[Federal Register Volume 86, Number 11 (Tuesday, January 19, 2021)]
[Rules and Regulations]
[Pages 5864-6135]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00538]



[[Page 5863]]

Vol. 86

Tuesday,

No. 11

January 19, 2021

Part IX





Department of Health and Human Services





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 Centers for Medicare & Medicaid Services





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42 CFR Parts 405, 417, 422, et al.





Medicare and Medicaid Programs; Contract Year 2022 Policy and Technical 
Changes to the Medicare Advantage Program, Medicare Prescription Drug 
Benefit Program, Medicaid Program, Medicare Cost Plan Program, and 
Programs of All-Inclusive Care for the Elderly; Final Rule

  Federal Register / Vol. 86 , No. 11 / Tuesday, January 19, 2021 / 
Rules and Regulations  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 417, 422, 423, 455, and 460

[CMS-4190-F2]
RIN 0938-AT97


Medicare and Medicaid Programs; Contract Year 2022 Policy and 
Technical Changes to the Medicare Advantage Program, Medicare 
Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan 
Program, and Programs of All-Inclusive Care for the Elderly

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services (HHS).

ACTION: Final rule.

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SUMMARY: This final rule will revise regulations for the Medicare 
Advantage (Part C) program, Medicare Prescription Drug Benefit (Part D) 
program, Medicaid program, Medicare Cost Plan program, and Programs of 
All-Inclusive Care for the Elderly (PACE) to implement certain sections 
of the Bipartisan Budget Act of 2018 and the Substance Use Disorder 
Prevention that Promotes Opioid Recovery and Treatment--(SUPPORT) for 
Patients and Communities Act (hereinafter referred to as the SUPPORT 
Act), enhance the Part C and D programs and the PACE program, codify 
several existing CMS policies, make required statutory changes, 
implement other technical changes, and make routine updates. As stated 
in the final rule that appeared in the Federal Register on June 2, 
2020, CMS is fulfilling its intention to address the remaining 
proposals from the February 2020 proposed rule here. Although the 
provisions adopted in this second final rule will be in effect during 
2021, most provisions will apply to coverage beginning January 1, 2022.
    Notwithstanding the foregoing, for proposals from the February 2020 
proposed rule that would codify statutory requirements that were 
already in effect prior to this rule's appearance in the Federal 
Register, CMS reminds organizations, plan sponsors, and other readers 
that the statutory provisions apply and will continue to be enforced. 
Similarly, for the proposals from the February 2020 proposed rule that 
would implement the statutory requirements in sections 2007 and 2008 of 
the SUPPORT Act, CMS intends to implement these statutory provisions 
consistent with their effective provisions.

DATES: 
    Effective Date: These regulations are effective March 22, 2021.
    Applicability Dates: Most of the provisions in this rule will be 
applicable to coverage beginning January 1, 2022, except as noted 
below.
    The Part D Income Related Monthly Adjustment Amount (IRMAA) 
calculation update in Sec.  423.286(d)(4)(ii) is applicable March 22, 
2021. The provision defining targeted beneficiaries for MTM at Sec.  
423.153(d)(2) is applicable March 22, 2021. The provisions on automatic 
escalation to the independent outside entity under a Medicare Part D 
drug management program (DMP) at Sec. Sec.  423.590(i) and 423.600(b) 
and the related provisions on information on appeal rights in the 
beneficiary notices at Sec. Sec.  423.153(f)(5)(ii)(C)(3), 
423.153(f)(6)(ii)(C)(4), and 423.153(f)(8)(i) are applicable March 22, 
2021. The provisions defining the term ``parent organization'' for MA 
and Part D plans at Sec. Sec.  422.2 and 423.4 are applicable March 22, 
2021. The General Requirements for Applicable Integrated Plans and 
Continuation of Benefits provisions at Sec. Sec.  422.629 and 422.632 
are applicable March 22, 2021.
    In order to help ensure that Part D sponsors have sufficient 
implementation time, the beneficiary real time benefit tool (RTBT) 
(Sec.  423.128(d)(4)) requirement will not be applicable until January 
1, 2023.
    Due to operational considerations, revisions to the Special Needs 
Plan Model of Care requirements in Sec.  422.101(f) are intended for 
implementation (that is, applicability) for models of care for contract 
year 2023. Plans that are required to submit models of care for 
contract year 2022 are due to submit MOCs by February 17, 2021; those 
submissions will be evaluated based on the regulations in effect at 
that time (that is, without the amendments adopted here) and SNPs must 
implement and comply with their approved MOCs in connection with 
coverage in 2022. Moving the applicable implementation of the SNP MOC 
provisions to contract year 2023 will allow SNPs and CMS to construct 
the necessary processes for full implementation and enforcement of the 
final rule. When MOCs for contract year 2023 are submitted for review 
and approval in early 2022, the regulations in this final rule will be 
used to evaluate those MOCs for approval.

SUPPLEMENTARY INFORMATION: The Code of Federal Regulations (CFR) will 
be updated consistent with the respective effective date of each 
provision. The applicability and effective dates are discussed in the 
summary and preamble for each of these items. Because CMS is finalizing 
the call center, marketing, and communications requirements under 
Sec. Sec.  422.111(h)(1), 422.2260 through 422.2274, Sec. Sec.  
423.128(d)(1), and 423.2260 through 423.2274 as applicable for the 
contract year and coverage beginning January 1, 2022, these 
requirements will apply to call center operations, marketing, and 
mandatory disclosures occurring in 2021 for enrollments made for 
contract year 2022.

FOR FURTHER INFORMATION CONTACT: 
    Cali Diehl, (410) 786-4053, Theresa Wachter, (410) 786-1157, or 
Christopher McClintick, (410) 786-4682--General Questions.
    Kimberlee Levin, (410) 786-2549--Part C Issues.
    Lucia Patrone, (410) 786-8621--Part D Issues.
    Kristy Nishimoto, (206) 615-2367--Beneficiary Enrollment and 
Appeals Issues.
    Daniel Deisroth, (443) 431-4171--PACE Issues.
    Debra Drew, (410) 786-6827--Program Integrity Issues.
    Tobey Oliver, (202) 260-1113--D-SNP Appeals and Grievances.

I. Executive Summary and Background

A. Executive Summary

1. Purpose
    The primary purpose of this final rule is to implement certain 
sections of the following federal laws related to the Medicare 
Advantage (MA or Part C) and Prescription Drug Benefit (Part D) 
programs:
     The Bipartisan Budget Act of 2018 (hereinafter referred to 
as the BBA of 2018), and
     The Substance Use-Disorder Prevention that Promotes Opioid 
Recovery and Treatment (SUPPORT) for Patients and Communities Act 
(hereinafter referred to as the SUPPORT Act).
    The rule also includes a number of changes to: Strengthen and 
improve the Part C and D programs and the PACE program, codify in 
regulation several CMS interpretive policies previously adopted through 
the annual Call Letter and other guidance documents, make required 
statutory changes, implement other technical changes, and make routine 
updates.
    In the June 2020 final rule (85 FR 33796), CMS addressed a 
selection of proposals from the February 2020 proposed rule (85 FR 
9002). In this final rule, CMS is addressing the remaining proposals 
from the February 2020 proposed rule with two exceptions: (1)

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Maximum Out-of-Pocket (MOOP) Limits for Medicare Parts A and B Services 
(Sec. Sec.  422.100 and 422.101) and (2) Service Category Cost Sharing 
Limits for Medicare Parts A and B Services and per Member per Month 
Actuarial Equivalence Cost Sharing (Sec. Sec.  422.100 and 422.113). 
Therefore, we may address the two remaining proposals from the February 
18, 2020, proposed rule (85 FR 9002) not included in this final rule in 
subsequent rulemaking.
    In so doing, the final rule addresses the following needs for 
federal regulatory action as set forth below:
     The regulations implementing the provisions of BBA of 2018 
relating to Medicare Advantage Special Needs Plans address, as directed 
by law, care management requirements through the development and 
implementation of models of care. Given the context of these provisions 
is a federal program, Congress has mandated a federal regulatory 
approach with respect to these provisions.
     The provisions implementing the provisions of BBA of 2018 
relating to the Coverage Gap Discount Program and the Part D Income 
Related Monthly Adjustment Amount (IRMAA) improve the operation of 
government programs by ensuring the regulations conform to the statute 
and the distribution of resources determined by Congress in statute. 
Given the context of these provisions is a federal program, Congress 
has mandated a federal regulatory approach with respect to these 
provisions.
     The provisions implementing the SUPPORT Act address the 
misuse and abuse of opioids in the manners directed by Congress. This 
includes the provisions related to Mandatory Drug Management Programs, 
Beneficiaries with History of Opioid-Related Overdose Included in Drug 
Management Programs, Automatic Escalation to External Review under a 
Medicare Part D Drug Management Program for At-Risk Beneficiaries, 
Suspension of Pharmacy Payments Pending Investigations of Credible 
Allegations of Fraud and Program Integrity Transparency Measures, 
Section 2008 of the SUPPORT Act, Section 6063 of the SUPPORT Act, 
Beneficiaries' Education on Opioid Alternatives, and Beneficiaries with 
Sickle Cell Disease. Given the context of these provisions is a federal 
program or impacts on several federal programs, Congress has mandated a 
federal regulatory approach with respect to these provisions.
     The provisions which strengthen and improve the PACE 
program with respect to Service Delivery Request Processes under PACE 
improve the operation of government programs by ensuring documentation 
is available for oversight required by statute. Given the context of 
these provisions is a federal program, a federal regulatory approach is 
appropriate with respect to these provisions.
     The provisions relating to Beneficiary Real Time Benefit 
Tools address inadequate and incomplete information available to Part D 
beneficiaries with regards to the choices they have for prescription 
drugs. Given the context of these provisions is a federal program, a 
federal regulatory approach is appropriate with respect to these 
provisions.
     The provisions relating to permitting a second, 
``preferred,'' specialty tier in Part D address externalities caused by 
the current specialty tier regulation--specifically the absence of 
negotiation leverage and incentives within the Part D specialty tier. 
Given the context of these provisions as a federal program, a federal 
regulatory approach is appropriate with respect to these provisions.
     The provisions relating to the Medicare Advantage (MA) and 
Part D Prescription Drug Program Quality Rating System improve the 
operation of government programs by making updates to reflect changes 
in measures (thereby ensuring the government program does not use 
outdated methodologies) and clarifying existing regulations (thereby 
answering questions regulated parties may have). These and other 
provisions also codify sub-regulatory guidance, which is an improvement 
in that regulated parties and CMS have greater clarity regarding the 
application of these policies as a rule. Given the context of these 
provisions is a federal program, a federal regulatory approach is 
appropriate with respect to these provisions.
2. Summary of the Major Provisions
a. Mandatory Drug Management Programs (DMPs) (Sec.  423.153)
    Section 704 of the Comprehensive Addiction and Recovery Act of 2016 
(hereinafter referred to as CARA) included provisions permitting Part D 
sponsors to establish drug management programs (DMPs) for beneficiaries 
at-risk for misuse or abuse of frequently abused drugs (FADs). Under 
the DMPs in place today, Part D sponsors engage in case management of 
potential at-risk beneficiaries (PARBs) through contact with their 
prescribers to determine whether the beneficiary is at-risk for 
prescription drug misuse or abuse. If a beneficiary is determined to be 
at-risk, after notifying the beneficiary in writing, the sponsor may 
limit their access to coverage of opioids and/or benzodiazepines to a 
selected prescriber and/or network pharmacy(ies) and/or through a 
beneficiary-specific point-of-sale (POS) claim edit.
    While the majority of Part D sponsors have already voluntarily 
implemented DMPs, CMS proposed regulations to implement section 2004 of 
the SUPPORT Act which require Part D sponsors to establish DMPs for 
plan years beginning on or after January 1, 2022.
    CMS is finalizing the requirement for mandatory DMPs with an 
additional modification so that plans without a Pharmacy and 
Therapeutics (P&T) committee can comply with the DMP regulation.
b. Beneficiaries With History of Opioid-Related Overdose Included in 
Drug Management Programs (DMPs) (Sec.  423.153)
    A past overdose is the risk factor most predictive for another 
overdose or suicide-related event.\1\ In light of this fact, in section 
2006 of the SUPPORT Act, Congress required CMS to include Part D 
beneficiaries with a history of opioid-related overdose (as defined by 
the Secretary) as PARBs under a Part D plan's DMP. CMS is also required 
under this section to notify the sponsor of such identifications. In 
line with this requirement, in lieu of modifying the definition of 
``potential at-risk beneficiary'' at Sec.  423.100 as proposed, CMS is 
finalizing the clinical guideline criteria at new paragraph Sec.  
423.153(f)(16)(ii)(2) to include a Part D eligible individual who is 
identified as having a history of opioid-related overdose, beginning 
January 1, 2022. Inclusion of beneficiaries with a history of opioid-
related overdose as PARBs in DMPs will allow Part D plan sponsors and 
providers to work together to closely assess these beneficiaries' 
opioid use and determine whether any additional action is warranted. 
The clinical guideline criteria CMS is finalizing at Sec.  
423.153(f)(16)(ii)(2) specify that both a principal diagnosis of 
opioid-related overdose and a recent Part D opioid prescription are 
required components to meet the definition of a PARB based on the 
history of opioid-related overdose. Additionally, CMS is making some 
revisions to the terminology used in the clinical

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guideline criteria at Sec.  423.153(f)(16)(ii)(2) from what was 
initially proposed in the definition at Sec.  423.100 to better 
characterize the data sources and opioid prescription criteria to be 
used to identify beneficiaries meeting the definition of a PARB based 
on a history of opioid-related overdose. The clinical guideline 
criteria mirror the definition of ``potential at-risk beneficiary'' 
that was initially proposed but relocated to Sec.  
423.153(f)(16)(ii)(2) to improve clarity of the regulation text.
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    \1\ Bohnert KM, Ilgen MA, Louzon S, McCarthy JF, Katz IR. 
Substance use disorders and the risk of suicide mortality among men 
and women in the U.S. Veterans Health Administration. Addiction. 
2017 Jul;112(7):1193-1201. doi: 10.1111/add.13774.
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c. Beneficiaries' Education on Opioid Risks and Alternative Treatments 
(Sec.  423.128)
    Sponsors of Part D prescription drug plans, including MA-PDs and 
standalone PDPs, must disclose certain information about their Part D 
plans to each enrollee in a clear, accurate, and standardized form at 
the time of enrollment and at least annually thereafter under section 
1860D-4(a)(1)(a) of the Act. Section 6102 of the SUPPORT Act amended 
section 1860D-4(a)(1)(B) of the Act to require that Part D sponsors 
also must disclose to each enrollee information about the risks of 
prolonged opioid use. In addition to this information, with respect to 
the treatment of pain, MA-PD sponsors must disclose coverage of non-
pharmacological therapies, devices, and non-opioid medications under 
their plans. Sponsors of standalone PDPs must disclose coverage of non-
pharmacological therapies, devices, and non-opioid medications under 
their plans and under Medicare Parts A and B. Section 6102 also amended 
section 1860D-4(a)(1)(C) to permit Part D sponsors to disclose this 
opioid risk and alternative treatment coverage information to only a 
subset of plan enrollees rather than disclosing the information to each 
plan enrollee. We are finalizing our proposal with only one 
modification to make the requirement applicable beginning January 1, 
2022, rather than January 1, 2021 as proposed.
d. Automatic Escalation to External Review Under a Medicare Part D Drug 
Management Program (DMP) for At-Risk Beneficiaries (Sec. Sec.  423.153, 
423.590, and 423.600)
    CMS proposed that, if on reconsideration a Part D sponsor affirms 
its denial of a DMP appeal, the case shall be automatically forwarded 
to the independent outside entity for review and resolution by the 
expiration of the adjudication timeframe applicable to the plan level 
appeal. We also proposed conforming revisions to the notices that are 
sent to beneficiaries. In the February 2020 proposed rule, we solicited 
feedback on these proposals. As a result, we received several comments 
related to the timeframe in which a plan sponsor has to forward the 
case file to the IRE. Specifically, commenters requested that plan 
sponsors have additional time beyond the applicable adjudication 
timeframe in which to assemble and forward the administrative case file 
to the IRE. As a result of this feedback, we are finalizing the 
automatic escalation provision with a modification to reflect that plan 
sponsors must forward the case file to the independent outside entity 
no later than 24 hours following the expiration of the adjudication 
timeframe applicable to the plan level appeal. This approach is 
consistent with regulations applicable to cases that must be forwarded 
to the IRE if the plan sponsor is untimely in its decision making and, 
we believe, remains consistent with the enrollee protections set forth 
in the SUPPORT Act. We are also finalizing the provisions related to 
beneficiary notices. The following provisions of this final rule are 
applicable 60 days after the publication date of this final rule: 
Sec. Sec.  423.590(i) and 423.600(b) related to auto-forwarding 
redeterminations made under a DMP to the IRE and the provisions related 
to information on appeal rights in the beneficiary notices at 
Sec. Sec.  423.153(f)(5)(ii)(C)(3), 423.153(f)(6)(ii)(C)(4), and 
423.153(f)(8)(i).
e. Suspension of Pharmacy Payments Pending Investigations of Credible 
Allegations of Fraud and Program Integrity Transparency Measures 
(Sec. Sec.  405.370, 422.500, 422.503, 423.4, 423.504, and 455.2)
    In the proposed rule, CMS proposed to undertake rulemaking to 
implement the provisions outlined in sections 2008 and 6063 of the 
SUPPORT Act, which are summarized in the following sections (1) and 
(2). Implementing these provisions will allow CMS, MA organizations and 
Medicare Part D plan sponsors (including MA organizations offering MA-
PD plans) to share data and information regarding unscrupulous actors, 
take swift action based on such data and information, and achieve 
enhanced outcomes in our efforts to fight the opioid crisis. In 
addition, this regulation will provide the means for more effective 
referrals to law enforcement based on plan sponsor reporting, 
ultimately resulting in reduced beneficiary harm and greater savings 
for the Medicare program.
(1) Section 2008 of the SUPPORT Act
    Title XVIII of the Social Security Act (the Act) provides authority 
for CMS to suspend payments to Medicare fee-for-service (FFS) providers 
and suppliers pending an investigation of a credible allegation of 
fraud, unless a good cause exception applies. While Part D plan 
sponsors currently have the discretion to suspend payments to 
pharmacies in the plans' networks, section 2008 requires that plan 
sponsors' payment suspensions based on credible allegations of fraud be 
implemented in the same manner as CMS implements such payment 
suspensions in FFS Medicare. Under this provision, plan sponsors are 
required to notify the Secretary of the imposition of a payment 
suspension that is based on a credible allegation of fraud and may do 
so using a secure website portal. The reporting requirement applicable 
to plan sponsors will only apply to suspended payments based on 
credible allegations of fraud as required by section 2008 and will not 
extend to other payment suspensions for which plan sponsors already 
have authority. Section 2008 also clarifies that a fraud hotline tip, 
without further evidence, is not considered a credible fraud allegation 
for payment suspension purposes. The statutory effective date for 
section 2008 is for plan years beginning on or after January 1, 2020.
(2) Section 6063 of the SUPPORT Act
    Section 6063 requires, effective not later than 2 years after the 
date of enactment, the Secretary to establish a secure internet website 
portal to enable the sharing of data among MA plans, prescription drug 
plans, and the Secretary, and referrals of ``substantiated or 
suspicious activities'' of a provider of services (including a 
prescriber) or a supplier related to fraud, waste, or abuse to initiate 
or assist with investigations conducted by eligible entities with a 
contract under section 1893 of the Act, such as a Medicare program 
integrity contractor. The Secretary is also required to use the portal 
to disseminate information to all MA plans and prescription drug plans 
on providers and suppliers that were referred to CMS for fraud, waste, 
and abuse in the last 12 months; were excluded or the subject of a 
payment suspension; are currently revoked from Medicare; or, for such 
plans that refer substantiated or suspicious activities to CMS, whether 
the related providers or suppliers were subject to administrative 
action for similar activities. The Secretary is required to define what 
constitutes substantiated or suspicious activities. Section 6063 
specifies that a

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fraud hotline tip without further evidence shall not be treated as 
sufficient evidence for substantiated fraud, waste, or abuse.
    Section 6063 also requires the Secretary to disseminate quarterly 
reports to MA plans and prescription drug plans on fraud, waste, and 
abuse schemes and suspicious activity trends reported through the 
portal. The Secretary's reports are to maintain the anonymity of 
information submitted by plans and to include administrative actions, 
opioid overprescribing information, and other data the Secretary, in 
consultation with stakeholders, determines important.
    Beginning with plan year 2021, section 6063 also requires Part D 
plan sponsors to submit to the Secretary information on investigations, 
credible evidence of suspicious activities of providers or suppliers 
related to fraud, and other actions taken by the plans related to 
inappropriate opioid prescribing. The Secretary is required to issue 
regulations that define the term inappropriate prescribing with respect 
to opioids, identify a method to determine if providers are 
inappropriately prescribing, and identify the information plan sponsors 
are required to submit.
    The applicability date of the section 2008 and section 6063 
provisions will be for plan years beginning on or after January 1, 2022 
because of several factors. The first factor is the need to ensure that 
the web-based portal is complete and operational for plan sponsor's 
use. While the development of the web-based portal began when the 
legislation was enacted, CMS was unable to complete the development of 
the portal in time for its full implementation in plan year 2021. In 
addition, the portal has required several key updates to reflect the 
requirements in this regulation. Additional factors include the time 
needed for plan sponsors to determine internal procedures to meet the 
requirements outlined in this rule; the need for CMS to obtain feedback 
from plan sponsors to address any challenges encountered with the web-
based portal; and the need to provide plan sponsors with the 
opportunity to address any other operational challenges with 
implementing these provisions, including potential changes that may be 
needed due to the COVID-19 public health emergency. Furthermore, the 
applicability date is later than the effective dates in the SUPPORT Act 
because the publication of this final rule is occurring after the bid 
deadline for plan year 2021. However, where the statute is self-
implementing, the delay in applicability of these regulations is not a 
barrier to enforcement of the statutory provisions.
f. Medicare Advantage (MA) and Part D Prescription Drug Program Quality 
Rating System (Sec. Sec.  422.162, 422.164, 422.166, 422.252, 423.182, 
423.184, and 423.186)
    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 (hereinafter referred to as the April 2018 
final rule), we codified the methodology for the Star Ratings system 
for the MA and Part D programs, respectively, at Sec. Sec.  422.160 
through 422.166 and Sec. Sec.  423.180 through 423.186. We have stated 
we will propose through rulemaking any changes to the methodology for 
calculating the ratings, the addition of new measures, and substantive 
measure changes.
    At this time we are codifying additional existing rules for 
calculating the ratings used for MA Quality Bonus Payments, 
implementing updates to the Health Outcomes Survey measures, adding new 
Part C measures, clarifying the rules around contract consolidations 
and application of the adjustment for extreme and uncontrollable 
circumstances when data are missing due to data integrity concerns, and 
making additional technical clarifications. Unless otherwise stated, 
data will be collected and performance measured using these rules and 
regulations for the 2022 measurement period and the 2024 Star Ratings.
g. Permitting a Second, ``Preferred,'' Specialty Tier in Part D 
(Sec. Sec.  423.104, 423.560, and 423.578)
    We are finalizing regulations to allow Part D sponsors to establish 
up to two specialty tiers and design an exceptions process that exempts 
drugs on these tiers from tiering exceptions to non-specialty tiers. 
Under this final rule, Part D sponsors will have the flexibility to 
determine which Part D drugs are placed on either specialty tier, 
subject to the ingredient cost threshold established according to the 
methodology we proposed and the requirements of the CMS formulary 
review and approval process under Sec.  423.120(b)(2). To maintain Part 
D enrollee protections, we will codify a maximum allowable cost sharing 
that would apply to the higher cost-sharing specialty tier. Further, we 
will require that if there are two specialty tiers, one must be a 
``preferred'' tier that offers lower cost sharing than the proposed 
maximum allowable cost sharing.
    We note that we did not propose to revise and are not revising 
Sec.  423.578(c)(3)(ii), which requires Part D sponsors to provide 
coverage for a drug for which a tiering exception was approved at the 
cost sharing that applies to the preferred alternative. Because the 
exemption from tiering exceptions for specialty tier drugs under Sec.  
423.578(a)(6)(iii) as proposed would apply only to tiering exceptions 
to non-specialty tiers, the existing requirement at Sec.  
423.578(c)(3)(ii) will require Part D sponsors to permit tiering 
exception requests for drugs on the higher cost-sharing specialty tier 
to the lower cost-sharing, specialty tier.
    To improve transparency, we will codify current methodologies for 
cost sharing and calculations relative to the specialty tier, with some 
modifications. First, we will codify a maximum allowable cost sharing 
permitted for the specialty tiers of between 25 percent and 33 percent, 
depending on whether the plan includes a deductible, as described 
further in section IV.E.4. of this final rule. We determine the 
specialty-tier cost threshold--meaning whether the drug has costs high 
enough to qualify for specialty tier placement--based on a 30-day 
equivalent supply. Additionally, we base the determination of the 
specialty-tier cost threshold on the ingredient cost reported on the 
prescription drug event (PDE). We will also maintain a specialty-tier 
cost threshold for both specialty tiers that is set at a level that, in 
general, reflects drugs with monthly ingredient costs that are in the 
top 1 percent, as described further in section IV.E.6. of this final 
rule. Finally, we will adjust the specialty-tier cost threshold, in an 
increment of not less than 10 percent, when an annual analysis of PDE 
data shows that an adjustment is necessary to recalibrate the 
specialty-tier cost threshold so that it only reflects Part D drugs 
with the top one percent of monthly ingredient costs. We will determine 
annually whether the adjustment would be triggered and announce the 
specialty-tier cost threshold annually via an HPMS memorandum or a 
comparable guidance document.
    We are finalizing these provisions as proposed, except that we are 
not finalizing our proposal to specify a specialty-tier cost threshold 
of $780. Additionally, in response to comments, we are finalizing new 
paragraph Sec.  423.104(d)(2)(iv)(A)(6), which describes the 
eligibility for placement on the specialty tier of newly-FDA-

[[Page 5868]]

approved Part D drugs. These provisions will apply for coverage year 
2022.
    To retain the policies in effect before coverage year 2022, we are 
amending the definition of specialty tier at Sec.  423.560 by adding 
paragraph (i) to clarify that the existing definition will be in effect 
before coverage year 2022, and paragraph (ii) to cross reference the 
definition which appears in Sec.  423.104(d)(2)(iv), which will apply 
beginning coverage year 2022. Additionally, as discussed in section 
IV.E.2. of this final rule, we are amending Sec.  423.578(a)(6)(iii) by 
adding paragraph (A) to cross reference the definition of specialty 
tier which will apply before coverage year 2022, and paragraph (B) to 
cross reference placement of the definition of specialty tier at Sec.  
423.104(d)(2)(iv) which will apply beginning coverage year 2022. 
Additionally, paragraph (A) will remove the phrase ``and biological 
products,'' and paragraph (B) will (1) reflect the possibility of a 
second specialty tier, and (2) clarify that Part D sponsors may design 
their exception processes so that Part D drugs on the specialty tier(s) 
are not eligible for a tiering exception to non-specialty tiers.
h. Beneficiary Real Time Benefit Tool (RTBT) (Sec.  423.128)
    This rule finalizes regulations to require that Part D plan 
sponsors implement a beneficiary real-time benefit tool (RTBT) by 
January 1, 2023. The RTBT must allow enrollees to view the information 
included in the prescriber RTBT system, which will include accurate, 
timely, and clinically appropriate patient-specific real-time formulary 
and benefit information (including cost, formulary alternatives and 
utilization management requirements). This rule permits plans to use 
existing secure patient portals to fulfill this requirement, to develop 
a new portal, or use a computer application. Plans are required to make 
this information available to enrollees who call the plan's customer 
service call center.
    In order to encourage enrollees to use the beneficiary RTBT, plans 
are permitted to offer rewards and incentives (RI) to their enrollees 
who log onto the beneficiary RTBT or seek to access this information 
via the plan's customer service call center, provided the value of the 
RI offered is a reasonable amount.
i. Service Delivery Request Processes Under PACE (Sec. Sec.  460.104 
and 460.121)
    Currently, PACE participants or their designated representatives 
may request to initiate, eliminate or continue a service, and in 
response, the PACE organization must process this request under the 
requirements at Sec.  460.104(d)(2). These requests are commonly 
referred to by CMS and the industry as ``service delivery requests.'' 
In response to feedback from PACE organizations and advocacy groups, 
and based on our experience monitoring PACE organizations' compliance 
with our current requirements, we proposed moving the requirements for 
processing service delivery requests from Sec.  460.104(d)(2) and 
adding them to a new Sec.  460.121 in order to increase transparency 
for participants and reduce confusion for PACE organizations. We also 
proposed modifying these provisions in order to reduce unnecessary 
burden on PACE organizations and eliminate unnecessary barriers for 
participants who have requested services that a PACE organization would 
be able to immediately approve. Specifically, we proposed to more 
clearly define what constitutes a service delivery request, and provide 
transparent requirements for how those requests would be processed by 
the PACE organization, including who can make a request, how a request 
can be made, and the timeframe for processing a service delivery 
request. We also proposed allowing the interdisciplinary team (IDT) to 
bypass the full processing of a service delivery request under the new 
proposed requirements in Sec.  460.121 when the request can be approved 
in full by an IDT member at the time it is made. For all other service 
delivery requests that are brought to the IDT, we proposed maintaining 
the requirement that an in-person reassessment must be conducted prior 
to a service delivery request being denied, but we proposed eliminating 
the requirement that a reassessment (either in-person or through remote 
technology) be conducted when a service delivery request can be 
approved. Lastly, we proposed adding participant protections; 
specifically, we proposed increasing notification requirements in order 
to ensure participants understand why their request was denied, and we 
proposed adding reassessment criteria in order to ensure reassessments 
are meaningful to the service delivery request, and that the IDT takes 
them into consideration when rendering a decision.
    We are finalizing these provisions as proposed, with some minor 
modifications. For example, all references to ``service delivery 
requests'' in Sec. Sec.  460.104, 460.121 and 460.122 have been 
replaced with the term ``service determination request.'' In addition, 
we have modified Sec.  460.121(d)(2) to limit service determination 
requests to requests that are received by PACE organization employees 
and contractors who provide direct care in the participant's residence, 
the PACE center, or while transporting participants.
j. Beneficiaries With Sickle Cell Disease (SCD) (Sec.  423.100)
    Beneficiaries with active cancer-related pain, residing in a long-
term care facility, or receiving hospice, palliative, or end-of-life 
care currently meet the definition of ``exempt beneficiary'' with 
respect to DMPs in Sec.  423.100. Section 1860D-4(c)(5)(C)(ii)(III) of 
the Act provides the Secretary with the authority to elect to treat 
other beneficiaries as exempted from DMPs. Due to concerns of 
misapplication of opioid restrictions in the sickle cell disease (SCD) 
patient population, CMS proposed that beneficiaries with SCD be 
classified as exempt beneficiaries. CMS is finalizing the definition of 
an exempted beneficiary to include beneficiaries with SCD as proposed 
with one modification to clarify that this definition is applicable 
starting in plan year 2022.
3. Summary of Costs and Benefits

----------------------------------------------------------------------------------------------------------------
                                                                                    Primary impact to plans and
                                                                                     sponsors, enrollees,  and
              Provision                                Description                     medicare trust fund as
                                                                                             applicable
----------------------------------------------------------------------------------------------------------------
a. Mandatory Drug Management Programs  This provision will codify the SUPPORT Act  There is a 10 year cost of
 (DMPs) (Sec.   423.153).               requirement making it mandatory that Part   $4.0 million. Part D
                                        D sponsors implement DMPs, starting in      sponsors will incur s a
                                        plan year 2022.                             special first year cost of
                                                                                    3.2 million with ongoing
                                                                                    costs of $0.1 million in
                                                                                    later years.

[[Page 5869]]

 
b. Beneficiaries with History of       As finalized, this provision will require   Part D beneficiaries with a
 Opioid-Related Overdose Included in    that, starting in plan year 2022, CMS       history of opioid-related
 Drug Management Programs (DMPs)        identify beneficiaries enrolled in          overdose have higher than
 (Sec.   423.153).                      Medicare Part D with a history of opioid-   average drug costs. CMS
                                        related overdose (as defined by the         estimates that as a result
                                        Secretary) and include such individuals     of reduced utilization of
                                        as PARBs for prescription drug abuse or     drugs for beneficiaries
                                        misuse under sponsors' DMPs.                participating in DMPs, there
                                                                                    will be a savings of 5
                                                                                    percent of the current
                                                                                    annual drug costs for
                                                                                    enrollees with a history of
                                                                                    opioid overuse. After the
                                                                                    first year, the reduction in
                                                                                    drug utilization may result
                                                                                    in an annual savings of $7.7
                                                                                    million to the Medicare
                                                                                    Trust Fund resulting from
                                                                                    reduced drug spending by
                                                                                    beneficiaries. The costs for
                                                                                    case management and related
                                                                                    paperwork is estimated at
                                                                                    $10.1 million annually.
c. Beneficiaries' Education on Opioid  CMS is finalizing requirements that Part D  The requirements set forth
 Risks and Alternative Treatments       sponsors and MA-PDs must provide            under 1860D-4(a)(1)(B) will
 (Sec.   423.128).                      information on the risks of opioids and     cost approximately $0.5
                                        alternative therapies to all Part D         million in the first year to
                                        beneficiaries with modification starting    account for one-time
                                        in plan year 2022.                          programming costs and $0.4
                                                                                    million in the following
                                                                                    years.
d. Automatic Escalation to External    Under this final rule, if a Part D sponsor  We estimate there will be
 Review under a Medicare Part D Drug    denies a DMP appeal, the case shall be      about 28,600 appeals per
 Management Program (DMP) for At-Risk   automatically forwarded to the              year, of which 0.08 percent
 Beneficiaries (Sec.  Sec.   423.153,   independent outside entity for review and   will be denied and
 423.590, and 423.600).                 resolution. A plan sponsor must forward     automatically escalated to
                                        the case to the independent outside         the independent review
                                        entity no later than 24 hours following     entity (IRE). Therefore,
                                        the expiration of the adjudication          there are approximately 23
                                        timeframe applicable to the plan level      cases (0.08 percent *
                                        appeal. Finally, this final rule            28,600) annually affected by
                                        establishes conforming revisions to the     this provision. Since most
                                        notices that are sent to beneficiaries.     IRE cases are judged by a
                                                                                    physician at a wage of
                                                                                    $202.46, and typically an
                                                                                    IRE will take at most 1 hour
                                                                                    to review, the total burden
                                                                                    is about $4,656.58 (23 cases
                                                                                    * $202.46 * 1 hour).
e. Suspension of Pharmacy Payments     CMS is finalizing policies to implement     While we believe there may be
 Pending Investigations of Credible     two sections of the SUPPORT Act, which      savings generated through
 Allegations of Fraud and Program       will--(1) require Part D plan sponsors to   actions taken by plans that
 Integrity Transparency Measures        notify the Secretary of the imposition of   will conduct their own due
 (Sec.  Sec.   405.370, 422.500,        a payment suspension on pharmacies that     diligence from the reporting
 422.503, 423.4, 423.504, and 455.2).   is based on a credible allegation of        and sharing of
                                        fraud, impose such payment suspensions      administrative actions
                                        consistent with the manner in which CMS     between CMS and plans
                                        implements payment suspensions in fee-for   sponsors, as well as
                                        service Medicare, and report such           additional law enforcement
                                        information using a secure website          actions, we cannot estimate
                                        portal; (2) define inappropriate            the impact at this time. The
                                        prescribing with respect to opioids; (3)    Part C and Part D sponsors
                                        require plan sponsors to submit to the      will incur an initial
                                        Secretary information on investigations     aggregate cost of $15.2
                                        and other actions related to                million with level
                                        inappropriate opioid prescribing; (4)       subsequent year aggregate
                                        define ``substantiated or suspicious        costs of $9.6 million.
                                        activities'' related to fraud, waste, or
                                        abuse; and (5) establish a secure portal
                                        which would enable the sharing of data
                                        and referrals of ``substantiated or
                                        suspicious activities'' related to fraud,
                                        waste, or abuse among plan sponsors, CMS,
                                        and CMS's program integrity contractors.
f. Medicare Advantage (MA) and Part D  We are codifying additional existing rules  There will be no, or
 Prescription Drug Program Quality      for calculating MA Quality Bonus Payments   negligible, impact on the
 Rating System (Sec.  Sec.   422.162,   ratings, implementing updates to the        Medicare Trust Fund from
 422.164, 422.166, 422.252, 423.182,    Health Outcomes Survey measures, adding     these provisions.
 423.184, and 423.186).                 new Part C measures, clarifying the rules
                                        around contract consolidations and
                                        application of the adjustment for extreme
                                        and uncontrollable circumstances when
                                        data are missing due to data integrity
                                        concerns, and making additional technical
                                        clarifications.
g. Permitting a Second,                CMS is finalizing regulations to (1) allow  Permitting Part D sponsors to
 ``Preferred,'' Specialty Tier in       Part D sponsors to establish a second,      establish a second,
 Part D (Sec.  Sec.   423.104,          ``preferred,'' specialty tier at a lower    ``preferred,'' specialty
 423.560, and 423.578).                 cost-sharing threshold than the current     tier is unlikely to have a
                                        specialty tier; (2) codify the existing     material impact on Part D
                                        maximum cost sharing for the highest        costs to either the
                                        specialty tier; (3) codify a methodology    government or Part D
                                        to determine annually the                   enrollees.
                                        specialty[dash]tier cost threshold using
                                        ingredient cost and increase the
                                        threshold when certain conditions are
                                        met; (4) require sponsors to permit
                                        tiering exceptions between the two
                                        specialty tiers; and (5) permit sponsors
                                        to determine which drugs go on either
                                        specialty tier.

[[Page 5870]]

 
h. Beneficiary Real Time Benefit Tool  CMS is finalizing regulations to require    Adoption of a beneficiary
 (RTBT) (Sec.   423.128).               that each Part D plan implement a           RTBT will be an additional
                                        beneficiary real time benefit tool by       cost and burden on Part D
                                        January 1, 2023. he RTBTl must enable       sponsors. Based on our
                                        enrollees to have the information           estimates, we believe this
                                        included in the prescriber RTBT system      will cost Part D plans about
                                        which includes accurate, timely, and        $4.0 million for all plans
                                        clinically appropriate patient-specific     in the first year based on
                                        real-time formulary and benefit             the costs for them to
                                        information (including cost, formulary      reprogram their computer
                                        alternatives and utilization management     systems.
                                        requirements).                             Additionally, the voluntary
                                                                                    provision of rewards by Part
                                                                                    D sponsors to enrollees
                                                                                    using RTBT will have an
                                                                                    impact of $0.7 million in
                                                                                    the first year, in order to
                                                                                    implement the program, and
                                                                                    $0.4 million in subsequent
                                                                                    years in order to maintain
                                                                                    the program. These are
                                                                                    maximum impacts assuming all
                                                                                    Part D sponsors choose to
                                                                                    implement the rewards and
                                                                                    incentives, and it remains
                                                                                    to be seen whether or not
                                                                                    this will be the case.
i. Service Delivery Request Processes  CMS is finalizing the process by which      The proposed revisions create
 under PACE (Sec.  Sec.   460.104 and   PACE organizations address service          efficiencies which are
 460.121).                              determination requests. Currently the IDT   estimated to create cost
                                        must determine the appropriate member(s)    savings of $16.8 million in
                                        of the IDT to conduct a reassessment,       the first year and gradually
                                        perform a reassessment, and render a        increase to $ 21.3 million
                                        decision on each service determination      in 2031. The net savings
                                        request. However, our experience shows      over 10 years is $193.8
                                        that approximately 40 percent of all        million. The savings are
                                        requests could be immediately approved in   true savings to PACE
                                        full by an IDT member. We are therefore     organizations as a result of
                                        removing the obligation for a request to    reduced administrative
                                        be brought to the IDT or for a              burden.
                                        reassessment to be conducted when a
                                        member of the IDT receives and can
                                        approve a service determination request
                                        in full at the time it is made. We are
                                        also removing the requirement to conduct
                                        a reassessment in response to a service
                                        determination request except when a
                                        request would be partially or fully
                                        denied.
j. Beneficiaries with Sickle Cell      CMS is finalizing that beneficiaries with   We estimate that the impact
 Disease (SCD) (Sec.   423.100).        SCD are classified as exempted from DMPs    of this provision is
                                        starting in plan year 2022.                 negligible because it will
                                                                                    result in under 70
                                                                                    beneficiaries (i.e.,
                                                                                    beneficiaries with SCD who
                                                                                    meet DMP inclusion criteria
                                                                                    by meeting the definition of
                                                                                    a PARB) being exempted from
                                                                                    DMPs.
----------------------------------------------------------------------------------------------------------------

B. Background

    We received approximately 667 timely pieces of correspondence 
containing multiple comments for the provisions implemented within this 
final rule from the proposed rule titled ``Medicare and Medicaid 
Programs; Contract Year 2021 and 2022 Policy and Technical Changes to 
the Medicare Advantage Program, Medicare Prescription Drug Benefit 
Program, Medicaid Program, Medicare Cost Plan Program, and Programs of 
All-Inclusive Care for the Elderly'' which appeared in the Federal 
Register on February 18, 2020 (85 FR 9002) (February 2020 proposed 
rule). Comments were submitted by MA health plans, Part D sponsors, MA 
enrollee and beneficiary advocacy groups, trade associations, 
providers, pharmacies and drug companies, states, telehealth and health 
technology organizations, policy research organizations, actuarial and 
law firms, MACPAC, MedPAC, and other vendor and professional 
associations. As mentioned previously, we are finalizing the policies 
from the February 2020 proposed rule in more than one final rule. The 
first part titled ``Medicare Program; Contract Year 2021 Policy and 
Technical Changes to the Medicare Advantage Program, Medicare 
Prescription Drug Benefit Program, and Medicare Cost Plan Program'' 
appeared in the Federal Register on June 2, 2020 (85 FR 33796), and 
contained a subset of regulatory changes that impacted MA organizations 
and Part D sponsors more immediately, including information needed to 
submit their bids by the statutory deadline (the first Monday in June). 
The majority of the remaining provisions are addressed here in this 
final rule.
    The proposals we are finalizing in this final rule range from minor 
clarifications to more significant modifications based on the comments 
received. Summaries of the public comments received and our responses 
to those public comments are set forth in the various sections of this 
final rule under the appropriate headings.
    We also note that some of the public comments received for the 
provisions implemented in this final rule were outside of the scope of 
the proposed rule. CMS did not make any proposals in the February 2020 
proposed rule on these topics, and as such, these out-of-scope public 
comments are not addressed in this final rule. The following paragraphs 
summarize the out-of-scope public comments.
    We received comments about how CMS will assess compliance with PACE 
regulatory requirements, recommendations for changes to PACE grievance 
requirements, and a recommendation to require plan sponsors to 
automatically escalate all adverse Part D benefit appeals to the 
independent review entity. Related to Star Ratings, we received 
comments that CMS should only apply the Categorical Adjustment Index if 
it positively impacts a contract's Star Rating, and that we adopt 
completely new Star Ratings measures or change HEDIS measures during 
the COVID-19 pandemic. Related to establishing pharmacy performance 
measure reporting requirements, we received comments in favor of 
abolishing Direct and Indirect Remunerations, applying 100 percent of 
direct pharmacy price concessions at the point-of sale, prohibiting use 
of a scoring method that

[[Page 5871]]

solely uses contractual pay-for-performance metrics, and the inclusion 
of clinical data as part of any standardized performance measures.
    With regard to our proposals to permit Part D sponsors to maintain 
up to two specialty tiers, several commenters expressed that, in 
general, tiered-formulary structures have misaligned incentives, and 
that specialty tiers (particularly a second specialty tier), exacerbate 
the impact of such misaligned incentives. These commenters expressed 
concerns over the transparency of Part D rebate mechanisms and 
suggested that Part D sponsors have incentives to grant more expensive 
products with preferred status even when preferred products are not 
always the least expensive products, which the commenters posited 
increases costs for both Part D enrollees and the government. Some 
commenters suggested that CMS should eliminate the specialty tier, 
reasoning that elimination of the specialty tier would only produce 
modest increases in premiums and cost sharing in other tiers. Some 
commenters also suggested that the tiers should be relabeled and 
reordered in the hierarchy relative to Part D enrollee cost sharing to 
be more consistent with current industry practices. Some commenters 
suggested that CMS should mandate that denials at the pharmacy counter 
trigger the appeals process. Other commenters suggested that Part D 
enrollees stabilized on a specialty drug be exempt from unfavorable 
coverage changes (for example, increased cost sharing) resulting from a 
secondary specialty tier. Some commenters suggested that CMS should 
adjust the Part D rebate sharing formulas to remove plan incentives for 
high-cost, high-rebate brand drugs. Some commenters encouraged CMS to 
investigate alternative catastrophic reinsurance models to incent the 
most savings for health plans implementing a preferred specialty tier. 
Some commenters suggested that, like private insurance plans with more 
than one specialty tier, CMS should establish an out-of-pocket max in 
Part D. Some commenters suggested a comprehensive reform of the Part D 
program. Some commenters suggested that transitioning to a biosimilar 
biological product on a lower specialty tier may have negative clinical 
implications for a patient stabilized on a reference product. (We refer 
readers to the Food and Drug Administration (FDA) regarding the safety 
and efficacy of biosimilar biological products, and their use in 
patients who have previously been treated with the reference product, 
as well as in patients who have not previously received the reference 
product.) Some commenters took the opportunity to suggest that CMS 
should expand the scope of our mid-year formulary change policy to 
include biosimilar biological products, reasoning that they are 
``equivalent'' to the reference biological products. Some commenters 
suggested that CMS should improve the exceptions and appeal process. 
Some commenters suggested that CMS should ensure independent pharmacies 
cannot be excluded from providing non-preferred specialty tier drugs. 
Finally, some commenters suggested that CMS should institute conflict 
of interest provisions for pharmacy chains owned by PBMs. (We note that 
this rule, as we are finalizing it, would not provide Part D sponsors 
with any additional basis to exclude independent pharmacies from their 
networks.)
    In response to proposed changes to the Coverage Gap Discount 
Program (CGDP), two commenters offered suggestions about how the Part D 
program could be more cost effective. One of these commenters urged CMS 
to prohibit Part D plans from using utilization management tools to 
steer utilization away from lower cost biosimilar products. The other 
commenter suggested that Congress change the CGDP in a way that would 
result in greater use of lower cost drugs throughout the program and 
suggested that the program's existence shifts the lower net cost 
determinations of generic and biosimilar products.
    With regard to Medication Therapy Management (MTM), one commenter 
expressed concern about how pharmacists are paid for providing 
services, while another questioned the overall cost benefit of the MTM 
program.
    A commenter recommended that CMS align exemption criteria for the 
Pharmacy Quality Alliance's Initial Opioid Prescribing Measures with 
DMP exemption criteria; however, these measures are not developed by 
CMS and are outside the scope of the proposed rule. We also received a 
number of comments that did not refer specifically to our Part D opioid 
proposals but more generally (1) referenced the opioid epidemic, (2) 
cited concerns that existing restrictions on opioid access may drive 
chronic pain patients to illicit markets and/or reduce their quality of 
life and functional status, (3) raised questions about Drug Enforcement 
Agency (DEA) actions against opioid prescribers and whether they 
address the root cause of the opioid epidemic, and (4) opined that 
interventions should be focused on illegal drugs.

II. Implementation of Certain Provisions of the Bipartisan Budget Act 
of 2018

A. Improvements to Care Management Requirements for Special Needs Plans 
(SNPs) (Sec.  422.101)

    Congress authorized special needs plans (SNPs) as a type of 
Medicare Advantage (MA) plan designed to enroll individuals with 
special needs. The three types of SNPs are those designed for: (1) 
Institutionalized individuals (defined in Sec.  422.2 as an individual 
continuously residing, or expecting to continuously reside, for 90 days 
or longer in specified facility) or institutionalized-equivalent 
(defined in Sec.  422.2 as living in the community but requiring an 
institutional level of care, which is determined using a specified 
assessment instrument and conducted consistent with specified 
standards); (2) individuals entitled to medical assistance under a 
State Plan under title XIX of the Act; or (3) other individuals with 
severe or disabling chronic conditions that would benefit from 
enrollment in a SNP. As noted in the proposed rule (85 FR 9013 through 
9014), there have been a number of changes to the requirements for MA 
SNPs since their initial authorization. We proposed changes to Sec.  
422.101(f) to implement and extend the latest of those statutory 
changes, made by the Bipartisan Budget Act of 2018 (BBA).
    As of July 2019, there were 321 SNP contracts with 734 SNP plans 
that had at least 11 members. These figures included 208 Dual Eligible 
SNP contracts (D-SNPs) with 480 D-SNP plans with at least 11 members, 
57 Institutional SNP contracts (I-SNPs) with 125 I-SNP plans with at 
least 11 members, and 56 Chronic or Disabling Condition SNP contracts 
(C-SNPs) with 129 C-SNP plans with at least 11 members. For more 
discussion of the history of SNPs, please see Chapter 16b of the 
Medicare Managed Care Manual (MMCM).\2\ The proposed rule summarized 
current processes and requirements for the models of care that all SNPs 
must use and follow under current law. (85 FR 9014)
---------------------------------------------------------------------------

    \2\ For more information pertaining to chapter 16b of the 
Medicare Managed Care Manual, please see: https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/mc86c16b.pdf.
---------------------------------------------------------------------------

    The Bipartisan Budget Act of 2018 (BBA), enacted into law on 
February 9, 2018, amended section 1859(f) of the Act to include new 
care management requirements for C-SNPs. We proposed, and are 
finalizing here, regulations to

[[Page 5872]]

implement the provisions of the BBA of 2018 and establishes new care 
management requirements at Sec.  422.101(f) for all SNPs, including 
minimum benchmarks for SNP models of care. Due to operational 
considerations, the requirements we are finalizing at Sec.  422.101(f) 
are intended for implementation for coverage beginning contract year 
2023. Plans that are required to submit MOCs for contract year 2022 are 
due to submit MOCs by February 17, 2021; those submissions will be 
evaluated based on the regulations in effect at that time (that is, 
without the amendments adopted here) and SNPs must implement and comply 
with their approved MOCs in connection with coverage in 2022. Moving 
the applicable implementation of the SNP MOC provisions to contract 
year 2023 will allow SNPs and CMS to construct the necessary processes 
for the full implementation and enforcement of this final rule. When 
MOCs for contract year 2023 are submitted for review and approval in 
early 2022, the regulations in this final rule will be used to evaluate 
those MOCs for approval.
    Specifically, we proposed the following:
     First, we proposed to implement the requirement in section 
1859(f)(5)(B)(i) of the Act regarding the interdisciplinary team, or 
sometimes called the interdisciplinary care team (ICT), in an amendment 
to Sec.  422.101(f)(1)(iii) that would require the team to include 
providers with demonstrated expertise, including training in an 
applicable specialty, in treating individuals similar to the targeted 
population of the plan, and in addition to implementing the statutory 
requirement for C-SNPs, extend the requirement to all SNPs.
     Second, we proposed to implement the requirement in 
section 1859(f)(5)(B)(ii) of the Act requiring compliance with 
requirements (developed by CMS) to provide a face-to-face encounter 
with each enrollee in a new paragraph (f)(1)(iv) of Sec.  422.101 that 
would extend the requirement to all SNPs. Under our proposal, face-to-
face encounters would have to be between each enrollee and a member of 
the enrollee's ICT or the plan's case management and coordination staff 
on at least an annual basis, beginning within the first 12 months of 
enrollment, as feasible and with the individual's consent; we also 
proposed that a face-for-face encounter must be either in-person or 
through a visual, real-time, interactive telehealth encounter.
     Third, we proposed to codify the requirement in section 
1859(f)(5)(B)(iii) of the Act that, as part of the C-SNP model of care, 
the results of the initial assessment and annual reassessment required 
for each enrollee be addressed in the individual's individualized care 
plan. As with the other provisions in section 1859(f)(5)(B) of the Act, 
we proposed to extend this requirement to the model of care for all 
SNPs, in revisions to Sec.  422.101(f)(1)(i).
     Fourth, we proposed to codify the requirement in section 
1859(f)(5)(B)(iv) of the Act that the evaluation and approval of the 
model of care take into account whether the plan fulfilled the previous 
MOC's goals and to extend this evaluation component to all SNP models 
of care, rather than limiting it to C-SNPs. We proposed a new provision 
at Sec.  422.101(f)(3)(ii) to require that, as part of the evaluation 
and approval of the SNP model of care, National Committee for Quality 
Assurance (NCQA) must evaluate whether goals were fulfilled from the 
previous model of care. We also proposed, in new paragraphs 
(f)(3)(ii)(A) through (C) that: (A) Plans must provide relevant 
information pertaining to the MOC's goals as well as appropriate data 
pertaining to the fulfillment of the previous MOC's goals; (B) plans 
submitting a new model of care must provide relevant information 
pertaining to the MOC's goals for review and approval; and (C) if the 
SNP model of care did not fulfill the previous MOC's goals, the plan 
must indicate in the MOC submission how it will achieve or revise the 
goals for the plan's next MOC. We also proposed to move an existing 
regulation at Sec.  422.101(f)(2)(vi) that requires all SNPs must 
submit their MOC to CMS for NCQA evaluation and approval in accordance 
with CMS guidance to a new paragraph at Sec.  422.101(f)(3)(i), using 
the same language.
     Lastly, we proposed to implement new regulation text at 
Sec.  422.101(f)(3)(iii) to impose the requirement for benchmarks to be 
met for a MOC to be approved. Section 1859(f)(5)(B)(v) of the Act 
requires that the Secretary establish a minimum benchmark for each 
element of the C-SNP model of care, and that the MOC can only be 
approved if each element meets a minimum benchmark. The proposed 
regulation in Sec.  422.101(f)(3)(iii) would extend these benchmarks 
for all SNP models of care.
    We proposed to extend the new requirements enacted by the BBA of 
2018 to all SNP plan types for several reasons. We explained that these 
additional requirements are consistent with current regulations and 
sub-regulatory guidance CMS provides to all SNPs regarding care 
management and MOC compliance. Second, we believe that these proposed 
regulations are important safeguards to preserve the quality of care 
for all special needs individuals, including those enrolled in D-SNPs 
and I-SNPs and not just those enrolled in C-SNPs. Given the prevalence 
of medically complex chronic conditions among I-SNP and D-SNP 
enrollees, we believe the proper application of these new care 
improvement requirements would improve care for enrollees with complex 
chronic conditions. Finally, we stated that the application of 
multiple, different MOC standards would be operationally complex and 
burdensome for MA organizations that sponsor multiple SNP plan types, 
for instance, a D-SNP and a C-SNP. Our proposal would streamline 
operational and administrative obligations by making the different SNPs 
have similar requirements as well as establish minimum standards to 
benefit all special needs individuals in these plans.
    In the proposed rule, we solicited comment on the extension of the 
new care management and MOC requirements for C-SNPs to the care 
management and MOC requirements for all SNP types and then discussed 
each of the specific proposed policies in turn. We address comments 
about the extension of the requirements to all SNP types first, 
followed by a review of each proposed policy and the relevant comments 
and the response to such comments. 1. Extension of the C-SNP 
requirements to all SNP types
    Comment: CMS received a number of comments in support of or in 
opposition to the extension of C-SNP requirements, added to section 
1859(f)(5) of the Act by the BBA of 2018, to apply to all SNP types, 
instead of limiting the applicability of these requirement to just C-
SNPs. A handful of commenters were concerned about the applicability of 
several of the proposed regulations to I-SNP and D-SNP care management 
protocols with some arguing that the proposed rule would result in 
requirements that are duplicative of the current MOC approval process 
requirements. Several commenters specifically noted that SNPs of all 
types have existing processes and practices that cover the areas 
discussed in the proposed rule. They contend that the NCQA Model of 
Care, review, and scoring guidelines comprehensively cover the 
coordination of care, provider, and quality requirements outlined in 
the proposed rule. In addition, commenters noted that CMS audits 
include review of

[[Page 5873]]

performance by SNPs on these processes.
    Response: Regarding the extension of section 1859(f)(5) of the Act 
to include all SNP types, we agree this rule is consistent with current 
CMS policy, including several current regulations implementing section 
1859; the statute and several regulations establish similar 
requirements for all SNPs regardless of type. Specifically, section 
1859(f)(5)(A) of the Act requires that MA organizations offering a SNP 
implement an evidence-based model of care. The MOC and other SNP-
specific requirements have been incorporated into the MA application 
for MAOs that wish to offer a SNP so that these MAOs can demonstrate 
that they meet CMS' SNP specific requirements and are capable of 
serving the vulnerable special needs individuals who enroll in SNPs. In 
the Medicare Program; Medicare Advantage and Prescription Drug Benefit 
Programs: Negotiated Pricing and Remaining Revisions (74 FR 1493), 
known hereafter as the January 2009 final rule, CMS outlined the 
overarching purpose of section 422.101(f) and noted that SNPs, 
regardless of type, are required to meet the same requirements 
including that each plan must have networks with clinical expertise 
specific to the special needs population of the plan; use performance 
measures to evaluate models of care; and be able to coordinate and 
deliver care targeted to people with disabilities, frail older adults, 
and those near the end of life based on appropriate protocols. (74 FR 
1498 through 1450) CMS's belief that these measures are critical to 
providing care to the types of special needs populations served by SNPs 
has not changed in the intervening years since finalizing Sec.  
422.101(f) in 2009. As noted in this section of this rule, for each 
specific provision we proposed and are finalizing at Sec.  422.101(f), 
CMS is codifying certain requirements that are part of the current SNP 
MOC approval process. Rather than forcing a duplication of processes, 
we believe that SNPs have already implemented many of these new 
requirements into their MOC. Understanding this, we proposed and are 
finalizing these provisions in line with current MOC review and scoring 
guidelines, covering all facets of the MOC including care coordination, 
provider, and quality requirements.
    As discussed in the proposed rule, extending the statutory 
requirements for C-SNPs to all SNPs will provide improvements to the 
care coordination model in all SNPs. For example, section 
1859(f)(5)(B)(ii), as added by the BBA of 2018, requires C-SNPs to 
provide face-to-face encounters with each enrollee on an annual basis, 
consistent with standards adopted by CMS. We proposed and are 
finalizing, at Sec.  422.101(f)(1)(iv), that all SNPs provide for face-
to-face encounters between each enrollee and a member of the enrollee's 
interdisciplinary team or the plan's case management and coordination 
staff on at least an annual basis, beginning within the first 12 month 
of enrollment, as feasible and with the individual's consent. Face-to-
face encounters are appropriate to require for all SNP enrollees 
because these SNP enrollees have similar healthcare needs, including 
the need for treatment of multiple chronic conditions and for services 
such as care coordination.
    Comment: Another comment supported the proposal, but added that CMS 
should explore the application of a more rigorous set of requirements 
focused on person-centered care to strengthen the MOC and meet the 
needs of SNP enrollees.
    Response: We thank the commenter for their comment and suggestions. 
As proposed and finalized, the new provisions in Sec.  422.101(f) 
provide both a structure for creating a care management process 
specifically designed to provide targeted care to individuals with 
special needs and allow flexibilities enabling plans to create 
innovative approaches to person-centered care. As noted in the Interim 
Final Rule with comment, titled ``Medicare Program; Revisions to the 
Medicare Advantage and Prescription Drug Benefit Programs'' (CMS-4138-
IFC), issued in September 2008 (``September 2008 IFC'') (73 FR 54225, 
54228), we expect the MA organizations that have the commitment and 
resources to serve vulnerable special needs beneficiaries through SNPs 
will perpetually evaluate their own model of care by collecting and 
analyzing performance data to continually improve their model of care. 
We also noted in the September 2008 IFC that CMS would continue to 
evaluate models of care through the analysis of SNP performance data 
and monitoring visits, the review of scientific research on the 
efficacy of other care models, and feedback from beneficiaries, 
advocacy groups, and healthcare professionals (73 FR 54228). The 
revisions to Sec.  422.101(f) adopted in this final rule represent a 
continuation of this process to evaluate and refine SNP care 
management.
    This final rule establishes and clarifies delivery of care 
standards for SNPs and codifies standards which we have included in 
other CMS guidance and instructions. As such, we are finalizing the 
revisions to paragraph (f) to Sec.  422.101 generally as proposed to 
extend certain statutory requirements to all SNPs.
1. The Interdisciplinary Team (ICT) in the Management of Care
    As amended by the BBA of 2018, section 1859(f)(5)(B)(i) of the Act 
requires the interdisciplinary team (ICT) of each C-SNP to include 
providers with specified expertise and training. We proposed to 
implement this through an amendment to Sec.  422.101(f)(1)(iii) that 
would apply the requirement to all SNPs. We proposed to require that 
each MA organization offering a SNP plan must provide each enrollee 
with an ICT that includes providers with demonstrated expertise and 
training, and, as applicable, training in a defined role appropriate to 
their licensure in treating individuals similar to the targeted 
population of the plan.
    We explained in the proposed rule that MIPPA required SNPs to 
conduct initial and annual comprehensive health risk assessments, 
develop and implement an individualized plan of care, and implement an 
ICT for each beneficiary. Specifically, Section 1859(f)(5)(A)(ii)(III) 
of the Act requires all SNPs to use ICTs as part of offering a 
specialized MA plan for special needs individuals. As stated in the 
proposed rule, we believe that the combination of MIPPA's statutory 
elements and our regulatory prescription for the SNP model of care 
establishes a standardized architecture for effective care management 
while giving plans the flexibility to design the unique services and 
benefits that enable them to meet the needs and preferences of their 
target population. We believe our proposal, which amends paragraph 
(f)(1)(iii) and applies the additional requirements pertaining to 
demonstrated expertise and training of interdisciplinary team providers 
to all SNPs, is consistent with the MIPPA requirements and the 
rulemakings that first adopted requirements for the use of 
interdisciplinary teams (73 FR 54228, 74 FR 1498).
    All SNPs must have an ICT to coordinate the delivery of services 
and benefits, but the current regulation provides flexibility as 
necessary for each SNP: One SNP may choose to contract with an ICT to 
deliver care in community health clinics; and another SNP may hire its 
team to deliver care in the home setting. Under the current rule, and 
our proposal, all SNPs must coordinate the delivery of services and 
benefits through integrated systems of communication among plan 
personnel, providers, and beneficiaries. However, as we explained in 
the proposed rule, one SNP may coordinate care through a

[[Page 5874]]

telephonic connection among all stakeholders and another SNP may 
coordinate care through an electronic system using Web-based records 
and electronic mail accessed exclusively by the plan, network 
providers, and beneficiaries. All SNPs must coordinate the delivery of 
specialized benefits and services that meet the needs of their most 
vulnerable beneficiaries. However, D-SNPs may need to coordinate 
Medicaid services while an institutional SNP may need to facilitate 
hospice care for its beneficiaries near the end of life. We provided 
these examples in the proposed rule to demonstrate the variety of ways 
SNPs currently implement their systems of care and how we believe all 
SNP enrollees should have access to a team of providers with expertise 
and training that are appropriate for each individual enrollee.
    We received the following comments and our responses follow:
    Comment: A commenter recommended that CMS clarify that 
``providers,'' as used in this section, follows the definition of 
``provider'' in 42 CFR 422.2, and also recommended that CMS provide 
additional details about what constitutes ``demonstrated expertise and 
training.'' Specifically, the commenter requested that CMS clarify 
whether there are minimal expertise or training requirements that the 
provider must meet or whether each special needs plan would have 
discretion to make this determination.
    Response: As proposed and finalized, Sec.  422.101(f)(1)(iii) 
requires SNPs to use an interdisciplinary team that includes a team of 
providers with demonstrated expertise and training, and, as applicable, 
training in a defined role appropriate to their licensure in treating 
individuals similar to the targeted population of the plan. Our current 
guidance for the MOC approval process provides that a SNP's MOC 
describe the composition of the ICT, including how the SNP determines 
ICT membership and the roles and responsibilities of each member. 
Additional information can be found in Chapter 5 of the MMCM, section 
20.2.2, specifically guidance on MOC 2, Element D.\3\ A compliant and 
well-developed MOC includes a description that specifies how the 
expertise and capabilities of the ICT members align with the identified 
clinical and social needs of the SNP beneficiaries. As proposed and as 
finalized, the requirement in Sec.  422.101(f)(1)(iii) to have training 
in a defined role appropriate to their licensure in treating 
individuals similar to the targeted population of the plan means that 
individual providers and providers in one type of SNP (compared to 
other SNPs) may have training and expertise that differ based on the 
SNP-type or each individual enrollee's needs. For example, a C-SNP that 
targets diabetes mellitus may seek to establish an ICT for each 
enrollee that has a specialist with training and expertise in 
endocrinology while a D-SNP may want to establish ICTs for individual 
enrollees that focus on a particular set of chronic conditions or focus 
on specific service delivery needs for an enrollee, such as long-term 
services and supports. This is consistent with our current guidance and 
we believe that any additional burden here for SNPs will be minimal.
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    \3\ Please see Chapter 5 of the MMCM, which can be found at: 
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c05.pdf.
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    As defined in Sec.  422.2, a provider is: (1) An individual who is 
engaged in the delivery of health care services in a State and is 
licensed or certified by the State to engage in that activity in the 
State; or (2) an entity that is engaged in the delivery of health care 
services in a State and is licensed or certified to deliver those 
services if such licensing or certification is required by State law or 
regulation. Therefore, the providers in the ICT must be licensed or 
certified to furnish the health care services they deliver. Under this 
new regulation, providers in an ICT must also be trained in a defined 
role appropriate to their licensure in treating individuals similar to 
the targeted population of the plan, when applicable. We expect that 
plans are already meeting this requirement that members of the ICT have 
training and expertise specific to the SNP's target population based on 
MOC scoring guidelines provided to all SNPs by NCQA; for example, MOC 
submissions specify how the expertise and capabilities of the ICT 
members align with the identified clinical and social needs of the SNP 
enrollees and describe how specific care plans for enrollees are used 
to determine the composition of the ICT.\4\ In conclusion, under the 
amendment to paragraph (f)(1)(iii) that we are finalizing here, all 
members of the ICT must be licensed or certified to deliver the 
applicable health care furnished to enrollees of the SNP in compliance 
with Sec.  422.2 and all of the members of the ICT must have 
demonstrated expertise and training, and, as applicable, training in a 
defined role appropriate to their licensure in treating individuals 
similar to the targeted population of the plan. The revisions at Sec.  
422.101(f)(1)(iii) are being finalized as applicable beginning with 
2023 so MOCs for that period will be reviewed and approved based on 
demonstrated compliance with this final rule. The specifics of the 
expertise and necessary training will vary with the SNP and the covered 
population, and we are not adopting specific, uniform minimum 
requirements for all providers in all SNPs ICTs.
---------------------------------------------------------------------------

    \4\ The scoring guidelines can be found at: https://snpmoc.ncqa.org/wp-content/uploads/MOC-Scoring-Guidelines_CY-2021-1.pdf. See section MOC 2, Element D.
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    The revisions at Sec.  422.101(f)(1)(iii) are being finalized as 
applicable beginning 2023 so MOCs for that period and subsequent years 
will be reviewed and approved based on demonstrated compliance with the 
amendments to the regulation that we are finalizing here.
    Comment: CMS received several comments regarding the extension of 
the new statutory interdisciplinary team requirements to D-SNPs and I-
SNPs. Some commenters believed that plan implementation of additional 
ICT requirements would be unnecessarily burdensome because some D-SNPs 
have difficulty contracting with and requiring specialists to take part 
in the ICT process. Other commenters noted that the new rule would be 
redundant, given existing regulations and policies are already in 
place, including regulations applying to the institutional settings in 
which I-SNP beneficiaries reside. Some of these commenters noted that 
adding ICT requirements will increase the burden on long-term care 
facilities and may require some patients to be managed to different 
standards than others. Others noted that this provision could interfere 
with plans' current practices that promote the identification of 
providers from disciplines that are most relevant to the beneficiary's 
needs. Another commenter noted that for D-SNPs, there are credentialing 
and network adequacy standards already in place to ensure appropriate 
access for D-SNP enrollees to high-quality providers. Lastly, CMS 
received a comment stating that the ICT should include the enrollee's 
managed care long term services and supports (MLTSS) care manager in 
cases where the enrollee receives those services.
    Response: We believe the revisions we proposed and are finalizing 
at Sec.  422.101(f)(1)(iii) are consistent with the current review and 
approval process for each MOC submission under MOC 2, Element D. While 
there might be overlap and redundancies for Sec.  422.101(f)(1)(iii) 
and existing standards either for SNPs and SNP MOCs or for 
institutional providers that furnish services to SNP enrollees, that 
only reinforces that finalizing

[[Page 5875]]

Sec.  422.101(f)(1)(iii) as proposed is appropriate. As SNPs are 
designed to furnish services and coordinate care based on the needs of 
its target population, ensuring that the providers and ICT that deliver 
that care have expertise that is specific to the target population is 
consistent with the overall goals of SNPs.
    As noted in Chapter 5 of the MMCM, section 20.2.2, the role and 
conditions of MOC approval for the ICT are described in MOC 2 Element 
D. All SNPs are required in Sec.  422.101(f) to implement an evidence 
based model of care (MOC) that has been evaluated and approved by the 
NCQA. As part of the approval process, SNPs are also required to meet 
ICT requirements under Element D. Each SNP must describe how its 
organization determines the composition of ICT membership. Under factor 
1 of MOC 2, Element D, all SNPs must explain how the SNP facilitates 
the participation of beneficiaries and their caregiver(s) as members of 
the ICT. In addition, each SNP must describe how the beneficiary's 
Health Risk Assessment Tool (HRAT) and ICP are used to determine the 
composition of the ICT for each enrollee, including where additional 
team members are needed to meet the unique needs of a beneficiary. 
Lastly, SNPs must explain how the ICT uses health care outcomes to 
evaluate processes established to manage changes or adjustments to the 
beneficiary's health care needs on a continuous basis. The new 
regulation text concerning the ICT and the need to include providers 
with certain expertise and training are similar to these existing 
requirements and standards for the MOC, so any additional burden should 
be minimal. To the extent that a SNP is already using the needs and 
assessments of each enrollee to identify ICT members that are qualified 
and trained to meet that individual enrollee's unique needs (and does 
this for each enrollee), this new standard may require some additional 
documentation from the SNP about the demonstrated expertise, licensure 
and training of the ICT. CMS believes plans will be able to implement 
the new ICT provisions without significant changes to current processes 
based on two critical factors: (1) All SNPs are already required under 
Sec.  422.101(f)(1)(iii) to establish an ICT for each enrollee, and 
thus, plans have in place steps for reviewing ICT composition and 
qualification; and (2) more importantly, SNPs are currently employing a 
process similar to the new provision for establishing an ICT as part of 
the MOC application approval process. Again, the new ICT provision is a 
natural extension of and generally codifies elements of the current MOC 
approval process covering the ICT, which should facilitate a seamless 
transition for SNPs as they implement the necessary processes to comply 
with new ICT requirements. These changes to the MOC, and the others 
contained in the amendments to Sec.  422.101(f) will apply to MOCs and 
SNP performance for 2023. This means that SNPs submitting MOCs for 2023 
will need to develop and implement their MOCs for 2023 based on the 
amendments in this final rule. However, CMS will not require SNPs that 
currently employ MOCs that have been approved by NCQA and are not due 
for review and approval in 2023 to resubmit their MOCs to demonstrate 
compliance with Sec.  422.101(f)(1)(iii) as amended in this rule; so 
long as the SNP and its MOC meets all other requirements, the SNP may 
continue to operate under its current MOC based on how similar the ICT 
provision of this final rule is to current law and policy. We strongly 
encourage D-SNPs and I-SNPs that do not have MOCs up for review and 
approval for 2023 to review their MOCs and implement changes as 
necessary to ensure the interdisciplinary team for each enrollee 
includes a team of providers with demonstrated expertise and training, 
and, as applicable, training in a defined role appropriate to their 
licensure in treating individuals similar to the targeted population of 
the plan.
    While the commenter states that some SNPs may face obstacles when 
seeking ICT participation from some providers (including certain types 
of specialists), CMS has not seen evidence suggesting such 
difficulties. Due to the similarity of Sec.  422.101(f)(1)(iii) as 
revised in this rule to CMS's current policy and the standards used in 
NCQA reviews, it is likely that any difficulty that would lead to an 
inability to comply with this provision would have been apparent in 
past reviews of MOCs.
    As we noted in the preamble of the proposed rule, SNPs are in the 
best position to identify an ICT with the appropriate expertise and 
training necessary to meet the clinical needs for each enrollee, based 
on the medical and behavioral health conditions of their member 
population and the SNP's developed expertise. We expect that an MA 
organization that offers a SNP for a particular population based on a 
chronic condition, on residence in an institution or needing a similar 
level of care as those who reside in an institution, or on eligibility 
for both Medicare and Medicaid, will have considered the needs of such 
populations in designing the plan and the network of providers. MA 
organizations are not required to offer SNPs and those that choose to 
do so must be capable of meeting the unique needs of the targeted 
population, including gaining the participation of specialists and 
other health care providers that have the most or best expertise for 
serving these vulnerable populations, consistent with the regulatory 
requirements. With respect to the inclusion of the enrollee's MLTSS 
care manager, we again defer to SNPs to determine the appropriate 
composition of the beneficiary's ICT in compliance with the MOC 
standards, which includes consultation with the beneficiary. This final 
rule is based on and reflects a policy that while all SNPs must develop 
and use an ICT to coordinate the delivery of services and benefits for 
each enrollee, the construction of the ICT must recognize and be built 
to address the needs and wishes of each individual enrollee.
    After consideration of the comments and for the reasons outlined in 
the response to comments and in the proposed rule, we are finalizing 
the amendment to Sec.  422.101(f)(1)(iii) regarding ICT expertise and 
training as proposed without modification.
2. Face-to-Face Annual Encounters
    We proposed to implement section 1859(f)(5)(B)(ii) of the Act 
requiring compliance with requirements (developed by CMS) to provide a 
face-to-face encounter with each enrollee. We proposed that the face-
to-face encounter be between each enrollee and a member of the 
enrollee's interdisciplinary team or the plan's case management and 
coordination staff on at least an annual basis, beginning within the 
first 12 months of enrollment, as feasible and with the individual's 
consent. We also proposed to codify that a face-for-face encounter must 
be either in-person or through a visual, real-time, interactive 
telehealth encounter. We proposed to adopt this in a new paragraph 
(f)(1)(iv) in Sec.  422.101 that would extend the requirement to all 
SNPs. Under our proposal, SNPs would be required to provide an annual 
face-to-face visit that is in-person or by remote technology and occurs 
starting within the first 12 months of enrollment within the plan. For 
instance, a plan enrolling a beneficiary on October 1 would need to 
facilitate a face-to-face encounter with that enrollee by September 
30th of the following year. We indicated in the proposed rule that SNPs 
should implement this requirement in a manner that honors

[[Page 5876]]

any enrollee's decision not to participate in any qualifying encounter.
    We received the following comments and our responses follow:
    Comment: CMS received a number of comments both supporting and 
opposing the requirement for SNPs to provide a face-to-face encounter 
with each enrollee. Some plans noted that this is already part of their 
program. Some commenters, however, were concerned that implementation 
could be a burden for enrollees, while others were concerned that the 
requirements would be particularly difficult for SNP types with larger 
enrollments, such as D-SNPs. Still others believed that the new 
regulation would be hard for plans to track encounters between 
enrollees and providers. Others suggested that CMS allow SNPs to use 
encounters with non-ICT plan contracted providers to meet this 
requirement.
    Response: We are finalizing the proposal to add Sec.  
422.101(f)(1)(iv) to require each SNP to provide an annual face-to-face 
encounter with each enrollee, with some modifications to address 
concerns raised by the commenters. As proposed and finalized, the 
required face-for-face encounter must be either in-person or through a 
visual, real-time, interactive telehealth encounter. The final rule 
requires, as proposed, that the MA organization provide for face-to-
face encounters between each enrollee and a member of the enrollee's 
interdisciplinary team or the plan's case management and coordination 
staff. And finally, we are also finalizing that the face-to-face 
encounter occur on at least an annual basis, beginning within the first 
12 month of enrollment, as feasible and with the individual's consent. 
However, we are finalizing additional flexibility as well for SNPs in 
connection with Sec.  422.101(f)(1)(iv) by including that the required 
face-to-face encounter may also be with a contracted health plan 
provider and clarification as to the type of encounter that is 
required.
    As we noted in the proposed rule, we intend for this requirement to 
be met in a number of different ways. In the proposed rule, we provided 
examples of encounters that would meet the requirement, including a 
visit to or by a member of an individual's interdisciplinary team or 
the plan's case management and coordination staff that perform clinical 
functions, such as direct beneficiary care. We agree with commenters 
that have requested that encounters with health care providers 
contracted with the enrollee's SNP qualify under the implementation of 
the final rule. This would include the enrollee's regular primary care 
physician, a specialist related to the enrollee's chronic condition, a 
behavioral health provider, health educator, social worker, and MLTSS 
plan staff or related MLTSS health care providers provided that such 
providers are (i) a member of the enrollee's interdisciplinary team; 
(ii) part of the plan's case management and coordination staff; or 
(iii) contracted plan healthcare providers. Requiring at a minimum that 
a healthcare provider with a contractual relationship with the SNP be 
part of the annual face-to-face encounter in this way will ensure that 
the annual encounter is a meaningful one from the perspective of the 
enrollee's overall health and wellbeing. We also believe that a 
healthcare provider with a contractual relationship will facilitate the 
sharing of critical health information among the plan, the ICT, and 
other key healthcare providers, and thus ensure coordination of care 
for the enrollee under Sec.  422.112(b), and result in increased care 
coordination and facilitate any necessary follow-up care or referrals. 
Therefore, we are finalizing the new regulation at Sec.  
422.101(f)(1)(iv) with additional text to list contracted plan 
healthcare providers as well as members of the ICT and the plan's care 
coordination team. We defer to each SNP to identify which providers are 
part of the plan's case management and coordination staff or contracted 
plan healthcare providers so long as the SNP's policies are reasonable 
and not a means to evade compliance with the rule.
    We intend for this mandatory face-to-face encounter to serve a 
clinical or care coordination/care management purpose. Ensuring that a 
special needs individual has been contacted by the SNP at least once a 
year and that there has been a face-to-face encounter that pertains to 
the individual's health care is a way of ensuring that the goals of a 
SNP are met. Examples of the necessary services or engagement happening 
during the required encounter include: (i) Engaging with the enrollee 
to manage, treat and oversee (or coordinate) their health care (such as 
furnishing preventive care included in the individualized care plan 
(ICP)); (ii) annual wellness visits and/or physicals; (iii) completion 
of a health risk assessment (HRA), such as the one annually required 
for all SNPs under the current regulation at Sec.  422.101(f)(1); (iv) 
care plan review or other similar care coordination activities; or (v) 
health related education whereby the enrollee receives information or 
instructions critical to the maintenance of their health or 
implementing processes for maintaining the enrollee's health, such as 
the administration of a medication. These examples are not the only 
activities that satisfy the new regulatory requirement. Encounters may 
also address any concerns related to the enrollee's physical, mental/
behavioral health, or overall health status, including functional 
status. Plans may also use qualifying encounters--those that meet 
qualifications as stipulated in this final rule--that are the result of 
plan efforts to satisfy state-mandated Medicaid or MTLSS requirements. 
We believe many SNPs would already meet this standard in current 
practice and have sufficient encounters on at least an annual basis 
with each enrollee that this new regulation will not be burdensome. 
Encounters that are sufficient to meet the regulatory requirement we 
are finalizing could occur either through regular visits by the 
enrollee to a member of the beneficiary's interdisciplinary team or 
through the care coordination process established by the plan's staff 
or contracted plan healthcare providers. We anticipate that, consistent 
with good clinical practice, concerns are addressed and any appropriate 
referrals, follow-up, and care coordination activities provided or 
scheduled as necessary as a result of these face-to-face encounters.
    We are cognizant that enrollees should have the final authority 
over their health care and our proposed regulation text reflected this 
by requiring that these face-to-face encounters be as feasible and with 
the enrollee's consent. A SNP must comply with this requirement in a 
manner that honors any enrollee's decision not to participate in a 
face-to-face (either in-person or virtual) encounter. If an enrollee 
does not consent to the encounter required by Sec.  422.101(f)(1)(iv), 
the plan should document that in order to demonstrate compliance with 
the regulation. The rule addresses feasibility barriers to a SNP 
providing for the required annual encounter, such as where a SNP 
enrollee may be non-responsive to plan outreach or the state of the 
member's health (such as if the member is dealing with a 
hospitalization) prohibits a face-to-face encounter with the type of 
provider or staff that are described in the final regulation. In these 
circumstances, CMS recognizes that a SNP may not be able to comply with 
the rule's mandate of an annual face-to-face encounter and we intend 
the ``as feasible'' standard in the regulation to address such 
situations. Since the enrollee has refused or because the SNP could not 
reach the enrollee after reasonable attempts, the plan has

[[Page 5877]]

complied with the requirement despite the lack of a qualified 
encounter. However, plans should document the basis or reason that a 
face-to-face encounter is not feasible in order to demonstrate that 
where there are no face-to-face encounters in the year, that failure is 
not a violation of the regulation. Note that a feasibility barrier does 
not include a SNP having to provide a reasonable accommodation, such as 
interpreter services, in order for the enrollee to participate in the 
encounter.
    Lastly, restricting the manner of face-to-face encounters to those 
that are in-person or as a visual, real-time, interactive telehealth 
encounter is consistent with section 1859(f)(5)(B)(ii) of the Act as 
amended by section 50311 of the Bipartisan Budget Act of 2018. The 
statute requires CMS to set requirements for face-to-face encounters 
that must happen on an annual basis for C-SNPs; and in extending that 
requirement to I-SNPs and D-SNPs, we do not believe there is reason to 
develop different standards. For this specific requirement, we believe 
that a real-time, interactive, visual telehealth encounter permits 
face-to-face interaction even though electronic or telecommunications 
technology is used to facilitate the encounter. The real-time, 
interactive, visual encounter serves the same function and permits 
sufficiently similar engagement between the enrollee and the required 
member of the ICT, the SNP's case management or care coordination 
staff, or other contracted provider of the SNP as an in-person 
encounter for purposes of this specific requirement; our regulation 
here does not address when or how telehealth encounters may be 
clinically appropriate or sufficient but only specifically addresses 
the need for SNPs to ensure there is one annual encounter of a certain 
type for each enrollee. While not all covered services are necessarily 
appropriate to furnish through electronic means, MA plans (including 
SNPs) have broader flexibility in this regard under Sec.  422.135. 
Therefore, face-to-face encounters required for all SNPs under this new 
rule may include visual, real-time, interactive telehealth encounters. 
As we noted in the Medicare and Medicaid Programs; Policy and Technical 
Changes to the Medicare Advantage, Medicare Prescription Drug Benefit, 
Programs of All Inclusive Care for the Elderly (PACE), Medicaid Fee-
For-Service, and Medicaid Managed Care Programs for Years 2020 and 2021 
Final Rule (hereinafter referred to as the April 2019 final rule), we 
believe MA additional telehealth benefits will increase access to 
patient-centered care by giving enrollees more control to determine 
when, where, and how they access benefits.
    Comment: A few commenters suggested that in the implementation of 
the face-to-face encounter requirement that SNPs should be allowed to 
develop their own technical specifications for capturing compliance 
with this requirement. For example, An MAO recommended that SNPs be 
allowed to capture verbal confirmation from members or providers of 
completed face-to-face encounters from external parties and/or 
telehealth encounters as evidence of compliance.
    Response: CMS believes plans are in the best position to develop 
the processes and technical specifications for documenting how they 
meet this requirement and that a face-to-face encounter for purpose of 
satisfying this regulation has taken place. While Sec.  
422.101(f)(1)(iv) imposes some parameters for these encounters, there 
is a broad range of flexibility for how SNPs may meet the requirement. 
However, we clarify that our guidance here is specific to Sec.  
422.101(f)(1)(iv) and does not address any other Medicare program 
requirements. Because an encounter must pertain to the delivery of 
health care to the enrollee, we encourage SNPs to take the information 
from these encounters into account and to document them consistent with 
how other health care visits are documented. Lastly, CMS will monitor 
compliance with the requirement and consider additional rulemaking if 
necessary.
    Comment: Several commenters suggested the addition of the face-to-
face requirement would create additional reporting burden for plans 
associated with capturing compliance to the rule.
    Response: We are also cognizant that new regulations sometimes 
include additional reporting or record keeping requirements. The final 
rule does not create any additional, explicit reporting requirements. 
However, SNPs are required under Sec.  422.503(b)(4)(vi) to adopt and 
implement an effective compliance program, which must include measures 
that prevent, detect, and correct non-compliance with CMS' program 
requirements as well as measures that prevent, detect, and correct 
fraud, waste, and abuse. CMS will be monitoring compliance by SNPs with 
this requirement. In addition, SNPs should have information about all 
health care encounters and deliveries of covered services for many 
purposes, including: Payment to providers for furnishing services; 
complying with the existing data submission requirements in Sec.  
422.310; and meeting the requirements of Sec.  422.112(b)(4), which 
requires procedures for plans and their provider networks to have the 
information necessary for effective and continuous patient care and 
quality review.
    Comment: Several commenters stated that some enrollees lack access 
to technology that would provide visual, real-time, interactive 
telehealth encounter, which may create a barrier to beneficiary 
participation in such encounters. Others requested that CMS allow 
telephonic encounters to count towards the annual face-to-face 
requirement under the new regulation.
    Response: We are cognizant that enrollees should have the final 
authority over their health care and our proposed regulation text 
reflected this by requiring that these face-to-face encounters be as 
feasible and with the enrollee's consent. First, SNPs have the 
flexibility to meet the requirement for a face-to-face encounter, 
either in-person or virtually. We believe that many beneficiaries are 
already meeting the requirement through in-person face-to-face 
encounters with qualified healthcare providers, which we believe will 
create minimal additional burden for plans implementing this final 
rule. The final rule does not mandate that SNPs utilize a visual, real-
time, interactive telehealth encounter, though it is a permissible 
option when appropriate. Second, the SNP must comply with this 
requirement in a manner that honors any enrollee's decision not to 
participate in a face-to-face (either in-person or virtual) encounter. 
If an enrollee does not consent to the encounter required by Sec.  
422.101(f)(1)(iv), the plan should document that in order to 
demonstrate compliance with the regulation. The rule addresses 
feasibility barriers to a SNP providing for the required annual 
encounter, such as where a SNP enrollee may be non-responsive to plan 
outreach or the state of the member's health (such as if the member is 
dealing with a hospitalization in an out-of-network facility) prohibits 
a face-to-face encounter. In these circumstances, CMS recognizes that a 
SNP may not be able to comply with the rule's mandate of an annual 
face-to-face encounter and we intend the ``as feasible'' standard in 
the regulation to address such situations. By clarifying that a face-
to-face encounter for delivery of health care services by a contracted 
provider will satisfy this requirement, it seems likely that most SNPs 
will be able to meet this requirement for most enrollees, as most 
enrollees in SNPs receive health care

[[Page 5878]]

services at some point each year. If the enrollee has refused or 
because the SNP could not reach the enrollee after reasonable attempts, 
the plan would be considered to have complied with the requirement 
despite the lack of a qualified encounter.
    This final rule allows many types of face-to-face encounters, 
including visual, real-time, interactive telehealth encounters, to 
suffice for meeting the requirement. We do not believe that telephonic 
encounters should count towards the fulfilling the requirements of 
Sec.  422.101(f)(1)(iv) for several reasons. First, the statute at 
section 1859(f)(5)(B)(ii) of the Act is specific in requiring that the 
encounters provided annually must be face-to-face with individuals 
enrolled in the plan. An audio-only encounter does not meet the 
statutory requirement that the encounter be face-to-face. Even though 
the statutory requirement is for C-SNPs, we believe that requiring all 
SNPs to meet this standard is appropriate in light of the health care 
needs and characteristics of the other populations of special needs 
individuals. Second, an audio-only encounter does not permit the 
provider to see the patient to use visual clues (for example, bruising, 
physical symptoms, or lack of focus) that could indicate something is 
wrong with the patient. This is a requirement for only one visit of 
this type a year and does not prohibit the use of audio-only encounters 
when those are appropriate for addressing other health care needs or 
visits. Further, for enrollees who do not use telehealth or lack the 
technological resources for such encounters, in-person delivery of 
health care services from one of the types of providers described in 
the regulation satisfies this requirement; there is no requirement for 
telehealth-based encounters to be used instead of in-person encounters. 
However, we will continue to monitor the ability of beneficiaries to 
take part in virtual encounters, the applicability of non-telephonic 
face-to-face encounters, and to assess the adequacy of substituting 
telephonic encounters in addition to the set of qualifying face-to-face 
encounters for I-SNPs and D-SNPs through future rulemaking.
    After consideration of the comments and for the reasons outlined in 
the response to comments and in the proposed rule, we are finalizing 
Sec.  422.101(f)(1)(iv) regarding face-to-face encounters substantially 
as proposed, but with modifications to clarify that the required face-
to-face encounters pertain to the delivery of certain kinds of services 
(health care or care coordination services or care management) and must 
be with a contracted health care provider or certain SNP staff (a 
member of the enrollee's interdisciplinary team or the plan's case 
management and coordination staff). In addition, our final regulation 
text at paragraph (f)(1)(iv) is somewhat reorganized from the proposed 
rule to improve the readability of the provision.
3. Health Risk Assessments and the SNP Enrollee's Individualized Care 
Plan
    We proposed to codify the requirement in section 1859(f)(5)(B)(iii) 
of the Act that, as part of the C-SNP model of care, the results of the 
initial assessment and annual reassessment required for each enrollee 
be addressed in the individual's individualized care plan. We also 
proposed to extend this requirement to the model of care for all SNPs 
in revisions to Sec.  422.101(f)(1)(i). Currently, MA organizations 
offering SNPs must conduct a comprehensive initial health risk 
assessment of the individual's physical, psychosocial, and functional 
needs as well as an annual HRA, using a comprehensive risk assessment 
tool that CMS may review during oversight activities. The proposed 
revision to paragraph (f)(1)(i) would also require the MA organization 
to ensure that results from the initial assessment and annual 
reassessment conducted for each individual enrolled in the plan are 
addressed in the individual's individualized care plan required under 
Sec.  422.101(f)(1)(ii).
    We received the following comments and our responses follow:
    Comment: Several commenters sought clarification concerning what 
type of information must be included in the ICP from the HRA. In 
addition, a few commenters wanted to know what information plans could 
omit from the ICP while adhering to the regulation. Another commenter 
asked if D-SNPs would be permitted to align the HRA with other 
beneficiary assessments that some D-SNPs are required to submit for a 
state's requirement that enrollees be assessed as to Medicaid managed 
long-term services and supports (MLTSS) needs.
    Response: Existing CMS guidance addresses the first part of these 
comments--pertaining to the information from the HRA that must be 
incorporated into the ICP--and that guidance is consistent with the 
regulatory provision being finalized at Sec.  422.101(f)(1)(i). Chapter 
5 of the Medicare Managed Care Manual, section 20.2.2, addresses how 
each SNP's MOC includes a clear and detailed description of the 
policies and procedures for completing the health risk assessment tool 
(HRAT).\5\ Because this existing guidance adequately describes how 
information from the annual HRA is incorporated into the enrollee's 
ICP, the guidance remains applicable. Part of NCQA's review of SNP MOCs 
is an evaluation of MOC 2, Element B, which includes the following 
subfactors:
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    \5\ Please see Chapter 5 of the MMCM, which can be found at: 
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c05.pdf.
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     How the organization uses the HRAT to develop and update 
the Individualized Care Plan (ICP) for each beneficiary (Element 2C).
     How the organization disseminates the HRAT information to 
the Interdisciplinary Care Team (ICT) and how the ICT uses that 
information (Element 2D).
     How the organization conducts the initial HRAT and annual 
reassessment for each beneficiary.
     The detailed plan and rationale for reviewing, analyzing 
and stratifying (if applicable), the HRA results.
    Under Element B, the content of and methods used to conduct the 
HRAT have a direct effect on the development of the ICP and ongoing 
coordination of ICT activities. The HRAT must assess the medical, 
functional, cognitive, psychosocial and mental health needs of each SNP 
beneficiary, as noted in Chapter 5 of the MMCM, section 20.2.2.
    To meet the requirements of the first 2 factors of MOC 2, Element 
B, the SNP's MOC must include a description of how the HRAT is used to 
develop and update, in a timely manner, the ICP for each beneficiary 
and how the HRAT information is disseminated to and used by the ICT. 
Under factor 3, the description must include the methodology used to 
coordinate the initial and annual HRAT for each beneficiary (for 
example, mailed questionnaire, in-person assessment, phone interview) 
and the timing of the assessments. There must be a provision in the MOC 
for reassessing beneficiaries if and when warranted by a health status 
change or care transition (for example, hospitalization or a change in 
medication). The SNP must describe in the MOC the SNP's process for 
attempting to contact beneficiaries and have them complete the HRAT, 
including provisions for beneficiaries that cannot or do not want to be 
contacted or complete the HRAT. This approach in our current guidance 
provides plans the flexibility to develop an ICP that is appropriate 
for each beneficiary based on and using HRA information; the 
requirement added to

[[Page 5879]]

Sec.  422.101(f)(1)(i) that each SNP ensure that results from the 
initial assessment and annual reassessment conducted for each enrollee 
are addressed in the individual's individualized care plan would be met 
by a SNP that does these things in its development of the MOC and the 
ICP. CMS intends to implement and enforce the revisions to Sec.  
422.101(f)(1)(i) consistent with existing CMS guidance regarding the 
information from the HRA and HRAT that must be incorporated into the 
ICP.
    We understand that some D-SNPs may be required to complete and use 
other assessments related to the Medicaid program. Integrated D-SNPs 
may choose to combine Medicaid and Medicare assessments as long as the 
assessment includes a review of the medical, functional, cognitive, 
psychosocial and mental health needs of each SNP beneficiary and is 
described in the MOC. Other assessments may (or may not) require the 
same elements or scope as the HRA required of MA SNPs so alignment and 
overlap of the assessments and how they are used depends on the 
specifics of each situation. As we implement Sec.  422.101(f)(1)(i), we 
will continue to monitor the alignment of multiple assessments on SNP 
enrollees to determine whether further rulemaking is necessary. 
However, plans have created an HRA process as part of their approved 
MOC in the past, so we do not anticipate that SNPs will have difficulty 
complying with the changes we are finalizing to Sec.  422.101(f)(1)(i). 
To the extent that there is overlap and the HRA required by Sec.  
422.101(f)(1)(ii) can be aligned with other assessments conducted by 
the SNP, the MOC should include a description of that alignment, 
consistent with the standards in MOC 2, Element B of Chapter 5, Sec.  
20.2.2.
    We believe the current factors outlined in MOC 2, Element B allows 
SNPs the flexibility to align a MOC-approved HRAT with other assessment 
tools (as noted above), and is consistent with the intent of the 
changes being finalized here in Sec.  422.101(f)(1)(i). Current 
guidance will be the basis for how CMS will implement and enforce Sec.  
422.101(f)(1)(i) to ensure that SNPs incorporate and address the 
results from the initial assessment and annual reassessment conducted 
for each individual enrolled in the individual's individualized care 
plan.
    After consideration of the comments and for the reasons outlined in 
the response to comments and in the proposed rule, we are finalizing 
the amendment to Sec.  422.101(f)(1)(i) as proposed without 
modification.
4. SNP Fulfillment of the Previous Year's MOC Goals
    We also proposed to codify the requirement in section 
1859(f)(5)(B)(iv) of the Act that the evaluation and approval of the 
model of care take into account whether the plan fulfilled the previous 
MOC's goals and to extend this evaluation component to all SNP models 
of care, rather than limiting it to C-SNPs. We proposed new regulation 
text at Sec.  422.101(f)(3)(ii) to provide that, as part of the 
evaluation and approval of the SNP model of care, NCQA must evaluate 
whether goals were fulfilled from the previous model of care and plans 
must provide relevant information pertaining to the MOC's goals as well 
as appropriate data pertaining to the fulfillment of the previous MOC's 
goals. Under our proposal, if the SNP MOC did not fulfill the previous 
MOC's goals, the plan must indicate in its MOC submission how it will 
achieve or revise those goals for the plan's next MOC. We also proposed 
to move an existing regulation at Sec.  422.101(f)(2)(vi) that requires 
all SNPs to submit their MOC to CMS for NCQA evaluation and approval in 
accordance with CMS guidance to a new paragraph at Sec.  422.101(f)(3); 
our proposed paragraph (f)(3)(i) contains the same language as current 
Sec.  422.101(f)(2)(vi).
    We also proposed at paragraph (f)(3)(ii)(A) through (C) specific 
provisions regarding how NCQA would evaluate the MOC in terms of 
achievement of goals from the prior MOC. We explained how we intended 
that NCQA would determine whether each SNP, as part of NCQA's process 
for evaluation and approval of MOCs, provided adequate information to 
perform the evaluation required by Sec.  422.101(f)(3)(ii) as well as 
whether the SNP met goals from the previous MOC submission. After 
stating that it is implicit in the evaluation of the MOC and the 
requirement for the SNP to submit relevant information that the 
information submitted by the SNP must be adequate for NCQA to use to 
evaluate the MOC, we solicited comment whether more explicit 
requirements on this point should be part of the regulation text.
    We received the following comments on the proposal regarding 
evaluation of outlining and fulfillment of the MOC's goals and our 
responses follow:
    Comment: CMS received several suggestions related to providing 
information for evaluation whether the SNP achieved the goals from the 
prior MOC. One commenter proposed CMS look to the Healthcare 
Effectiveness Data and Information Set (HEDIS) reporting and measures 
for direction. Another commenter suggested that CMS evaluate plan 
performance monitoring and evaluation metrics included in the MOC, and 
not goals included in the Individual Care Plan.
    Response: We appreciate these suggestions as to the type and scope 
of information that should be used to evaluate whether a SNP has 
fulfilled the goals of its prior MOC. We clarify that it is the goals 
of the MOC (and whether those goals have been met) and not the goals of 
the ICP that are to be evaluated by NCQA under Sec.  422.101(f)(3)(ii) 
as proposed and finalized.
    We explained in the proposed rule that proposed Sec.  
422.101(f)(3)(ii) would align with our current guidance on the MOC 
submission and review process regarding SNP fulfillment of goals and 
summarized the current review process. (85 FR 9016) This includes the 
type of information submitted by SNPs and used by NCQA in evaluating 
whether the goals of a prior MOC have been fulfilled. Currently, all 
SNPs are required to identify and clearly define measurable goals and 
health outcomes as part of their model of care under MOC 4, Element B: 
Measurable Goals and Health Outcomes for the MOC, as addressed in 
Chapter 5 of the MMCM. It is critical for all SNPs to use the results 
of the quality performance indicators and measures to support ongoing 
improvement of the MOC, and all SNPs should continuously assess and 
evaluate plan quality outcomes. This is reflected in current guidance 
in Chapter 5, Sec.  20.2.2 of the Medicare Managed Care Manual. MOC 4, 
Element B currently contains the following subfactors:
     Identify and define the measurable goals and health 
outcomes used to improve the health care needs of SNP beneficiaries.
     Identify specific beneficiary health outcome measures used 
to measure overall SNP population health outcomes at the plan level.
     Describe how the SNP establishes methods to assess and 
track the MOC's impact on SNP beneficiaries' health outcomes.
     Describe the processes and procedures the SNP will use to 
determine if health outcome goals are met.
     Explain the steps the SNP will take if goals are not met 
in the expected timeframe.
    The measures identified in the MOC as part of addressing these 
subfactors are the measures that should be used in evaluating whether 
the goals of the prior MOC have been fulfilled. Current CMS guidance 
permits the SNP to identify

[[Page 5880]]

and describe the measures and data used by the SNP and does not require 
specific quality measures, such as HEDIS, be used. SNPs may use data 
and quality performance that CMS measures for the Star Ratings program 
or through the HEDIS surveys (or other surveys and required quality 
performance data) but are not limited to those measures and data 
sources. Subfactors 3 and 4 of Element B provide for descriptions of 
how the SNP assesses and tracks the impact of the MOC and determines if 
health outcome goals are met. As proposed and finalized, paragraph 
(f)(3)(ii)(A) does not list specific types of data or information but 
requires submission of relevant information pertaining to the MOC's 
goals and whether those goals were fulfilled. For example, a SNP may 
submit plan-level health or clinical goals such as controlling diabetes 
or improving mental health screening access, and provide data showing 
progress towards these goals. This means that the type and scope of 
data required are tied to what the MOC's goals are and how the previous 
MOC addressed MOC 4, Element B. At a minimum, the data and measures 
described in the previous MOC should be submitted under Sec.  
422.101(f)(3)(ii)(A) for determining whether the MOC's goals have been 
fulfilled but other data may be relevant and pertinent. We expect SNPs 
to make reasonable determinations about what other data could be 
submitted as relevant and pertinent for the NCQA evaluation that is 
required under Sec.  422.101(f)(3)(ii).
    For SNPs submitting their initial MOC, NCQA will evaluate the 
information under MOC 4 Element B as whether the SNP has set clearly 
definable and measurable goals and health outcomes in the MOC for the 
upcoming MOC period of performance. For the following submission year, 
the SNP MOC will be evaluated on whether the measurable goals and 
health outcomes set in the initial MOC were achieved. We proposed 
specific regulation text at Sec.  422.101(f)(3)(ii)(B) that plans 
submitting an initial model of care must provide relevant information 
pertaining to the MOC's goals for review and approval and are 
finalizing that provision. This new regulation is consistent with our 
existing regulation and we intend that similar standards will be used 
going forward as those that are used now regarding the amount of 
information required from SNPs.
    Comment: CMS received several comments expressing concern regarding 
the incorporation of MOC performance information and data from the 
previous MOC into the next submission. Commenters noted that plans 
would need to have complete information on the achievement of goals 
from the previous year before submission of the next year's MOC in 
order to meet the new requirement 42 CFR 422.101(f)(3)(ii), and that 
this short timeframe may prevent plans from being able to provide a 
complete representation of their performance from the previous year. 
Others sought further clarification regarding how plans should 
operationalize the regulation or specific metrics to be evaluated by 
NCQA.
    Response: While we understand the commenters' concern about 
sufficient information being available each year about the previous 
year's MOC and performance, we believe that SNPs and NCQA can meet the 
requirements of the regulation. For SNPs submitting a MOC renewal after 
one year (because an annual review and approval is necessary), 
preliminary data from the immediately prior year can provide evidence 
to the level of fulfillment of the previous MOC's goals. For many I-
SNPs and D-SNPs, they will be able to share findings from multiple 
years of data as part of this requirement because their MOCs will not 
necessarily need to be reviewed and approved on an annual basis. C-
SNPs, which must submit annually under section 1859(f)(5)(B)(iv) of the 
Act, will be able to select preliminary findings each year from 
measures that provide evidence of progress on the MOC's goals. Further, 
for goals that are tied to building on prior performance or making 
incremental progress in the same or similar area each year, information 
about performance in more than one prior year may be relevant and 
pertinent to show how the SNP is fulfilling the MOC's goals. Under MOC 
4, Element B of the MOC, SNPs must currently provide a description of 
the processes and procedures the plan will use to determine if health 
outcome goals are met. By sharing the findings from these processes, 
SNPs can outline achievable steps toward long term goals so that small 
steps using limited data year to year can be evaluated. Therefore, we 
believe that SNPs can effectively demonstrate progress to meet the 
requirements of Sec.  422.101(f)(3)(ii).
    As proposed and finalized, Sec.  422.101(f)(3)(ii) requires, as 
part of the evaluation and approval of the SNP model of care, that NCQA 
evaluate whether goals were fulfilled from the previous model of care. 
To serve this purpose, the regulation also requires that:
     Plans must provide relevant information pertaining to the 
MOC's goals as well as appropriate data pertaining to the fulfillment 
the previous MOC's goals.
     Plans submitting an initial model of care must provide 
relevant information pertaining to the MOC's goals for review and 
approval.
     If the SNP model of care did not fulfill the previous 
MOC's goals, the plan must indicate in the MOC submission how it will 
achieve or revise the goals for the plan's next MOC.
    In each MOC submission and evaluation of the MOC, the SNP must be 
able to demonstrate that it is continuing to work towards achieving the 
MOC goals even if the SNP requires additional time or metrics to 
evaluate the progress. Each MOC should reflect modification of the 
SNP's strategies to meet the goals of the MOC as needed. Again, under 
MOC 4 Element B, SNPs are currently submitting health outcome measures 
used to measure overall SNP population health outcomes at the plan 
level. SNPs may submit final or preliminary findings from these 
measures in order to provide evidence of progress as part of each MOC 
submission.
    Comment: Several commenters questioned the applicability of the 
proposed regulation to D-SNPs and stated that dual eligible enrollees 
experience changes in eligibility based on their Medicaid status, which 
the commenters stated impacts the plan's ability to implement and 
operationalize the MOC.
    Response: First, we believe that the process for setting health 
outcome goals and choosing a set of measures to determine progress 
permits all SNPs, including D-SNPs, to select measures that make sense 
for the population that the plan serves in so far as those measures 
speak to benchmarks, specific time frames, and how achieving those 
goals will be determined. A SNP that believes it suffers from 
disproportionate rates of disenrollment can seek to align outcome 
measures in a way that recognizes these perceived challenges; however, 
any measures that the plan selects must be approved by NCQA as part of 
the MOC approval process. Second, we also believe that the extension of 
the provision in this rule requiring fulfillment of the previous MOC's 
goals is consistent with current MOC approval requirements as outlined 
in Chapter 5, section 20.2.2 (Model of Care Scoring Criteria), as 
applied currently to all MOC types. The goal of performance improvement 
and quality measurement is to improve the SNP's ability to deliver 
high-quality health care services and benefits to its SNP enrollees; 
our commitment to this is

[[Page 5881]]

reflected in how it is explicitly stated in section 20.2.2 under MOC 4: 
MOC Quality Measurement and Performance Improvement, Element B: 
Measurable Goals and Health Outcomes for the MOC. This goal may be 
achieved as a result of increased organizational effectiveness and 
efficiency through incorporation of quality measurement and performance 
improvement concepts that drive organizational change. The leadership, 
managers and governing body of a SNP must have a comprehensive quality 
improvement program in place to measure its current level of 
performance and determine if organizational systems and processes must 
be modified, based on performance results.
    In addition, section 20.2.2 of Chapter 5 of the Medicare Managed 
Care Manual provides additional information for plans to identify and 
clearly define measurable goals and health outcomes for the MOC in 
listing the five subfactors for Element B of MOC 4. Under factor 1, the 
SNP's description of measurable goals must include benchmarks, specific 
time frames, and how achieving goals will be determined. For factor 2, 
the SNP must include the specific data sources it will use for 
measurement for the stated health outcome measures. SNPs have 
flexibility in setting health outcome goals, particularly flexibility 
to align those goals with the population being served by the plan, but 
such measures must be approved by NCQA in its review of the MOC. The 
rule we are finalizing at Sec. Sec.  422.101(f)(3)(ii) maintains the 
current level of flexibility for different SNP types in setting goals 
and the measures and data used to determine if the goals are met. By 
allowing such flexibilities, the regulation permits SNPs to take into 
account unique challenges facing their plan (such as potential changes 
in enrollment due to changes in eligibility for enrollees) and to set 
goals that allow SNPs to measure progress against these challenges.
    For factor 2, the SNP must identify in the MOC the specific data 
sources it will use for measurement for the stated health outcome 
measures. We believe that the process for setting health outcome goals 
and choosing a set of measures to determine progress permits D-SNPs, 
and all SNPs, to select measures that makes sense for the population of 
beneficiaries that the plan serves in so far as those measures speak to 
benchmarks, specific time frames, and how achieving goals will be 
determined. The regulation we are finalizing at Sec.  422.101(f)(3)(ii) 
maintains the level of flexibility for different SNP types as it is 
currently constructed through NCQA's MOC approval process. By allowing 
such flexibilities, plans can take into account unique challenges 
facing their plan and to set goals that allow SNPs to measure progress 
against these challenges.
    After consideration of the comments and for the reasons outlined in 
the response to comments and in the proposed rule, we are finalizing 
the amendment to Sec.  422.101(f)(3)(ii) as proposed without 
modification.
5. Establishing a Minimum Benchmark for Each Element of the SNP Model 
of Care
    Finally, we proposed a new regulation at Sec.  422.101(f)(3)(iii) 
imposing the requirement that benchmarks for each MOC element set by 
CMS must be met for a MOC to be approved. Section 1859(f)(5)(B)(v) of 
the Act requires that the Secretary establish a minimum benchmark for 
each element of the C-SNP model of care and that the MOC can only be 
approved if each element meets a minimum benchmark. We proposed to 
implement this requirement and a minimum 50% benchmark for all SNP 
models of care because medically complex conditions are found in 
enrollees across all SNP types and implementation of the benchmark 
requirement only for C-SNPs would be operationally challenging for MA 
organizations that operate more than one SNP. In the proposed rule, we 
stated that each SNP model of care would be evaluated based on a 
minimum benchmark for each of the four elements and how that was 
consistent with our current policy. Currently, each subfactor of a MOC 
element is valued at 0-4 points with the score of each element based on 
the number of factors met for that specific element; the aggregate 
total of all possible points across all elements equals 60, which is 
then converted to percentage scores based on the number of total points 
received. We proposed that each element of the MOC must meet a minimum 
benchmark of 50 percent of total points as allotted, and a plan's MOC 
would only be approved if each element of the model of care meets the 
applicable minimum benchmark.
    We received the following comments and our responses follow:
    Comment: CMS received several comments that, while receptive to the 
establishment of the minimum benchmark as proposed, were concerned 
about the timing of the implementation of the rule. Commenters sought 
implementation to begin in Contract Year 2022.
    Response: We are finalizing the changes to Sec.  422.101(f) as 
being applicable for contract year 2023 and subsequent years. While 
this final rule will have an earlier effective date, making these 
provisions applicable for the period beginning January 1, 2023 provides 
time for MA organizations to plan and time for NCQA to implement these 
new standards for use in evaluating MOCs developed and submitted for 
2023. Plans that are required to submit MOCs for contract year 2022 are 
due to submit MOCs by February 17, 2021; those submissions will be 
evaluated based on the regulations in effect at that time (that is, 
without the amendments adopted here) and SNPs must implement and comply 
with their approved MOCs in connection with coverage in 2022. Moving 
the applicable implementation of the SNP MOC provisions to contract 
year 2023 will allow SNPs and CMS to construct the necessary processes 
for the full implementation and enforcement of this final rule. When 
MOCs for contract year 2023 are submitted for review and approval in 
early 2022, the regulations in this final rule will be used to evaluate 
those MOCs for approval.
    Comment: A number of commenters asked for additional clarity 
regarding how CMS will implement the scoring of each MOC sub-element.
    Response: First, we clarify that NCQA evaluates and scores the 
MOCs, as part of the NCQA approval requirement that has been in place 
since 2012 and that will be codified at Sec.  422.101(f)(3) under this 
final rule. Second, we intend that scoring using the 50 percent 
benchmarks will be consistent with how MOCs are evaluated and scored 
now with the addition that the MOC submitted by the SNP must score at 
least 50% on each element; the scope, content and number of elements 
and the points available for each element remain the same as outlined 
in Chapter 5 of the Medicare Managed Care Manual, section 20.2.2.
    Currently, the MOC narrative in Chapter 5 addresses four 
overarching categories: (1) Description of the SNP Population, (2) Care 
Coordination, (3) SNP Provider Network, and (4) MOC Quality Measurement 
& Performance Improvement. Each of the four categories is then 
comprised of a set of required elements, such as Element B: 
Subpopulation--Most Vulnerable Beneficiaries under the MOC 1 category. 
These elements and their various factors are reviewed and scored by 
NCQA and contribute to the overall score for that element. All total, 
there are 15 elements among the 4 MOC categories. A full list of 
categories, elements, and factors, as

[[Page 5882]]

well as additional guidance pertaining to MOC submission requirements 
and structure, can be found in Chapter 5 of the MMCM. As we explained 
in the proposed rule, there are a total of 60 points available, across 
all categories and elements. Each element is scored by NCQA on a range 
of 0 to 4. To meet the new standard at Sec.  422.101(f)(3)(iii), each 
MOC must earn at least 2 points for each element.
    As proposed and finalized, Sec.  422.101(f)(3)(iii) does not alter 
the current characteristics or the number of categories, elements, and 
factors and the mandatory benchmarks will be applied at the element 
level. For example, the category MOC 2: Care Coordination is made up of 
five elements:
     Element A: SNP Staff Structure;
     Element B: Health Risk Assessment Tool (HRAT);
     Element C: Individualized Care Plan (ICP);
     Element D: Interdisciplinary Care Team (ICT); and
     Element E: Care Transition Protocols.
    A SNP will need to meet a minimum benchmark score of 50 percent for 
each of Elements A-E. Failing to meet the minimum score in any one 
element would result in disapproval of the MOC by NCQA during the first 
round of evaluation. The current process and procedures for the 
evaluation is not changing under this final rule, so the SNP would be 
able to resubmit a revised MOC during the cure period after having an 
opportunity to address the failures identified by NQCA and to revise 
how the MOC addresses the applicable element(s).
    Starting with the MOC for contract year 2023, each SNP will need to 
meet a minimum benchmark score of 50 percent for each element, and a 
plan's model of care will only be approved if each element of the model 
of care meets the minimum benchmark. CMS and NCQA will provide an 
overview of any category and/or element deficiencies in our 
correspondence to plans at the completion of NCQA's MOC evaluation. In 
addition, each SNP MOC will need to meet an overall score in order to 
meet NCQA approval, as is the case now.
    Comment: CMS received one comment concerned that the introduction 
of this new scoring process at the element level would potentially 
derail an otherwise worthy MOC submission.
    Response: We believe the final rule is largely consistent with 
existing regulations and guidance regarding review of SNP MOC standards 
as plans already receive scores at the element level, though under our 
current policy approval is based only on the aggregate score. However, 
use of minimum benchmarks for each element serves important policy 
goals by ensuring that each MOC is minimally compliant and that each 
MOC addresses all of the elements. We also have concerns that the 
current system potentially allows a MOC to pass while containing a 
significant deficiency in a specific element. We believe continued 
guidance and training by CMS and NCQA will mitigate disruption that may 
stem from the changes associated with the new scoring process under 
Sec.  422.101(f)(3)(iii).
    As we noted in the proposed rule, we anticipate that there will be 
some impact to the number of MOC submissions that will not pass NCQA's 
initial MOC review. Looking at MOC score data for contract year 2020, 
our proposed element benchmark of 50 percent would have impacted 20 of 
the 273 MOCs submitted, or 7.3 percent. Meaning 20 of the 273 MOCs in 
2020 would have been required to resubmit during the cure period of the 
approval process. For comparison, for contract year 2020, under our 
current aggregate scoring system, seven plans were required to submit 
revised MOCs based on the current scoring system and an additional 
seven plans decided to withdraw their MOCs before the revision process, 
for a total of 14 MOCs. CMS intends to work with NCQA to ensure that 
the transition for SNPs to using the new scoring benchmarks for each 
element is as seamless as possible. Further, the cure period will 
provide an opportunity to make revisions to address deficiencies 
identified by NCQA for SNPs that must submit their MOCs for review and 
approval by NCQA for 2023.
    Comment: A commenter expressed concerns that the amended scoring 
process would be particularly problematic for D-SNPs that enroll 
beneficiaries with significant and complex medical and social needs.
    Response: We believe the MOC review and approval processes are 
structured to provide a uniform apparatus that already takes into 
account differences among SNP types and the populations that they 
serve. As a quality improvement tool, the MOC acts as an important 
roadmap for ensuring that the unique needs of SNP enrollees are 
addressed and is a fundamental component of SNP quality improvement. 
NCQA uses a review process that scores a MOC based on how well a plan 
has addressed process details and narrative descriptions. Each MOC 
renewal is an opportunity for a SNP to plan for, lay out, and implement 
improvements to its processes for each specific element and factor. 
Even when the MOC guidelines focus on quality improvement and enrollee 
health outcomes, the MOC review is centered on the SNP's processes and 
procedures used to determine if those health outcome goals are met. 
Under the MOC rubric, CMS does not intend for SNPs to meet specific 
metric thresholds denoting quality. For example, under MOC, Element B, 
factor 4, the MOC must describe how it determines if the goals 
described in factor 1 are met rather than address performance on a 
specific metric set by CMS. Regardless of SNP type, NCQA applies the 
review standards uniformly across each MOC submission under this 
regulation.
    Comment: A commenter noted concern that the MOC benchmark was 
duplicative of the reporting and tracking of plan performance under the 
Star Rating system.
    Response: The MOC requirement is distinct from the goals and 
purpose of the Star Ratings system so even though there may be some 
overlap in MA organization and SNP processes in order to successfully 
implement the MOC and achieve high Star Ratings, we do not believe that 
these are duplicative or that one should be eliminated in favor of the 
other.
    Section 1859(f)(5)(A)(i) of the Act requires that all SNPs be 
approved by NCQA based on standards developed by the Secretary; this 
requirement was added by section 164 of the Medicare Improvements for 
Patients and Providers Act (hereinafter referred to as MIPPA) (Pub. L. 
110-275) and became effective with the 2012 contract year. As provided 
in Sec. Sec.  422.4(a)(1)(iv), 422.101(f), and 422.152(g), the NCQA 
approval process is based on evaluation and approval of the SNP MOC. 
Therefore, all SNPs must submit their MOCs to CMS for NCQA evaluation, 
and an MA organization must develop separate MOCs to meet the needs of 
the targeted population for each SNP type it offers. NCQA, based on 
guidance from CMS, has applied scoring standards applicable to all SNP 
types. The MOC is a forward-looking tool used by SNPs to design 
processes to perform and improve their performance over a set time 
period. The Star Ratings system, on the other hand, is used to measure 
and provide comparative information about the performance of MA 
organizations on defined measures. Under sections 1853(o) and 1854(b) 
of the Act, Star Ratings are used in determining payment and 
beneficiary rebates for MA plans; CMS has adopted provisions, at 
Sec. Sec.  422.504(a)(17) and 423.505(a)(26), to use historical, 
sustained poor

[[Page 5883]]

performance on the Star Ratings to evaluate compliance with MA and Part 
D program requirements and, thus, whether an MA contract should be 
terminated. In this way, the Star Ratings are retrospective and provide 
information about past performance, not the MA organization's 
intentions or plans for improvement and to address enrollee needs in 
the coming year. Even if past performance can sometimes predict future 
performance, the Star Ratings program is not the duplicative of a 
quality improvement program like the MOC. There are other differences 
between the Star Ratings program and the MOC review and approval 
process, but these differences in purpose are fundamental and 
sufficient to conclude that it is appropriate to use a minimum 
benchmark for approval of all SNP MOCs. Therefore, we are finalizing 
Sec.  422.101(f)(3)(iii) as proposed to require use of a 50 percent 
minimum benchmark for each MOC element.
    After consideration of the comments and for the reasons outlined in 
the proposed rule and our responses to comments, we are finalizing 
amendments to Sec.  422.101(f)(1) introductory text, (f)(1)(i), 
(f)(1)(iii), and (f)(2) introductory text and adding Sec.  
422.101(f)(1)(iv) and (f)(3). These provisions are finalized 
substantially as proposed with a modification in paragraph (f)(1)(iv) 
to set standards for the required face-to-face encounter.

B. Coverage Gap Discount Program Updates (Sec. Sec.  423.100 and 
423.2305)

    We proposed to amend our regulations at Sec. Sec.  423.100 
(definition of applicable drug) and 423.2305 (determination of coverage 
gap discount) to reflect changes to the relevant statutory provisions 
made by the BBA of 2018. Sections 53113 and 53116 of the BBA of 2018 
amended section 1860D-14A of the Act to (a) increase the coverage gap 
discount for applicable drugs from 50 to 70 percent of the negotiated 
price beginning in plan year 2019, and (b) revise the definition of an 
applicable drug to include biosimilar biological products, also 
beginning in plan year 2019.
    Specifically, section 53116 of the BBA of 2018 revised the 
definition of ``discounted price,'' meaning the price provided to the 
beneficiary, in section 1860D-14A(g)(4)(A) of the Act to mean, for a 
plan year after 2018, 30 percent of the negotiated price. This means 
that the coverage gap discount is 70 percent, rather than 50 percent. 
To make our regulations consistent with this change, we proposed to 
amend the definition of ``applicable discount'' in Sec.  423.2305 to 
provide that, with respect to a plan year after plan year 2018, the 
applicable discount is 70 percent of the portion of the negotiated 
price (as defined in Sec.  423.2305) of the applicable drug of a 
manufacturer that falls within the coverage gap and that remains after 
such negotiated price is reduced by any supplemental benefits that are 
available.
    Section 53113 of the BBA of 2018 amended section 1860D-14A(g)(2)(A) 
of the Act to specify that biological products licensed under 
subsection (k) of section 351 of the Public Health Service Act (that 
is, biosimilar and interchangeable biological products) are excluded 
from the coverage gap discount program only with respect to plan years 
prior to 2019. Accordingly, CMS has treated biosimilar biological 
products as applicable drugs under the Discount Program since 2019. 
Therefore, we proposed to revise the definition of applicable drug at 
Sec.  423.100 to specify that such biological products are excluded 
only for plan years prior to 2019. \6\
---------------------------------------------------------------------------

    \6\ Unless our policy specifically distinguishes biosimilar 
biological products from interchangeable biological products, we use 
the term ``biosimilar biological product(s)'' in this preamble to 
reference biosimilar or interchangeable (when such products become 
available) biological products.
---------------------------------------------------------------------------

    We received four comments on our proposal. The two comments that 
were within the scope of the rule were supportive of the proposed 
changes. Therefore, we are finalizing the regulatory change as proposed 
to amend the definition of ``applicable discount'' in Sec.  423.2305 to 
increase the applicable discount from 50 to 70 percent of the 
negotiated price beginning in 2019, and to revise the definition of 
applicable drug at Sec.  423.100 such that biosimilar biological 
products are excluded only for plan years before 2019. As previously 
noted, these changes are being made to update the regulations to 
reflect statutory and operational changes that became effective in 
2019.

C. Part D Income Related Monthly Adjustment Amount (IRMAA) Calculation 
Update for Part D Premium Amounts (Sec.  423.286)

    Section 3308 of the Affordable Care Act amended section 1860D-13(a) 
of the Act and established an income-related monthly adjustment amount 
for Medicare Part D (hereinafter referred to as Part D-IRMAA) for 
beneficiaries whose modified adjusted gross income (MAGI) exceeds the 
same income threshold amount tiers established under section 1839(i) of 
the Act with respect to the Medicare Part B income-related monthly 
adjustment amount (Part B-IRMAA). The Part D-IRMAA is an amount that a 
beneficiary pays in addition to the monthly plan premium for Medicare 
prescription drug coverage under the Part D plan in which the 
beneficiary is enrolled when the beneficiary's MAGI is above the 
specified threshold.
    The Part D-IRMAA income tiers mirror those established for the Part 
B-IRMAA. As specified in section 1839(i) of the Act, when the Part B-
IRMAA went into effect in 2007, individuals and joint tax filers 
enrolled in Medicare Part B whose modified adjusted gross income 
exceeded $80,000 and $160,000, respectively, were assessed the Part B-
IRMAA on a sliding scale. As specified in section 1839(i)(5) of the 
Act, each dollar amount within the income threshold tiers shall be 
adjusted annually based on the Consumer Price Index (CPI). As a result 
of the annual adjustment, for calendar year 2010, the income threshold 
amounts had increased to reflect four income threshold amount tiers for 
individuals and joint tax filers whose modified adjusted gross income 
exceeded $85,000 and $170,000, respectively. (We note that section 3402 
of the Affordable Care Act froze the income thresholds for 2011 through 
2019 at the level established for 2010.)
    Consistent with section 3308 of the Affordable Care Act, the Part 
D-IRMAA is calculated using the Part D national base beneficiary 
premium (BBP) and the applicable premium percentage (P) as follows: BBP 
x [(P - 25.5 percent)/25.5 percent]. The premium percentage used in the 
calculation will depend on the level of the Part D enrollee's modified 
adjusted gross income.
    Section 3308 of the Affordable Care Act required CMS to provide the 
Social Security Administration (SSA) with the national base beneficiary 
premium amount used to calculate the Part D-IRMAA no later than 
September 15 of each year, starting in 2010. Also, effective in 2010, 
CMS must provide SSA no later than October 15 of each year, with: (1) 
The modified adjusted gross income threshold ranges; (2) the applicable 
percentages established for Part D-IRMAA in accordance with section 
1839 of the Act; (3) the corresponding monthly adjustment amounts; and 
(4) any other information SSA deems necessary to carry out Part D-
IRMAA.
    To determine a beneficiary's IRMAA, SSA considers the beneficiary's 
MAGI, together with their tax filing status, to determine the 
percentage of the: (1) Unsubsidized Medicare Part B premium the 
beneficiary must pay; and (2) cost of basic Medicare prescription drug 
coverage that the beneficiary must pay.

[[Page 5884]]

    Since the implementation of the Part D-IRMAA in 2011, subsequent 
revisions to the statute have modified the associated income tiers used 
in IRMAA calculations:
     Section 402 of the Medicare Access and CHIP 
Reauthorization Act (MACRA) of 2015, revised the income thresholds for 
the Part B- and Part D-IRMAA income groups such that beneficiaries with 
incomes greater than $85,000 but not more than $107,000 were required 
to pay 35 percent of Part B and Part D program costs; beneficiaries 
with incomes greater than $107,000 but not more than $133,500 would pay 
50 percent of Part B and Part D program costs; beneficiaries with 
incomes greater than $133,500 but not more than $160,000 would pay 65 
percent of Part B and Part D program costs; while beneficiaries with 
incomes greater than $160,000 were required to pay 80 percent of Part B 
and Part D program costs.
     Section 53114 of the Bipartisan Budget Agreement (BBA) of 
2018 revised the income thresholds again such that, beginning in 2019, 
beneficiaries with incomes greater than $500,000 ($750,000 for joint 
tax filers) are required to pay 85 percent of program costs (an 
increase from 80 percent).
    We proposed to revise Sec.  423.286(d)(4)(ii) for consistency with 
the changes made by section 53114 of the BBA of 2018 and to make other 
technical changes to ensure that the calculations used in the 
methodology for updating Part D-IRMAA are described correctly. We 
proposed to remove the language ``the product of the quotient obtained 
by dividing the applicable premium percentage specified in Sec.  
418.2120 (35, 50, 65, or 80 percent) that is based on the level of the 
Part D enrollee's modified adjusted gross income for the calendar year 
reduced by 25.5 percent and the base beneficiary premium as determined 
under paragraph (c) of this section'' and replace it with ``the product 
of the standard base beneficiary premium, as determined under paragraph 
(c) of this section, and the ratio of the applicable premium percentage 
specified in 20 CFR 418.2120, reduced by 25.5 percent; divided by 25.5 
percent (that is, premium percentage-25.5)/25.5).''
    We received no comments on this proposal and are finalizing the 
proposed revisions to Sec.  423.286(d)(4)(ii) without modification. 
Although we are finalizing this provision as applicable 60 days after 
publication, it codifies current policies so we anticipate that there 
will be no change in operations or administration of the MA and Part D 
programs and encourage MA organizations and Part D sponsors to take 
this final rule into account immediately. We note that the revisions to 
this provision that we are finalizing in this final rule simply codify 
the Part D-IMRAA calculation that is currently used by SSA.

III. Implementation of Several Opioid Provisions of the Substance Use-
Disorder Prevention That Promotes Opioid Recovery and Treatment 
(SUPPORT) for Patients and Communities Act

A. Mandatory Drug Management Programs (DMPs) (Sec.  423.153)

    Section 2004 of the SUPPORT Act requires that all Part D sponsors 
must have established DMPs no later than January 1, 2022. We proposed 
to amend regulatory language at Sec.  423.153(f) to reflect this 
requirement. As discussed in the proposed rule preamble, the 
Overutilization Monitoring System (OMS) criteria used to identify 
``potential at-risk beneficiaries'' (PARBs) (defined in Sec.  423.100) 
are based on a history of filling opioids from multiple doctors and/or 
multiple pharmacies. While implementation of DMPs has been optional 
since codified for 2019, 85.9 percent of Part D contracts in calendar 
year 2019 and 87.2 percent in calendar year 2020 have established DMPs 
to address opioid overutilization among their enrollees. Thus, of about 
49 million beneficiaries who were enrolled in the Medicare Part D 
program in 2019, about 48.5 million enrollees (99 percent) are covered 
under Part D contracts that offer a DMP already. We received the 
following comments on this proposal and our responses follow:
    Comment: CMS received numerous comments that were generally 
supportive of our proposal to codify the statutory requirement that all 
Part D plans implement a DMP.
    Response: We thank commenters for their support.
    Comment: Several commenters expressed concerns that enrollees being 
treated for pain would be forced, through mandatory DMPs, to see a new 
doctor or use a new pharmacy and that the proposed regulation would 
undermine the doctor-patient relationship.
    Response: The concerns expressed in some of these comments appeared 
to reflect a misunderstanding of the requirements in section 2004 of 
the SUPPORT Act. Although section 2004 mandates the establishment of 
DMPs for all Part D sponsors beginning January 1, 2022, section 2004 
did not expand DMPs' scope. Thus, it is not the case that a 
``mandatory'' DMP would now require all Part D beneficiaries taking 
opioids to be subject to coverage limitations or quantity limits. 
Rather, the statute and the regulations we are finalizing in this rule 
will now require the few Part D sponsors who have not already 
established a DMP to do so. DMPs identify a subset of opioid users in 
the Part D program who may be at the highest risk of an adverse health 
event, for example, due to uncoordinated care. As mentioned in the 
proposed rule, CMS' internal analysis estimated that only 158 
additional PARBs will be identified per year by applying the current 
minimum OMS criteria across all Part D contracts that do not already 
have DMPs in place. CMS expects that only a few of these additional 
beneficiaries will be subject to a coverage limitation after case 
management with their opioid prescribers.
    CMS does not agree that DMP activities undermine the doctor-patient 
relationship. In fact, the goal of case management under a DMP is for 
Part D sponsors to assist prescribers in coordinating care for PARBs to 
ensure their opioid use is appropriate and medically necessary. The 
case management process increases safety and accountability within the 
doctor-patient relationship, as prescribers may or may not be aware 
that there are other prescribers of opioids or benzodiazepines for 
their patients. Any potential coverage limitation under a DMP is put in 
place only after the plan conducts case management, solicits the views 
of the enrollee's prescriber(s), and provides advance written notice to 
the enrollee. If a Part D sponsor implements a prescriber and/or a 
pharmacy limitation, the affected beneficiary is provided opportunities 
to select their preferred pharmacy and prescriber when they receive an 
Initial Notice of their PARB status and a Second Notice of their at-
risk beneficiary (ARB) status, as described in regulation at Sec.  
423.153(f)(5)(ii)(4) and Sec.  423.153(f)(6)(ii)(5). The sponsor is 
required to consider the beneficiary's preferences consistent with 
Sec.  423.153(f)(9). These aspects of DMPs safeguard beneficiary's 
access to coverage of opioids, prescriber and pharmacy choice, and the 
integrity of the doctor/patient relationship.
    Comment: Several commenters requested that PACE organizations be 
exempt from the requirement to establish a DMP. These commenters noted 
that drug utilization management programs, quality assurance measures, 
and medication therapy management (MTM) program requirements

[[Page 5885]]

(Sec.  423.153(a) through (d)) are currently waived for PACE under 
Sec.  423.458(d). Commenters also stated that the PACE model of care 
already addresses opioid overutilization through use of a closed 
provider network; care coordination through primary care providers and 
the interdisciplinary team; proactive drug utilization review; and in-
person health assessments already required for PACE enrollees.
    Some of these commenters noted that, while the majority of PACE 
participants do not reside in an LTC facility, PACE participants are 
required to meet their state's eligibility criteria for nursing home 
care and therefore share characteristics with beneficiaries who are 
exempt from DMPs because they are residents of LTC facilities. They 
also state that PACE organizations typically contract with a single 
pharmacy which inherently coordinates access and achieves the goals of 
a DMP. One commenter noted that many PACE organizations do not have 
formularies and therefore no Pharmacy and Therapeutic (P&T) committee 
to develop and carry out DMP policies and procedures.
    Response: CMS thanks these commenters for their feedback, but 
disagrees that PACE organizations should be exempt from the statutory 
requirement to establish a DMP. While the DMP statute does outline 
certain exempted beneficiaries, such as individuals with cancer or who 
reside in a LTC facility, it does not specify or contemplate exemptions 
based on Part D plan type. CMS notes that MA-PDs that require enrollees 
to access routine care from contracted and/or employed prescribers 
through an HMO or integrated care model are similarly required under 
Part 422 to provide coordinated care, but are not exempt from the DMP 
requirement. As commenters noted, PACE participants are an especially 
vulnerable Medicare population, and for those who live in the 
community, additional monitoring will serve as a valuable safeguard to 
help prevent misuse of opioids. Depending on the frequency of 
engagement between the participant and PACE organization, as well as 
participant preferences, the in-person assessments required under 
Sec. Sec.  460.104 and 460.121 may not always coincide with 
identification through the OMS, and may present missed opportunities to 
intervene.
    Under the existing regulatory framework where DMPs are voluntary, 
approximately 40 percent of PACE contracts have reported to CMS that 
they already have a DMP in place. In 2019, PACE enrollees accounted for 
0.03 percent of all Part D enrollees belonging to a plan with a DMP, 
and 0.07 percent of Part D enrollees identified in OMS as PARBs because 
they met the minimum OMS criteria. Based on CMS' analysis used in the 
proposed rule, PACE enrollees account for 0.14 percent of total Part D 
enrollees identified as PARBs because they meet the criteria for 
history of opioid overdose (see discussion in this section of this 
rule), which is proportional to the number of PACE enrollees in Part D 
(for January 2020, 0.1 percent of all Part D enrollment). In other 
words, the likelihood of a PACE participant being identified as a PARB, 
either based on OMS criteria or history of opioid overdose, is at least 
as high as the likelihood of any Part D enrollee to meet those 
criteria. Therefore, a PACE participant is as likely as any other Part 
D enrollee to benefit from case management and should not be deprived 
of this aspect of the Part D program. As discussed in the proposed rule 
preamble, Part D sponsors with DMPs infrequently implement coverage 
limitations after case management. This reflects the goals of case 
management as a means through which Part D sponsors engage prescribers, 
gather relevant patient-specific information not available to CMS, such 
as more recent medical or prescription claims data, and seek to 
coordinate care tailored to the unique needs of the beneficiary. CMS 
expects the volume of PARBs identified through minimum OMS criteria in 
the PACE organizations that have not yet implemented a DMP will 
continue to be minimal and present a low overall burden for these 
organizations. As with other Part D plans, such burden includes 
conducting case management, implementing any needed coverage 
limitations, and reporting of case management outcomes and coverage 
limitations back to CMS via OMS. Reporting outcomes of case management 
provides CMS with valuable information to help track the safe use of 
opioids and benzodiazepines in the Part D program and serves as a means 
to document that case management occurred.
    CMS agrees with commenters that a PACE organization, or for that 
matter, any Part D plan sponsor, that does not have a P&T committee 
would not be in compliance with existing Sec.  423.153(f)(1), which 
requires approval of DMP policies and procedures by the ``applicable 
P&T committee.'' As specified in Sec.  423.120(b), only Part D sponsors 
that use formularies must have a P&T committee, and CMS did not propose 
to broaden that requirement to apply to Part D sponsors that do not use 
formularies. For this reason, after consideration of the comments, CMS 
is amending the language at Sec.  423.153(f)(1) to account for Part D 
sponsors, including PACE organizations, that do not have their own or a 
contracted P&T committee (for example, through their PBM) because they 
do not use a formulary. Such sponsors can comply with this requirement 
by having written DMP policies and procedures that are approved by the 
Part D sponsor's medical director and applicable clinical and other 
staff or contractors, as determined appropriate by the medical 
director. We have also added cross references to the existing 
regulations requiring that Part D sponsors have a medical director at 
Sec.  423.562(a)(5), and for PACE organizations, at Sec.  460.60(b).
    Comment: Several commenters stated general concerns or 
recommendations regarding DMPs. Commenters expressed concerns regarding 
the misapplication of the CDC Guideline for Prescribing Opioids for 
Chronic Pain \7\ and recommended that CMS direct sponsors towards 
appropriate disease-specific pain management guidelines. Additional 
recommendations included facilitating or encouraging providers to refer 
patients to non-pharmacologic therapies for pain; ensuring provider 
education about overdose and naloxone prescribing, including evaluation 
for substance use disorder; ensuring shared decision-making between 
beneficiaries and prescribers such that access to medically necessary 
opioids is not impeded; ensuring beneficiaries with a coverage 
limitation are not forced to use a pharmacy in which the sponsor has a 
financial interest; and generally ensuring DMP activities are non-
punitive or stigmatizing.
---------------------------------------------------------------------------

    \7\ Dowell D, Haegerich TM, Chou R. CDC Guideline for 
Prescribing Opioids for Chronic Pain--United States, 2016. MMWR 
Recomm Rep 2016;65(No. RR-1):1-49. DOI: http://dx.doi.org/10.15585/mmwr.rr6501e1.
---------------------------------------------------------------------------

    Response: CMS appreciates the concerns and recommendations 
commenters shared regarding case management activities. We note that 
the recommendations are not inconsistent with the current DMP 
requirements.
    In finalizing the regulatory framework for DMPs (83 FR 16440), CMS 
made a conscious effort that DMP activities would not be punitive or 
stigmatizing and would not inappropriately limit access or result in 
abrupt opioid tapering. This is consistent with the CDC's commentary 
\8\ published in 2019,

[[Page 5886]]

which advised against the misapplication of the Guideline for 
Prescribing Opioids for Chronic Pain, including the inflexible 
application of the Guideline's dosage recommendations and policies that 
encourage abrupt tapering, sudden discontinuation, or dismissal of the 
patient from their physician.
---------------------------------------------------------------------------

    \8\ https://www.cdc.gov/media/releases/2019/s0424-advises-misapplication-guideline-prescribing-opioids.html.
---------------------------------------------------------------------------

    CMS agrees that many of the suggestions proposed could be of value 
in many cases, and encourages sponsors to incorporate them, as 
appropriate, into their DMP policies and procedures, as well as protect 
against the unintended consequences identified by the CDC. Finally, CMS 
notes that beneficiaries are provided opportunities to select their 
preferred pharmacies and prescribers, if their plan intends to apply a 
pharmacy or prescriber limitation under the DMP. See Sec.  
423.153(f)(5)(ii)(4) and Sec.  423.153(f)(6)(ii)(5).
    Comment: A few commenters stated that mandatory DMPs are redundant 
with existing prescription drug monitoring programs (PDMPs).
    Response: CMS disagrees that DMPs are redundant with PDMPs. PDMPs 
are state-level electronic databases that are used to collect 
information on all controlled substance prescriptions in a state. While 
PDMPs, which allow providers to access their patients' prescription 
history, are one tool to combat the opioid epidemic, PDMPs do not exist 
in all states, and health plans may not have access to them. Also, 
while CMS encourages providers to use PDMPs prior to issuing 
prescriptions for controlled substances, it is not mandatory for 
providers to do so in all states.\9\ Therefore, CMS believes that DMPs 
provide additional value for ensuring safe opioid prescribing in the 
Part D program through the initiation of case management and care 
coordination activities. Moreover, the CARA statute required CMS to 
establish a regulatory framework for DMPs.
---------------------------------------------------------------------------

    \9\ Centers for Disease Control and Prevention. What States Need 
to Know about PDMPs. Accessed June 10, 2020 from https://www.cdc.gov/drugoverdose/pdmp/states.html.
---------------------------------------------------------------------------

    Comment: Several commenters requested CMS clarify existing guidance 
with regard to identification of PARBs, criteria for identifying exempt 
beneficiaries, reporting requirements for ARBs, and notice requirements 
for exempt beneficiaries. Several commenters provided additional 
recommendations, including suggestions to expand the list of frequently 
abused drugs to drugs beyond opioids and benzodiazepines (for example, 
other central nervous system depressants such as gabapentin) and 
allowing beneficiaries with existing beneficiary-specific POS edits 
that were implemented prior to 2019 be integrated into the DMP.
    Response: CMS' proposal was to implement the statutory requirement 
that Part D sponsors establish DMPs as of January 1, 2022. As discussed 
in section VII.L, CMS also proposed to designate beneficiaries with 
sickle cell disease as exempted individuals in the regulation for 
purposes of a Part D sponsor's DMP. CMS did not propose any changes to 
the other existing requirements, except to solicit comment about case 
management for PARBs with a history of opioid related-overdose, which 
is discussed later in this section. CMS will consider revisions to the 
guidance and OMS criteria as appropriate. CMS also regularly reviews 
data submitted into OMS and MARx and will update guidance and/or 
communicate with sponsors if needed.
    After consideration of the comments received, CMS is finalizing the 
proposal to make DMPs mandatory at Sec.  423.153(f) with a modification 
at Sec.  423.153(f)(1) to accommodate Part D plans, such as PACE 
organizations, that do not have a P&T committee, as described earlier.

B. Beneficiaries With History of Opioid-Related Overdose Included in 
Drug Management Programs (DMPs) (Sec.  423.153)

    Under section 2006 of the SUPPORT Act, CMS is required to identify 
Part D beneficiaries with a history of opioid-related overdose (as 
defined by the Secretary) and notify the sponsor of such 
identification, as those individuals must be included as PARBs for 
prescription drug abuse under their Part D plan's DMP. In line with 
this requirement, CMS proposed to modify the definition of ``potential 
at-risk beneficiary'' at Sec.  423.100 to include a Part D eligible 
individual who is identified by CMS as having a history of opioid-
related overdose, which is also defined in this regulation.
    Based on the analyses and rationale described in detail in the 
proposed rule, CMS proposed to operationalize this definition by: (1) 
Using diagnosis codes that include both prescription and illicit opioid 
overdoses; (2) using a 12-month lookback period from the end of each 
OMS reporting quarter for record of opioid-related overdose; and (3) 
using a 6-month lookback period from the end of each OMS reporting 
quarter for record of a recent Part D opioid PDE. The number of unique 
beneficiaries identified under this proposal is approximately 18,268 
annually (based on opioid-related overdose claims from July 1, 2017 to 
June 30, 2018). Under existing rules, which CMS did not propose to 
change, Part D sponsors with DMPs must conduct case management for each 
PARB identified by CMS through OMS, which includes sending written 
information to the beneficiary's prescribers that the beneficiary has 
been identified as a PARB. In expanding the definition of PARB by 
adding beneficiaries with a history of opioid overdose, Part D sponsors 
must conduct the same case management process for this additional group 
of beneficiaries that they currently conduct for PARBs identified based 
on their use of multiple opioid prescribers and/or pharmacies. As 
discussed in the proposed rule, CMS expects that case management for 
these individuals will involve sponsors communicating with their 
provider(s), who may or may not already be aware of the beneficiary's 
overdose history.\10\ CMS also solicited comments on whether the 
proposal needed any additional features to facilitate the case 
management process for PARBs with a history of opioid-related overdose.
---------------------------------------------------------------------------

    \10\ Additionally, the beneficiary with an overdose may or may 
not meet OMS criteria.
---------------------------------------------------------------------------

    CMS received numerous comments on this provision, which were 
largely supportive of the proposal, with several commenters expressing 
concerns or requesting clarification on various aspects as discussed in 
this section of this rule.
    Comment: A few commenters pointed out that the regulatory text 
defining potential at-risk beneficiary at Sec.  423.100 was unclear 
with regard to whether both an overdose diagnosis and an opioid PDE 
were necessary to meet the new definition of a PARB based on the 
proposed regulation.
    Response: In response to these comments, CMS clarifies that both 
criteria are required to meet the definition of a PARB with a history 
of opioid-related overdose. In order to improve overall clarity in this 
final rule, in lieu of revising the PARB definition at Sec.  423.100 as 
proposed, we are incorporating the elements of the proposed definition 
into the clinical guideline regulation as criteria in a new paragraph 
at Sec.  423.153(f)(16)(ii)(2). That is, the criteria initially 
proposed in the definition of PARB at Sec.  423.100 have been relocated 
to the DMP clinical guidelines section of the regulation at Sec.  
423.153(f)(16)(ii)(2). CMS has also made some technical changes to the 
criteria now located at Sec.  423.153(f)(16)(ii)(2) to clarify that a 
plan can use its own data to identify PARBs. Specifically, instead of 
referring to ``PDE,'' the criteria will refer to

[[Page 5887]]

``claim'' and the words ``has been submitted'' are struck from the 
criteria.
    Comment: A few commenters expressed concern with identification of 
overdose based on diagnosis code, citing anecdotal reports that the 
codes are unreliable due to being assigned inappropriately or over-
diagnosed in beneficiaries taking opioids who present for emergency 
care for other health conditions.
    Response: CMS disagrees and was unable to find evidence to 
substantiate this claim specific to opioid-related overdose in the 
published literature. In the event a situation such as this does occur, 
during the case management process the prescriber will likely review 
the diagnosis and determine whether to discuss it with their patient on 
a case by case basis. Such review and discussion will present an 
opportunity for the provider to evaluate whether the diagnosis appears 
to be inaccurate and to communicate this information back to the 
sponsor's DMP.
    Comment: A commenter suggested CMS include both primary and 
secondary diagnosis codes for opioid-related overdose to avoid under-
reporting.
    Response: CMS believes the principal diagnosis code is the most 
reliable means to identify overdoses in order to meet the statutory 
requirement for the reasons that follow.
    According to the ICD-10-CM Official Guidelines for Coding and 
Reporting,\11\ the principal diagnosis code is the condition, after 
study, to be chiefly responsible for occasioning the admission of a 
patient to the hospital. The terms principal and primary are used 
interchangeably to define the diagnosis that is sequenced first on a 
claim. Other diagnoses, including secondary diagnoses, are conditions 
that may coexist at the time of admission, or develop subsequently. As 
such, secondary diagnoses may capture overdoses not directly related to 
the beneficiary's recent use of opioids that triggered the overdose 
event. CMS' proposed criteria for identification of a PARB based on 
history of opioid overdose specifies ``recent'' overdose so that DMP 
activities can be the most relevant and impactful. Since secondary 
diagnoses may be historical, CMS does not believe that they as reliably 
reflect ``recent'' opioid-related overdoses as do principal diagnoses.
---------------------------------------------------------------------------

    \11\ https://www.cms.gov/Medicare/Coding/ICD10/Downloads/2020-Coding-Guidelines.pdf.
---------------------------------------------------------------------------

    Taking program size into account, focusing on the principal or 
primary diagnosis chiefly responsible for the admission or event is 
most appropriate to capture overdoses related to a beneficiary's recent 
use of opioids and increase the likelihood that the beneficiary would 
benefit from case management. Using the same time period, diagnosis 
codes, PDE, and lookback period criteria described in the proposed rule 
methodology, CMS evaluated the number of PARBs that would be identified 
by the proposed definition, both including and excluding secondary 
diagnoses. Including secondary diagnosis codes for identification of 
opioid-related overdoses was found to increase the number of PARBs 
identified by about 40 percent (for a total of 25,566) relative to the 
number of PARBs identified only on the basis of principal diagnosis 
(18,268, as described in burden estimates). However, due to the 
limitations of secondary diagnoses themselves, described earlier, CMS 
believes the additional PARBs identified solely on the basis of a 
secondary diagnosis would not necessarily be those with the most 
relevant history of opioid-related overdose. Therefore, CMS does not 
believe that the increased program size due to including secondary 
diagnosis codes for the purpose of identifying PARBs is a cost-
effective use of DMP resources, when these resources would be better 
focused on beneficiaries at highest risk of misuse or abuse.
    In evaluating this comment, CMS noticed that the proposed 
regulatory language in the definition of PARB at Sec.  423.100 was not 
sufficiently broad to include data sources and methodology discussed in 
the proposed rule. As mentioned in response to a prior comment, the 
criteria initially proposed in the definition of PARB at Sec.  423.100 
have been relocated to Sec.  423.153(f)(16)(ii)(2). Specifically, in 
the clinical guideline criteria for identifying PARBs on the basis of 
history of opioid-related overdose at Sec.  423.153(f)(16)(ii)(2), the 
words ``Medicare fee-for-service'' and ``code'' were stuck from what 
was in the initially proposed definition at Sec.  423.100. This revised 
language, which CMS is finalizing, better reflects CMS' intention to 
use claims, including encounter data, resulting from healthcare visits 
involving opioid-related overdoses. With this modification, the broader 
criteria will encompass both inpatient and outpatient locations of 
care.
    Comment: A commenter requested addition of the ICD-10 code Z91.5 
for method suicide attempt to capture intentional overdose in the 
methodology CMS will use to identify PARBs based on history of opioid-
related overdose.
    Response: CMS disagrees, as the ICD-10 code Z91.5 indicates a 
history of self-harm, and does not specify self-harm via opioid use. 
Although the literature CMS cited in the proposed rule preamble does 
reference history of opioid-related overdose being a risk factor for 
future overdoses or suicide-related events, the SUPPORT Act directs CMS 
to identify beneficiaries with a history of opioid-related overdose. 
Thus, including the ICD-10 code for history of self-harm would be 
overly inclusive. Other ICD-10 codes are more specific to identify 
injury due to opioid-related poisoning or overdose, and are used in the 
methodology applied by CMS and described in more detail in the February 
2020 proposed rule. CMS believes the ICD-10 codes used in this 
methodology will capture both intentional and unintentional overdoses.
    Comment: A commenter pointed out that using Medicare data will not 
capture overdose history from new Medicare enrollees.
    Response: CMS acknowledges this is a limitation to the methodology; 
however, it is not feasible to gather all non-Medicare claims data for 
Medicare beneficiaries. We believe using Medicare claims data strikes 
the right balance to permit inclusion of beneficiaries with a history 
of opioid-related overdose in DMPs without undue burden.
    Comment: A commenter expressed the opinion that for beneficiaries 
with overdoses due to illicit opioids, coverage limitations on 
prescription opioids would not likely impact future overdose risk.
    Response: CMS disagrees with the commenter's assertion given the 
criteria CMS has proposed for identifying a PARB based on history of 
opioid-related overdose. The statute requires that beneficiaries with a 
history of opioid-related overdose be included as PARBs without 
specifying that the overdose involve a prescription opioid; therefore, 
we believe it is appropriate to include beneficiaries with a history of 
illicit opioid overdose. In the methodology presented in the proposed 
rule, CMS discussed the fact that in some cases, it is not possible to 
identify whether an opioid that contributed to overdose was obtained 
legally or illicitly. CMS also notes that any beneficiaries identified 
in OMS due to a history of opioid overdose, regardless of whether such 
overdose was illicit, will have also received an opioid prescription, 
consistent with the proposed criteria. Thus, there is still a potential 
role for case management, including conveying the overdose diagnosis to 
the beneficiary's prescriber(s), who may

[[Page 5888]]

consider this information for ongoing opioid prescribing or referral 
for other health services, with or without the implementation of a 
coverage limitation for Part D prescription opioids. For example, a 
prescriber may refer the beneficiary for medication-assisted treatment, 
if appropriate, based on evaluation of their patient.
    Comment: A commenter suggested that CMS' proposal may discourage 
overdose patients who self-treated with naloxone from seeking follow-up 
medical care to avoid an overdose diagnosis and potential DMP 
enrollment.
    Response: CMS appreciates the commenter's concerns for these 
beneficiaries, and recognize the stigma they may face because of such 
diagnosis. However, the statute requires including these beneficiaries 
as PARBs, and the commenter's concerns do not obviate the need for CMS, 
Part D plan sponsors, or health care providers from engaging in 
rigorous patient safety programs, especially for this vulnerable 
population. CMS encourages plan sponsors, prescribers, and advocacy 
organizations to assist in efforts to educate beneficiaries about the 
risks and benefits of opioid use, as well as their options for opioid 
use disorder treatment. See section III.D of this final rule for 
additional information about CMS' efforts, as well as the ``Information 
for Patients'' resource provided on the Drug Management Program page of 
the CMS website.\12\
---------------------------------------------------------------------------

    \12\ https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/RxUtilization.
---------------------------------------------------------------------------

    Comment: A commenter requested clarification if a beneficiary would 
no longer be considered a PARB once they no longer meet the overdose 
criteria.
    Response: It depends. Once a beneficiary is identified as a PARB 
based on a history of opioid-related overdose and reported to Part D 
sponsors, sponsors must review the case and submit responses through 
the OMS. CMS will update the guidance, including the OMS user guide, to 
account for scenarios appropriate to PARBs identified based on a 
history of opioid-related overdose, including where these beneficiaries 
simultaneously or at a different time meet the definition of a PARB 
based on the existing OMS criteria, or where the situation changes 
while the plan is engaged in review/case management.
    Comment: Many commenters, while supportive of the proposed 
regulation, asked CMS to clarify expectations for case management, 
outline expectations for case management outcomes, and provide guidance 
for management of PARBs identified by a history of opioid-related 
overdose.
    Response: CMS acknowledges these comments about Part D plans 
conducting case management with prescribers who are treating PARBs with 
a history of opioid-related overdose. Case management is an integral 
part of the DMP process. It serves the purpose of engaging in clinical 
contact with the prescribers of FADs, verifying whether the beneficiary 
is at risk for abuse or misuse of FADs, and obtaining agreement to a 
coverage limitation on FADs, if a limitation is deemed necessary. The 
goal of case management under a DMP is to improve patient safety and 
care coordination, while protecting beneficiary access to coverage of 
needed medications.
    CMS expects that the overall elements of case management should be 
similar for all PARBs, regardless of whether identified by existing OMS 
criteria based on use of multiple opioid prescribers and/or pharmacies 
or on a history of opioid-related overdose. CMS continues to recognize 
that every case is unique and that the approach to case management will 
vary depending on many factors, such as the complexity of the case and 
the promptness with which prescribers respond to sponsors' outreach. 
CMS continues to encourage sponsors to use flexibility and clinical 
discretion depending on prescriber input and patient-related variables. 
Case management activities should align with desired goals of the DMP, 
for example, reducing multiple opioid prescribers and/or reducing risk 
of a subsequent overdose. In estimating the burden for this provision 
in the proposed rule, CMS estimated that beneficiaries with a history 
of opioid-related overdose would potentially have a higher rate of 
coverage limitations imposed by sponsors than beneficiaries meeting 
minimum or supplemental OMS criteria because a history of overdose is 
the most predictive risk factor for another overdose or suicide-related 
event.\13\ However, this is only a pre-implementation estimate and CMS 
continues to emphasize that the implementation of coverage limitations 
should be based on individual risk factors and goals identified through 
case management.
---------------------------------------------------------------------------

    \13\ Bohnert KM, Ilgen MA, Louzon S, McCarthy JF, Katz IR. 
Substance use disorders and the risk of suicide mortality among men 
and women in the U.S. Veterans Health Administration. Addiction. 
2017 Jul; 11/2(7):1193-1201. doi: 10.1111/add.13774.
---------------------------------------------------------------------------

    Plan sponsors should continue to refer to CMS guidance on elements 
that may be incorporated into case management, including prescriber 
education on opioid overutilization, encouraging prescribers to perform 
or refer their patients for substance use disorder screening and/or 
assessment, referral for follow-up treatment with pain specialists or 
addiction treatment providers, if indicated, and encouraging 
prescribers to utilize PDMPs to which they have access.
    DMPs should notify providers and patients of the coverage of 
naloxone and its availability through their plan. The U.S. Department 
of Health and Human Services also issues guidance for safe opioid 
prescribing, including naloxone co-prescribing.\14\
---------------------------------------------------------------------------

    \14\ https://www.hhs.gov/opioids/prevention/safe-opioid-prescribing/index.html.
---------------------------------------------------------------------------

    Comment: Many commenters inquired about sponsor flexibility with 
regard to identification of PARBs based on a sponsor's own claims data, 
applying the criteria to identify PARBs with a history of opioid-
related overdose more frequently than the OMS quarterly reports, or 
using criteria beyond those proposed by CMS to identify beneficiaries 
at risk of overdose at the time of their first opioid fill.
    Response: CMS appreciates these comments. Just as currently 
permitted with the minimum OMS criteria, sponsors are permitted to 
identify PARBs with a history of opioid-related overdose more 
frequently than the CMS-generated reports through OMS. CMS expects that 
Part D sponsors identify PARBs consistent with the revised clinical 
guidelines CMS is finalizing at Sec.  423.153(f)(16)(ii)(2). The 
clinical guidelines specify a recent (that is, within the past 12 
months) claim containing a principal diagnosis indicating opioid 
overdose and a recent claim (that is, within the past 6 months) for an 
opioid medication. Sponsors are required by regulation to submit 
responses through OMS within 30 days of the most recent OMS report for 
all CMS-identified or sponsor-identified beneficiaries. Sponsors do not 
need to wait to receive an OMS report from CMS to initiate case 
management for sponsor-identified cases and send beneficiary notices, 
if applicable. Also, as we previously noted, the clinical guidelines 
for identifying PARBs that we are finalizing in this rule no longer 
require that history of opioid-related overdose be determined by CMS. 
This better reflects sponsors' ability to identify PARBs meeting the 
clinical guidelines using their own data.
    Comment: A commenter requested CMS report Part D beneficiaries to 
sponsors through OMS with overdose diagnoses, but without a subsequent

[[Page 5889]]

opioid claim, to proactively target these additional beneficiaries who 
may be at risk. Another commenter stated that beneficiaries with a 
history of overdose are already being managed outside of DMPs and 
therefore DMP activities may be duplicative.
    Response: CMS does not agree with the request to report 
beneficiaries with an overdose diagnosis but no subsequent opioid 
claim. As discussed in detail in the proposed rule preamble (85 FR 
9026), it is essential that all Part D plan sponsors, including 
standalone PDPs, can identify a prescriber with whom to conduct case 
management.
    Without the presence of an opioid claim, Part D DMPs are not 
implicated. This does not preclude plans from conducting outreach 
towards beneficiaries with a history of opioid-related overdose who 
have not received a Part D prescription opioid, if they are able to 
identify them. A plan may offer services or interventions tailored to 
these beneficiaries, as the purpose of the DMP is not to supplant other 
health care activities that may be of benefit to the beneficiary, but 
rather to promote safe opioid prescribing practices and utilization in 
the Part D program. However, these beneficiaries should not be included 
in DMPs unless they meet the clinical guidelines specified in Sec.  
423.153(f)(16).
    Comment: Some commenters suggested a 6-month, as opposed to a 12-
month, lookback to identify opioid-related overdoses. Commenters 
suggested this would enable more timely engagement with beneficiaries 
and align with the Pharmacy Quality Alliance's (PQA) Initial Opioid 
Prescribing (IOP) measure.
    Response: CMS agrees that identifying beneficiaries as soon as 
possible after their opioid-related overdose is likely to make DMP 
activities most impactful; however, we disagree with changing the 
lookback to 6 months for two reasons. First, CMS describes the 
rationale for the 12-month lookback. Second, CMS describes why it is 
not relevant to align the lookback with PQA's IOP measure.
    Using a 12-month lookback, CMS anticipates that the first report 
will contain the largest proportion of overdoses occurring greater than 
6 months prior to the report being generated. Going forward, however, 
CMS anticipates that subsequent quarterly reports will reflect a 
greater proportion of more recent, and thus, more timely, claims and a 
smaller proportion of earlier claims that were delayed due to 
processing errors or late submissions.\15\ CMS expects that with 
regular reporting, the majority of PARBs with a history of opioid-
related overdose will be identified on a timely basis. As discussed in 
the proposed rule, 12 months allows CMS to identify the majority of 
overdoses and appears to reflect the window of time necessary to 
capture the majority of processed claims or encounters. CMS will 
evaluate the implementation of the new clinical guidelines to identify 
PARBs based on history of opioid-related overdose and revise the 
operational specifications in the future if needed.
---------------------------------------------------------------------------

    \15\ CMS data indicates that, historically, 90% of FFS claims 
across all claim types are submitted within 3 months and 90% of MA 
encounters across all claim types are submitted within 12 months. 
See: https://www.cms.gov/files/document/medicare-covid-19-data-snapshot-fact-sheet.pdf.
---------------------------------------------------------------------------

    The PQA's IOP measure set includes three separate measures. CMS has 
included one of these measures, IOP-LD (Initial Opioid Prescribing--
Long Duration), in Part D sponsors' patient safety reports. The IOP-LD 
measure does not consider opioid overdoses; rather, it evaluates when 
there has been no other opioid prescription in the 90-day lookback 
period prior to the start of an opioid with a long duration of therapy. 
Because the IOP-LD measure is largely unrelated to the overdose 
lookback window, CMS is not persuaded to change the overdose lookback 
to align with the IOP-LD measure.
    Comment: A commenter recommended that CMS exclude beneficiaries 
with only one opioid prescription during the lookback period from the 
definition of PARB with a history of opioid overdose. Specifically, the 
commenter raised concerns about the efficacy of using plan resources to 
engage emergency department prescribers in case management based on a 
one-time, short-term opioid prescription.
    Response: While CMS understands the commenter's concerns about 
engaging emergency department prescribers in case management, CMS 
disagrees with the recommendation to exclude beneficiaries with only 
one opioid prescription during the lookback period. Given the level of 
risk to beneficiaries with a history of opioid-related overdose, CMS 
strongly believes the best policy approach is for plans to attempt to 
engage their opioid prescribers through case management, even if the 
prescriber only ordered a single prescription for the beneficiary. CMS 
does not believe it is appropriate to presume that all such opioid 
prescribers would decline to engage in case management, given the 
statutory requirement to include this population in DMPs. Additionally, 
the DMP regulation at Sec.  423.153(f)(4)(ii) specifies the 
circumstances under which sponsors may implement a coverage limitation 
for FADs in the event prescribers are not responsive. Thus, reporting 
these beneficiaries in OMS as PARBs despite there only being one PDE 
provides the opportunity for prescriber engagement, but still maintains 
plan flexibility through the DMP in the event outreach is unsuccessful.
    Comment: A commenter cited their concerns with including PARBs with 
a history of opioid-related overdose in DMPs in light of the Substance 
Abuse and Mental Health Services Administration's (SAMSHA) 42 CFR part 
2 (``part 2'') regulations regarding disclosure of substance use 
disorder (SUD) information. The commenter expressed concern that 
because Part D sponsors would have to conduct case management with 
prescribers of all PARBs, which will include beneficiaries with a 
history of opioid-related overdose, CMS is in effect requiring Part D 
sponsors to disclose SUD information about beneficiaries to providers 
and that such disclosure would be in violation of the part 2 
regulations. The commenter requested that CMS provide guidance and/or a 
safe harbor for sponsors making such disclosures to protect them from 
any compliance issues.
    Response: CMS thanks the commenter for the comment. SAMSHA's part 2 
regulations protect the confidentiality of SUD treatment records by 
restricting the circumstances under which part 2 programs or other 
lawful holders can disclose such records without the patient's consent. 
CMS considered these regulations in the development of our February 
2020 proposed rule. The requirement to include beneficiaries with a 
history of opioid-related overdose as PARBs does not require Part D 
sponsors to disclose SUD information to providers under a DMP; rather, 
they are communicating to the prescriber as part of case management 
that the beneficiary has a history of opioid-related overdose. A 
diagnosis of overdose is not synonymous with SUD or SUD treatment, and 
CMS will not be reporting SUD treatment records, nor the specific 
overdose diagnosis code, to Part D plans via the OMS report. We 
anticipate reporting overdose history in the form of a binary indicator 
(e.g. ``yes/no,'' ``0/1,'' or other code) on the OMS report if the PARB 
was identified based on having a history of opioid-related overdose. 
Additional information, such as the date of overdose, may be provided 
as well. CMS will provide the updated OMS report file layout and

[[Page 5890]]

OMS technical guidance in advance of the 2022 contract year. The 
information CMS will provide in the OMS report will be limited such 
that 42 CFR part 2 does not apply to the disclosures required under 
this rule. The restrictions on disclosure and use of SUD information 
only apply to such information that ``would identify a patient as 
having or having had a substance use disorder either directly, by 
reference to publicly available information, or through verification of 
such identification by another person.'' (42 CFR 2.12(a)(1)(i)). 
Furthermore, under part 2, overdose information that does not reveal 
the identity of an individual as a SUD patient is not covered by the 
part 2 rule. The rule does not apply to ``[a] diagnosis of drug 
overdose or alcohol intoxication which clearly shows that the 
individual involved does not have a substance use disorder (e.g., 
involuntary ingestion of alcohol or drugs or reaction to a prescribed 
dosage of one or more drugs).'' (42 CFR 2.12(e)(4)(2)). As detailed in 
the proposed rule preamble, the diagnosis codes that CMS will use to 
identify PARBs with a history of opioid-related overdose do not capture 
the nature of the intent or circumstances of the overdose. CMS is 
making no assumptions as to the factors that contributed to the 
overdose, but rather, is deferring to the providers who will be engaged 
in case management to appropriately evaluate and triage their patients 
as necessary.
    CMS has suggested in the previously cited November 20, 2018 DMP 
guidance memo that an element of case management could be encouraging 
prescribers to consider performing or referring their patients for SUD 
screening and/or assessment. The sponsor should not presume a 
beneficiary has SUD on the basis of the opioid overdose diagnosis.
    Comment: A commenter recommended that beneficiaries with a history 
of opioid-related overdose be excluded from the criteria for 
identifying a PARB if there was a subsequent medical claim for opioid 
treatment program (OTP) services or a PDE for medication-assisted 
treatment (MAT). The commenter stated that case management through the 
DMP would not likely offer benefit since presence of either scenario 
would suggest that an intervention had already been made and risk 
factors are being addressed.
    Response: CMS disagrees that beneficiaries with a claim for OTP 
services or MAT should be automatically excluded from the criteria for 
identifying a PARB. Referral to an OTP or initiation of MAT are not the 
only goals of case management through a DMP. While a claim for OTP 
services or MAT indicate that an intervention has begun, it does not 
necessarily mean that the intervention has been successful. CMS 
believes beneficiaries may still benefit from other elements of the 
DMP. For example, a coverage limitation on future opioid prescriptions 
may be beneficial for an individual while in treatment.
    In reviewing this comment, CMS realized that the proposed rule had 
not specified how prescriptions for MAT were treated in the context of 
requiring an opioid prescription claim in addition to the opioid-
related overdose diagnosis to meet the new PARB criteria. The 
methodology that CMS used to identify PARBs based on the proposed 
criteria excluded PDEs for MAT. Only PDEs for non-MAT opioids were 
included in the analysis and corresponding burden estimates. This is 
how CMS plans to operationalize the clinical guideline criteria for the 
purposes of reporting PARBs with a history of opioid-related overdose 
via OMS. CMS has revised the clinical guidelines at Sec.  
423.153(f)(16)(ii)(2) to clarify that prescriptions for MAT will not 
satisfy the opioid prescription claim criteria for identification of 
PARBs on the basis of history of opioid-related overdose. Therefore, a 
beneficiary who has at least one claim with a principal diagnosis 
indicating opioid overdose, but only has prescription claims for MAT 
and no other opioids, will not be included as a PARB in the OMS report.
    Comment: A few commenters requested that CMS conduct outreach and 
education to prescribers regarding DMPs and the new criteria for 
identifying PARBs based on history of opioid-related overdose.
    Response: CMS will update educational materials and guidance as 
appropriate.
    Comment: Several commenters requested CMS provide updated model 
documents to reflect the new criteria for identifying PARBs based on 
opioid-related overdose history.
    Response: Revisions have been made in accordance with the Paperwork 
Reduction Act (PRA) model notice revision process. Revised notices will 
be published in the Federal Register for public comment before being 
finalized and posted on the CMS website.\16\
---------------------------------------------------------------------------

    \16\ https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/RxUtilization.
---------------------------------------------------------------------------

    Comment: Many commenters requested that CMS provide technical 
specifications, such as OMS report file layout and response codes, well 
in advance (that is, 6 months) of the expected implementation date so 
that sponsors would have sufficient time to update internal systems.
    Response: CMS appreciates that plans will need time to make 
operational changes to incorporate this new beneficiary population into 
their DMPs, and intends to issue guidance and technical specifications 
to ensure such changes are in place prior to the compliance deadline.
    Comment: A commenter recommended that naloxone prescribing should 
be mandatory.
    Response: In the proposed rule, CMS stated that the provider should 
consider prescribing the beneficiary an opioid-reversal agent if they 
are newly aware of the beneficiary's history of opioid-related overdose 
and DMPs should notify providers and patients of the coverage of 
naloxone and its availability through their plan. CMS does not have 
statutory authority to mandate naloxone prescribing in Part D.
    Comment: A commenter suggested that naloxone education be added to 
model beneficiary notice letters.
    Response: CMS will consider this recommendation during the PRA 
model notice revision process. Revised notices will be published in the 
Federal Register for public comment before being finalized and posted 
on the CMS website.\17\
---------------------------------------------------------------------------

    \17\ Ibid.
---------------------------------------------------------------------------

    Comment: Some commenters requested clarification that the DMP 
exemptions still apply to PARBs identified based on history of opioid-
related overdose.
    Response: Section 1860D-4(c)(5)(C)(v)(I) of the Act specifies that 
beneficiaries who are not exempted individuals and who have a history 
of opioid-related overdose must be included as PARBs. Therefore, even 
if a beneficiary has a history of opioid-related overdose, if the 
beneficiary also meets the regulatory definition of an exempted 
beneficiary, as codified at Sec.  423.100, that beneficiary is not to 
be included in a DMP. Beneficiaries with a known exemption will not be 
reported via OMS; however, it is possible that it will not be known 
whether a beneficiary is exempt until case management takes place. 
Thus, beneficiaries may initially be reported as PARBs but will later 
be found to be exempt. In this scenario, the beneficiary would no 
longer be considered a PARB. In response to this comment, CMS is making 
a technical change to the definition of potential at-risk beneficiary 
at Sec.  423.100 to clarify that it excludes exempted beneficiaries.

[[Page 5891]]

This technical change is described in more detail in section VI.M.
    After consideration of the comments received, CMS is not finalizing 
the remaining changes we had proposed to the definition of ``potential 
at-risk beneficiary'' at Sec.  423.100. Rather, we are incorporating 
those proposed changes into the DMP clinical guidelines at Sec.  
423.153(f)(16)(ii)(2). Thus, the clinical guidelines used to identify 
PARBs, beginning January 1, 2022, will include a Part D eligible 
individual who is identified as having a history of opioid-related 
overdose and at least one recent opioid claim, in addition to the 
existing clinical guidelines based on obtaining frequently abused drugs 
from multiple prescribers and/or pharmacies. The finalized clinical 
guidelines for identifying PARBs with history of opioid-related 
overdose also include modifications to encompass potential data sources 
and clarify the exclusion of MAT from the opioid prescription component 
of the guidelines, as discussed earlier in this section.

C. Information on the Safe Disposal of Prescription Drugs (Sec.  
422.111)

    Section 6103 of the SUPPORT Act amends section 1852 of the Act by 
adding a new subsection (n). Section 1852(n)(1) requires MA plans to 
provide information on the safe disposal of prescription drugs that are 
controlled substances when furnishing an in-home health risk 
assessment. Section 1852(n)(2) requires us to establish, through 
rulemaking, criteria that we determine appropriate with respect to 
information provided to an individual during an in-home health risk 
assessment to ensure that he or she is sufficiently educated on the 
safe disposal of prescription drugs that are controlled substances.
    In order to implement the requirements of Section 1852(n)(1) for MA 
plans, CMS in its proposed rule (CMS 4190-P) proposed to revise the 
Sec.  422.111, Disclosure Requirements, to add a paragraph (j), which 
would require MA plans that furnish an in-home health risk assessment 
on or after January 1, 2022, to include both verbal (when possible) and 
written information on the safe disposal of prescription drugs that are 
controlled substances in such assessment. Consistent with Section 
1852(n)(1), we proposed that information must include details on drug 
takeback programs and safe in-home disposal methods.
    In educating beneficiaries about the safe disposal of medications 
that are controlled substances, we proposed that MA plans would 
communicate to beneficiaries in writing and, when feasible, verbally. 
We proposed that MA plans must do the following to ensure that the 
individual is sufficiently educated on the safe disposal of controlled 
substances: (1) Advise the enrollee that unused medications should be 
disposed of as soon as possible; (2) advise the enrollee that the US 
Drug Enforcement Administration allows unused prescription medications 
to be mailed back to pharmacies or other authorized sites using 
packages made available at such pharmacies or other authorized sites; 
(3) advise the enrollee that the preferred method of disposing of 
controlled substances is to bring them to a drug take back site; (4) 
identify drug take back sites that are within the enrollee's MA plan 
service area or that are nearest to the enrollee's residence; and (5) 
instruct the enrollee on the safe disposal of medications that can be 
discarded in the household trash or safely flushed. Although we did not 
propose to require MA plans to provide more specific instructions with 
respect to drug disposal, we did propose that the communication to 
enrollees would provide the following additional guidance: If a drug 
can be safely disposed of in the enrollee's home, the enrollee should 
conceal or remove any personal information, including Rx number, on any 
empty medication containers. If a drug can be discarded in the trash, 
the enrollee should mix the drugs with an undesirable substance such as 
dirt or used coffee grounds, place the mixture in a sealed container 
such as an empty margarine tub, and discard in the trash.
    We also proposed that the written communication include a web link 
to the information available on the United States Department of Health 
and Human Services website identifying methods for the safe disposal of 
drugs available at the following address: https://www.hhs.gov/opioids/prevention/safely-dispose-drugs/index.html. We noted in our proposed 
rule that the safe disposal of drugs guidance at this website can be 
used for all medications not just medications that are controlled 
substances. We stated in our proposed rule that we believed that plan 
communications consistent with the standard on this website would 
furnish enrollees with sufficient information for proper disposal of 
controlled substances in their community. We thank commenters. We 
received 35 comments on this proposal; we summarize these comments and 
our responses to the comments follow.
    Comment: A commenter expressed concern about the significant 
operational burden required in performing a health risk assessment in 
person. This commenter also recommends that CMS allow risk assessments 
through telehealth such as video conference or a phone call 
particularly in rural areas where access is an issue.
    Response: In-home HRAs are performed in-person where the 
beneficiary resides and not via telehealth. However, we clarify that 
this rule is not requiring MA plans to conduct in-home HRAs. In-home 
HRAs are optional and MA plans may choose to conduct HRAs in this 
manner. Specifically, the information on the safe disposal of 
controlled substances is only required to be furnished when an MA plan 
chooses to conduct an in-home HRA. In this final rule, in consideration 
of the comments received, we have sought to minimize unnecessary plan 
burden while also ensuring consistency with the statutory requirement 
that enrollees who receive an in-home HRA are furnished useful and 
accessible information on the safe disposal of controlled substances. 
With the exception of MA SNP plans, all other MA plans are required 
under Sec.  422.112(b)(4)(i) to make a best effort to conduct an HRA 
annually and generally do so as part of an enrollee's covered annual 
wellness visit (see 42 CFR 410.15), but there is no requirement that 
the HRA be conducted in-home. We note that MA special needs plans 
(SNPs), as part of their model of care, are required to conduct annual 
HRAs for their enrollees (42 CFR 422.101(f)(1)(i), but are also not 
required to conduct in-home HRAs.
    Comment: A commenter asked us to clarify whether the requirement to 
furnish information about safe drug disposal during an in-home risk 
assessment applies to risk assessments conducted at other locations 
where seniors reside, such as senior-living centers, nursing homes or 
assisted living facilities.
    Response: If the enrollee's primary residence is in an 
institutional setting (such as a nursing home) the enrollee typically 
will not be responsible for the disposal of unused medications. 
Therefore, for purposes of this requirement, we would not consider a 
health risk assessment furnished to an individual who is residing in an 
institutional setting such as a nursing facility to be an ``in-home'' 
health risk assessment, and the MA plan is not required to furnish the 
enrollee with the guidance on the safe disposal of controlled 
substances during the HRA as required at Sec.  422.111(j). We have 
added language to Sec.  422.111(j) clarifying this exception.

[[Page 5892]]

    Comment: Several commenters questioned how CMS will confirm 
compliance with these disclosure requirements. The commenter asked CMS 
to clarify any member material requirements regarding confirming 
receipt of this information. For example, the commenter questioned 
whether enrollee attestations would be required. A commenter asked that 
CMS provide additional clarity about what must be included in the 
health risk assessment to be compliant with this requirement.
    Response: MA plans conducting an in-home HRA must document the 
visit and their provision of the required disclosure to the enrollee as 
described at Sec.  422.111(j). However, we are not imposing any 
additional requirements beyond written documentation that would 
otherwise be available to CMS upon review or audit that the safe 
disposal instructions have been met.
    Comment: A commenter recommend that CMS explore additional methods 
to improve take-back programs, such as allowing direct-to-consumer 
incentives for returning unused opioids. The commenter proposed that 
rewards and incentives (R&I) could take the form of coupons, gift 
cards, and electronic deposits to a digital wallet, or other options 
chosen by the consumer. Another commenter also proposed that CMS 
explore mechanisms that reverse distributors use to return prescription 
drugs from healthcare providers and pharmacies back to manufacturers 
could be leveraged to enable manufacturer-funded incentives that could 
be shared with consumers. These commenters stated they believed R&I 
would help spur individuals to return substantially more unused 
prescription opioids.
    Response: This comment is outside of the scope of this regulation. 
MA plans may offer R&I programs as specified in our regulations at 
Sec.  422.134 in section V.D of this final rule.
    Comment: A commenter stated that they will be furnishing free kits 
in a retail pharmacy chain that can be used to dispose of medications 
in the home. The commenter asked that CMS require plans to inform MA 
enrollees about this option. Another commenter indicated that they 
would be selling in-home drug deactivation kits and that CMS should 
inform MA enrollees of this option. This commenter recommended that CMS 
require that patient education include information about commercially 
available in-home disposal products that may be used in disposing of 
unused medications. Another commenter cited a report indicating that 
the use of in-home drug deactivation kits is a particularly effective 
way to facilitate the safe in-home disposal of controlled medications. 
This commenter also noted that drug deactivation kits would be 
particularly useful in rural areas where an authorized collector may 
not be nearby, and that the use of such kits would complement Take Back 
Day events and give consumers more options.
    Response: We recognize that other technologies, such as drug 
deactivation kits, have been developed and can provide additional 
options for the safe disposal of unused medications in the home. 
Accordingly, we are revising the regulation text at Sec.  422.111(j) 
(5) to add that the written and verbal information on the safe disposal 
of controlled medications may also include information about the 
availability of drug deactivation kits for in-home disposal of unused 
medications. Because these products may not be available to all 
enrollees and may have varying associated costs for the enrollee, CMS 
defers to MA organizations to determine whether and how to include such 
information. As we discuss in more detail in this section of this rule, 
MA plans have the flexibility to amend the information they furnish on 
the safe disposal of controlled substances to reflect innovations such 
as home drug disposal kits that may become available.
    Comment: Several commenters asked that CMS develop a model document 
that all MA plans could present to enrollees regarding the safe 
disposal of controlled substances and identification of community Rx 
take back sites. Several commenters also recommend that this model 
information be developed and provided in a format, reading level, and 
use appropriate visuals to ensure understanding by Medicare 
beneficiaries. A commenter also asked that CMS consider including in 
the model general information on drug take-back sites. Another 
commenter states that with thousands of health plans offering Medicare 
Advantage products and thousands of health professionals providing 
HRAs, the need for a common educational document is clear.
    Response: We do not believe that developing a model document will 
allow MA plans the flexibility to tailor their information to the local 
needs or changes in this rapidly evolving area. For example, the use 
and expanding availability of drug deactivation kits for in-home use is 
a relatively new development, and may vary in cost and availability 
across plans and depending on location. Other new developments or 
changes in how medications can be safely disposed may become available 
and we want to preserve the flexibility of MA plans to respond to 
possible future innovations in drug disposal methods by updating their 
information without depending on a CMS model document to make those 
changes. We believe that within the parameters we have established in 
this regulation, MA plans will have the flexibility to tailor their 
information to the specific conditions present in the rural, urban or 
metropolitan community where the enrollee receiving an in-home HRA 
resides. We expect that as with all written information furnished to MA 
enrollees that MA plans will use a format, reading level, and use 
appropriate visuals to aid understanding by Medicare beneficiaries 
consistent with Sec.  422.2267, which we are adopting elsewhere in this 
rule.
    Comment: Several commenters expressed concern about the burden of 
the proposed enrollee disclosure requirement. These commenters 
specifically mentioned that a verbal explanation of the safe disposal 
options and also the proposed requirement of identifying local take 
back sites are particularly burdensome. This commenter stated it would 
be impractical to tailor local takeback information for every 
individual nationwide who receives an in-home HRA. Rather, this 
commenter urges CMS to adopt a rule that the health professional's 
reference to the safe disposal website, where local takeback locations 
can be found, satisfies the requirement to provide such information.
    Response: The regulations we are finalizing in this final rule will 
require the verbal instructions to supplement the written guidance on 
the safe disposal of medications when possible. However, verbal 
instruction is not required if the enrollee is impaired to a degree 
where they are unable to receive verbal information. To assist plans in 
furnishing a verbal communication to enrollees and reduce the burden we 
are revising the final rule to specify that MA plans will inform 
enrollees in writing and verbally of two or more drug take back sites 
that are consistent with the community pattern of access to drug take 
back sites where the enrollee resides. The verbal instructions should 
also note that the written instructions contain the DEA website where 
the enrollee can identify other community drug take back sites through 
a search engine where the enrollee can also find current information on 
the safe disposal of drugs. If the enrollee's spouse or caregiver is 
the responsible party it would be appropriate to furnish this 
information (written and verbal) to them when conducting an in-home HRA 
of an impaired enrollee. We have amended

[[Page 5893]]

Sec.  422.111(j) to clarify the information that should be shared with 
the enrollee when a verbal summary of the instructions is possible. We 
believe providing this information in both written and verbal format is 
important for the effective transmission of this information to help 
enrollees appreciate the importance of disposing of unused medications 
that are controlled substances and that the written document can be 
used for more details on how to dispose of these unused medications. 
With respect to identifying local take back sites we recognize that 
simply referencing a website would be less burdensome. However, as 
previously noted, in response to these comments, we are modifying our 
proposal and will require a written and verbal disclosure of at least 
two drug take back locations that are consistent with the enrollee's 
community pattern of access to drug take back sites. Specifically, the 
identified drug take back sites must be among the drug take back sites 
that are generally utilized by people residing in the same community as 
the enrollee receiving the in-home HRA. That is, drug take back sites 
that are physically located within the shortest travel times. While the 
identification of two drug take back sites available to the enrollee 
identifies two choices we encourage plans to identify additional 
community take back sites.
    Comment: A commenter asked that rather than furnishing written 
guidance on the safe disposal of controlled substances the information 
could be furnished to all MA enrollees in ANOC/EOC documents. Another 
commenter states that adding this information to the MA plan website 
would also be less burdensome for members and health plans. One 
commenter recommends that CMS promote inclusion of safe disposal 
information within a member's enrollment welcome packet.
    Response: We are implementing the statutory requirement at section 
1852(n)(1), which requires that specific information on the safe 
disposal of controlled medications must be provided to MA enrollees who 
are furnished an in-home HRA. While we acknowledge that this 
information could be beneficial to other enrollees, given the specific 
statutory language referencing this subset of enrollees, we are not 
requiring the inclusion of this information in other MA plan 
communications, nor are we adding it to the EOC template. While not 
required, we recognize that information on safe disposal may be useful 
for all Medicare beneficiaries, and therefore we encourage MA plans to 
make it available to other plan enrollees, for example by posting it on 
their website.
    Comment: Another commenter asks that CMS maintain flexibility for 
plans to provide beneficiary education and outreach in a way that best 
suits the needs of individual members while minimizing burden. A 
commenter asks that CMS allow plans the flexibility to determine what 
information to provide, including relying on existing, externally 
validated sources. For example, the U.S. Drug Enforcement Agency (DEA) 
website at www.deatakeback.com already hosts an up-to-date, searchable 
database of locations for safe disposal (located specifically at 
https://apps2.deadiversion.usdoj.gov/pubdispsearch/spring/main?execution=e2s1), and local law enforcement stations routinely 
collect controlled substances or can direct beneficiaries elsewhere as 
needed.
    Response: The proposed regulation at Sec.  422.111(j)(1)(vi) (which 
we are renumbering as Sec.  422.111(j)(6)) requires that MA plans 
include in their written guidance a link to the United States 
Department of Health and Human Services website identifying methods for 
the safe disposal of drugs available at the following address: https://www.hhs.gov/opioids/prevention/safely-dispose-drugs/index.html.
    However, we agree that the previously identified DEA website is a 
useful tool for locating drug take back sites available in specific 
communities. We will require that MA plans include a link to the DEA 
website in their written instructions and will require MA plans to 
provide a verbal summary of the written instruction noting the 
availability of the DEA website as a source for locating drug take back 
sites. Therefore, we are amending Sec.  422.111(j)(2) to include the 
DEA link.
    Comment: Several commenters stated that pharmacists are trusted and 
qualified and should be the source of information to inform enrollees 
about methods for the safe disposal of medications. The commenters 
stated that delivering this information to the beneficiary at the point 
of sale where the beneficiary gets or refills their prescription could 
be more effective . The commenter believed that at these times, 
information on safe disposal is more likely to be understood, and the 
drugs are more likely to be disposed of safely as part of the 
beneficiary's care routine (for example, expired medications can be 
disposed of at or near the same location where a new prescription is 
filled).
    Response: As we have previously noted in this preamble, we are 
implementing the statutory requirement at Section 1855(n), which 
requires MA plan to furnish information on the safe disposal of 
controlled substances when conducting an in-home HRA. Elsewhere in this 
rule we discuss the statutory requirement for this information to be 
furnished as part of a Part D MTM program.
    Comment: A commenter expressed concern that the various 
requirements for providing beneficiaries with safe disposal information 
may result in a beneficiary receiving multiple and varied messages with 
the adverse effect of beneficiary confusion and/or beneficiary 
resistance to the safe disposal message. This commenter recommends that 
CMS and plans make certain such efforts are coordinated with pharmacies 
to ensure consistent messaging, particularly around treatment 
alternatives.
    Response: As we have previously discussed we are laying out 
parameters rather than mandating model language with respect to the 
information that MA plans must furnish to enrollees during an in-home 
HRA. We believe the parameters we are finalizing at Sec.  422.111(j) 
give MA plans the flexibility to ensure that their written information 
remains reasonably consistent with the current drug disposal options 
available in the communities where their enrollees reside.
    We thank the commenters for sharing their concerns and 
recommendations regarding our proposed implementation of Section 
1855(n)(1) in the MA regulations at Sec.  422.111(j). After careful 
examination of all comments received and for the reasons set forth in 
the proposed rule and our responses to comments, we are finalizing 
Sec.  422.111(j) with the following modifications from the proposal. We 
are renumbering Sec.  422.111(j). We recognized the that DEA website is 
a useful tool for locating drug take back sites available in specific 
communities. We will require that MA plans include a link to the DEA 
website in their written guidance and note the availability of the DEA 
website as part of the verbal instructions to enrollee's when 
conducting in-home HRAs. Therefore, we are amending Sec.  422.111(j)(2) 
(as renumbered) to include the DEA link at: www.deatakeback.com which 
includes a page with a searchable database where drug take back sites 
nearest to a person's home can be identified at the following web link: 
https://apps2.deadiversion.usdoj.gov/pubdispsearch/spring/main?execution=e2s1.
    We are also amending Sec.  422.111(j)(4) to require that the 
written and verbal

[[Page 5894]]

instructions identify two or more drug take back sites available in the 
community where the enrollee resides. We are adding a new provision at 
Sec.  422.111(j)(5) specifying that as part of its educational 
information on the safe disposal of controlled medications, the plan 
may inform enrollees in writing and verbally about the availability of 
drug disposal kits for the in-home disposal of unused medications. 
Finally, we are revising Sec.  422.111(j) to clarify that for purposes 
of this requirement, a health risk assessment is not considered ``in 
home'' if the enrollee's primary place of residence, such as a nursing 
facility, manages the disposal of unused medications.

D. Beneficiaries' Education on Opioid Risks and Alternative Treatments 
(Sec.  423.128)

    Sponsors of Part D prescription drug plans, including MA-PDs and 
standalone PDPs, must disclose certain information about their Part D 
plans to each enrollee in a clear, accurate, and standardized form at 
the time of enrollment and at least annually thereafter under section 
1860D-4(a)(1)(a) of the Act. Section 6102 of the SUPPORT Act amended 
section 1860D-4(a)(1)(B) of the Act to require that Part D sponsors 
also must disclose to each enrollee, with respect to the treatment of 
pain, information about the risks of prolonged opioid use. In addition 
to this information, with respect to the treatment of pain, MA-PD 
sponsors must disclose coverage of non-pharmacological therapies, 
devices, and non-opioid medications under their plans. Sponsors of 
standalone PDPs must disclose coverage of non-pharmacological 
therapies, devices, and non-opioid medications under their plans and 
under Medicare Parts A and B. Section 6102 also amended section 1860D-
4(a)(1)(C) to permit Part D sponsors to disclose this opioid risk and 
alternative treatment coverage information to only a subset of plan 
enrollees, such as enrollees who have been prescribed an opioid in the 
previous 2-year period, rather than disclosing the information to each 
plan enrollee.
    To implement section 6102, we proposed to amend our regulations at 
Sec.  423.128 to require Part D sponsors to send information on opioid 
risks and alternative treatment information to all Part D enrollees, 
with the option to provide such information to a subset of such 
enrollees, in accordance with section 1860D-4(a)(1)(C), in lieu of 
providing it to all enrollees.
    Paragraph (a) of section 423.128 requires Part D sponsors to 
disseminate specific plan information to enrollees, under which a 
sponsor must disclose the information specified in paragraph (b) of 
this section in the manner specified by CMS. Paragraph (b) lays out 
information requirements the plan must include for qualified 
prescription drug coverage offered under the Part D plan. We proposed 
to revise these requirements by adding paragraph subsection (b)(11) to 
mandate that Part D sponsors send information about the risks 
associated with prolonged opioid use, coverage of non-pharmacological 
therapies, devices, and non-opioid medications, for MA-PDs, coverage 
under the plan, and for PDPs, coverage under Parts A and B. 
Additionally, we proposed to add subsection (b)(11)(ii), which gives 
Part D sponsors the option of sending these resources to a subset of 
enrollees, in lieu of providing it to every enrollee. In the proposed 
rule, as shown in Table C1, we suggested 6 different enrollee subsets 
to whom sponsors could send the required opioid risk and alternate pain 
treatment coverage information, generally grouped by retrospective 
review of prescription opioid fills using several different timeframes, 
with the exception of the subgroup that contains all Part D enrollees. 
The lookback periods ranged from use of any opioids in last 2 years to 
greater than 90 days continuous use with a 7-day gap or less in the 
past year. Table C1 also shows the estimated number of enrollees in 
each suggested subgroup, as well as the estimated percent of total 
opioid users in Part D that each subgroup constitutes.

       Table C1--Suggested Subset Options To Receive Education on Opioid Risks and Alternate Treatments *
----------------------------------------------------------------------------------------------------------------
                                                                                   Number of        Percent of
               Subset                             Suggested subset               enrollees in      total Part D
                                                                                  this subset      opioid users
----------------------------------------------------------------------------------------------------------------
1...................................  All Part D Enrollees...................        46,759,911              N/A
2...................................  Any opioid use in last 2 years.........        16,134,063              100
3...................................  Any opioid use in past year............        11,027,271              100
4...................................  7 days continuous opioid use...........         7,163,615               65
5...................................  Greater than 30 days continuous opioid          3,816,731               35
                                       use, 7 day or less gap.
6...................................  Greater than 90 days continuous opioid          2,698,064               24
                                       use, 7 day or less gap.
----------------------------------------------------------------------------------------------------------------
* All figures based on 2018 PDE data as of 7/6/2019, except subset 2 which is based on 2017 and 2018 PDE data.
  Beneficiaries were excluded from the opioid use subsets if they were in hospice, in a resident facility, or
  had a palliative care diagnosis (07/01/2018-12/31/2018). Beneficiaries were also excluded if they had a cancer
  diagnosis (01/01/2018-12/31/2018). No exclusions were applied to the all Part D enrollees figure (subset 1).

    We specifically solicited comments from stakeholders on the various 
suggested subsets of enrollees to whom the required information could 
be sent, in order to determine if there was any consensus that might 
inform sponsors' decisions, whether based on our suggested subsets or 
otherwise.
    Comment: Many commenters were supportive of our proposal as an 
additional means to support efforts to address the national opioid 
crisis.
    Response: We thank these commenters for their support of the 
proposed provision.
    Comment: A few commenters expressed concern about overreach in 
sending the required information to all Part D enrollees. They 
highlighted the potentially negative reactions enrollees may have if 
they receive this information without having record of a previous 
opioid prescription. Conversely, other commenters believed that it was 
important for all enrollees to receive the information whether or not 
they had a record of a prior opioid prescription, noting that 
successful public health campaigns are not always tailored to specific 
populations. Other commenters supporting that the information be 
disclosed to all Part D enrollees noted that some beneficiaries may 
have paid cash for opioids or used illicit ones, and thus would be 
missed in any subset based on prescription opioid use. A few commenters 
believed that plans could focus their efforts on beneficiaries who have 
received an opioid in the last 7 days, so as to not

[[Page 5895]]

be over-inclusive with the information disseminated to them. No other 
commenters suggested a different subset of enrollees to whom the 
information should be provided.
    Response: We appreciate the commenters' feedback. Although some 
commenters offered their opinion on the enrollee population that might 
be the best group to receive the information, there was no consensus to 
inform sponsors' ultimate decisions on to whom to send the information. 
As we have noted, the statute leaves this decision to the sponsor's 
discretion.
    Comment: Several commenters encouraged CMS to develop a model 
document for sponsors to use for consistent messaging about the risk of 
opioid use and coverage of alternative pain treatments.
    Response: We do not believe a model document is appropriate or 
necessary. Both MA-PDs and standalone PDPs should be able to describe 
the risks of prolonged opioid use without a model document, as they 
possess the expertise in both the coverage and clinical use of drugs 
and their associated risks. In addition, Part D sponsors have available 
to them federal government websites as resources for consistent 
messaging. For example, the U.S. Department of Health and Human 
Services website (https://www.hhs.gov/opioids/) contains information 
about opioid risks and pain management options, and CMS' Pain 
Management website (https://www.medicare.gov/coverage/pain-management) 
also contains information about the risks of opioids and pain 
management.
    Moreover, we anticipate that sponsors will require some flexibility 
when it comes to developing the content for these beneficiary notices, 
given that they have the discretion to choose a subset of enrollees to 
whom they will send the notices. Also, coverage of alternative pain 
treatments will likely vary among plans. Additionally, a plan's 
beneficiary population can be unique and opioid issues may vary 
regionally and over time. Thus, the degree of flexibility any model 
document would require to allow each plan to tailor its message and 
information to its specific plan population in terms of coverage of the 
risks of prolonged opioid use and alternate pain treatments would 
decrease the utility of a model document.
    Comment: A commenter suggested that this information could be 
conveyed to Part D enrollees through the EOC.
    Response: We respectfully disagree. While the EOC does contain 
information about plan coverage of alternate pain treatments, such as 
coverage of physical therapy services in an MA-PD, it is a very large 
document containing hundreds of pages of material, which is not the 
best method to provide the specific, cohesive, and concise information 
on opioid alternatives that is required under this provision.
    Moreover, given that Section 6102 of the SUPPORT Act provides for 
specific opioid education to Part D beneficiaries, we do not believe 
that adding opioid risk and alternative pain treatment coverage to a 
lengthy technical document would draw sufficient attention to the 
required information. For this reason, we believe that a separate 
beneficiary communication is a more effective means of conveying this 
information. We may consider revising the EOC template in future years 
so that a plan may include this information; however, our current focus 
is on implementing the statutory requirement and believe it is best 
implemented as we proposed.
    Comment: Some commenters requested clarification on whether Part D 
plans are permitted to send the required information electronically 
without prior consent of the beneficiary, based on requirements they 
referenced from Sec.  423.128(b), which allowed for electronic delivery 
of EOCs without prior beneficiary authorization. Specifically, the 
regulation allowed plans to meet the disclosure and delivery 
requirements for certain documents by relying on notice of electronic 
posting and provision of the documents in hard copy when requested, 
when previously the documents, such as the EOC, had to be provided in 
hard copy.
    Response: As stated under Sec.  423.2267(d)(2)(ii), which we are 
finalizing as discussed elsewhere in this rule, we will not allow for 
electronic delivery without prior approval from the beneficiary for 
this type of material. Part D sponsors may only mail new and current 
enrollees a notice for electronic access to the EOC, Provider and 
Pharmacy Directories, and Formulary without beneficiary authorization. 
Conversely, the separate beneficiary notice on opioid risk and coverage 
of alternate pain treatment is a new document that will convey 
important safety information related to a national epidemic, and we 
want to make sure that beneficiaries will see the information. For this 
reason, we are not making any exceptions to Sec.  423.2267(d) for this 
information, and Part D plans must obtain the beneficiary's consent 
before they may provide this information electronically.
    Comment: As we noted earlier in section A, we received many general 
comments expressing concern that the opioid provisions of the proposed 
rule would limit access to pain medicine, including opioids.
    Response: We are not persuaded that educating beneficiaries about 
the risks of opioid use and coverage of alternative pain treatments 
will prevent people who need opioids for treatment of their pain from 
receiving them. It is commonly accepted that beneficiaries should 
discuss their health care treatment choices and the potential risks 
associated with each choice with their health care providers, and that 
the more education beneficiaries have about their options and the 
associated risks when they have these conversations, the better able 
they will be to make the best choice for themselves in consultation 
with their providers.
    After consideration of the comments received, we are finalizing the 
new requirement at Sec.  423.128(b)(11) to disclose information to 
enrollees about opioid risks and alternatives without modification 
except thatthis provision will be applicable beginning on January 1, 
2022 rather than January 1, 2021 as initially proposed. However, given 
the ongoing national opioid epidemic and public health emergency, we 
strongly encourage Part D sponsors to disclose this information to 
their enrollees in 2021, if possible. We also encourage sponsors to 
include information in these notices, as they deem appropriate, to help 
increase awareness among Part D enrollees about access to medication-
assisted treatment (MAT) and naloxone. In this regard, we note that the 
CMS web page (https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Opioid-Treatment-Program/Index) includes information about the 
dispensing and administration of MAT medications (if applicable) now 
covered under the new Opioid Treatment Program (OTP) benefit under 
Medicare Part B. We also note that in the CY 2020 Call Letter, CMS 
previously encouraged Part D sponsors to engage in targeted education 
of enrollees on co-prescribing of naloxone,\18\ and that this 
beneficiary notice may be an ideal avenue to include such information.
---------------------------------------------------------------------------

    \18\ Announcement of Calendar Year (CY) 2020 Medicare Advantage 
Capitation Rates and Medicare Advantage and Part D Payment Policies 
and Final Call Letter, page 204 (April 1, 2019). https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf.
---------------------------------------------------------------------------

E. Eligibility for Medication Therapy Management Programs (MTMPs) 
(Sec.  423.153)

    We proposed to amend Part D Medication Therapy Management

[[Page 5896]]

(MTM) program requirements in Sec.  423.153 to conform with the 
relevant SUPPORT Act provisions. The SUPPORT Act modifies MTM program 
requirements for Medicare Part D plans by expanding the population of 
beneficiaries who are targeted for MTM program enrollment (``targeted 
beneficiaries'') to include at-risk beneficiaries (ARBs), and by adding 
a new service component requirement for all targeted beneficiaries. 
Section 6064 of the SUPPORT Act amended section 1860D-4(c)(2)(A)(ii) of 
the Act by adding a new provision requiring that ARBs be targeted for 
enrollment in the Part D plan's MTM program. We proposed to codify this 
requirement at Sec.  423.153(d)(2). Section 6103 of the SUPPORT Act 
amended the MTM program requirements in section 1860D-4(c)(2)(B) of the 
Act by requiring Part D plans to provide MTM enrollees with information 
about the safe disposal of prescription drugs that are controlled 
substances, including information on drug takeback programs, in-home 
disposal, and cost-effective means for safe disposal of such drugs. We 
proposed to codify this requirement by adding new paragraphs at Sec.  
423.153(d)(1)(vii)(E) and (F).
1. ARBs and MTM
    Under our proposed revisions to Sec.  423.153(d), ARBs would be 
targeted for enrollment in a sponsor's MTM program. The existing 
criteria that Part D sponsors currently use to target beneficiaries for 
MTM program enrollment would remain unchanged, so that two groups of 
enrollees would now be targeted for enrollment: (1) Enrollees who meet 
the existing criteria (multiple chronic diseases, multiple Part D drugs 
and Part D drug costs); and (2) enrollees who are determined to be ARBs 
under Sec.  423.100.
    Under our proposal, Part D sponsors would be required to 
automatically enroll all ARBs in their MTM programs on an opt-out only 
basis as required in Sec.  423.153(d)(1)(v). We did not propose to 
change any existing MTM program requirements for targeted beneficiaries 
enrolled in a Part D sponsor's MTM program, including service 
requirements such as annual comprehensive medication reviews (CMRs) and 
targeted medication reviews (TMRs). Accordingly, the MTM program 
requirements would be the same for all targeted beneficiaries enrolled 
in a Part D sponsor's MTM program, regardless of whether they are 
targeted for enrollment based upon the existing criteria or because 
they are ARBs.
    As discussed in detail in the February 2020 proposed rule (85 FR 
9031), CMS encourages sponsors to design MTM interventions for this new 
population of targeted beneficiaries to reflect their simultaneous 
inclusion in the sponsors' DMPs. CMS also encourages sponsors to 
consult existing clinical guidelines, such as those issued by the 
Centers for Disease Control and Prevention for Prescribing Opioids for 
Chronic Pain,\19\ when developing MTM strategies and materials. CMS 
solicited input into how sponsors can best coordinate DMPs and MTM 
programs and effectively perform outreach to offer MTM services. We 
also solicited feedback on how to leverage MTM services to improve 
medication use and reduce the risk of adverse events in this 
population, how to measure the quality of MTM services delivered, and 
how to increase meaningful engagement of the new target population in 
MTM. Lastly, we solicited comments on the type of information that we 
should use to monitor the impact of MTM services on ARBs, who will now 
be targeted for MTM services.
---------------------------------------------------------------------------

    \19\ Accessible at https://www.cdc.gov/mmwr/volumes/65/rr/rr6501e1.htm?CDC_AA_refVal=https%3A%2F%2Fwww.cdc.gov%2Fmmwr%2Fvolumes%2F65%2Frr%2Frr6501e1er.htm.
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    CMS also sought comment in the proposed rule on how the CMS 
Standardized Format (CMS-10396; OMB control number 0938-1154) might be 
modified in order to accommodate the new population of ARBs that will 
be enrolled in Part D sponsors' MTM programs. Additionally, CMS posted 
the CMR Standardized Format with rule-related changes in conjunction 
with the proposed rule. A version reflecting non-rule related revisions 
was posted in the Federal Register on February 24, 2020 (85 FR 10444) 
through the Paperwork Reduction Act (PRA) process with a 60-day public 
comment period. We also solicited feedback on whether using Health 
Level Seven (HL7[supreg])-enabled CMRs could positively impact the 
sharing of CMR data with the prescriber for an MTM enrollee, and the 
value of encouraging Part D MTM providers to use FHIR-enabled platforms 
when providing MTM to Part D enrollees to facilitate integration of the 
MTM service elements into prescribers' EHRs.
    Comment: CMS received multiple comments expressing concerns about 
the timing of the proposed requirements to include ARBs in MTM programs 
and to provide information on safe disposal of controlled substances to 
beneficiaries enrolled in MTM. Commenters requested that CMS postpone 
implementation of the requirement to add ARBs to MTM programs until 
2022, citing the time involved to develop an effective MTM program that 
would serve the new population, including the need to coordinate 
between MTM providers, behavioral health teams, DMPs, and others. They 
stated that plans will need time to create the systems required for 
information exchange to facilitate care coordination. One commenter 
pointed out that resources are currently being consumed by COVID-19 
needs.
    Response: Recognizing the impact of the COVID-19 public health 
emergency on plans and other stakeholders, we are modifying the 
regulation text at Sec.  423.153(d)(1)(vii)(E) and Sec.  
423.153(d)(2)(ii) to specify that these changes to MTM programs must be 
implemented by Part D plan sponsors beginning January 1, 2022, rather 
than January 1, 2021 as initially proposed. The applicability date for 
Sec.  423.153(d)(2) is 60 days after the date of publication of this 
final rule.
    Comment: Many commenters opined on the usefulness of targeting ARBs 
for enrollment in the Part D MTM program. Some commenters believe that 
these beneficiaries would benefit from MTM interventions that would 
create additional opportunities to provide counseling and education to 
a generally underserved population. Other commenters expressed concern 
that targeting these beneficiaries for MTM would make this vulnerable 
population believe they are being singled out or stigmatized, or would 
increase the size of MTM programs. A commenter questioned CMS' 
authority to propose this requirement, calling our proposal 
``bureaucratic over-reach.'' Other commenters stated that providing 
ARBs with both DMP and MTM services would be duplicative and 
potentially confusing; a commenter pointed out that plans often use one 
vendor to perform DMP-related services and another for MTM which could 
lead to a lack of coordination between service providers. A few 
commenters suggested alternative mechanisms to provide services to the 
ARBs such as enhancing DMPs or making a beneficiary's at risk status 
another condition to be considered when developing MTM targeted 
population.
    Response: Section 6064 of the SUPPORT Act, as codified at section 
1860D-4(c)(2)(A)(ii) of the Act, requires that Part D plan sponsors 
include ARBs in their MTM programs. As discussed in the proposed rule, 
the MTM program requirements are the same for all targeted 
beneficiaries enrolled in a Part D sponsor's MTM program, regardless of 
whether they are targeted for enrollment based upon the existing 
criteria or because they are ARBs. In order to

[[Page 5897]]

provide services for ARBs, plans will need to coordinate services 
across both their DMP and MTM program without regard for which vendors 
furnish such services. Part D plan sponsors are ultimately responsible 
for ensuring that all delegated functions are compliant with CMS 
requirements. See 42 CFR 423.505(i)(1). This includes making sure that 
downstream entities used to provide a plan's DMP and/or MTM program 
coordinate, as necessary, to ensure that communications with and 
services furnished to plan enrollees comply with applicable Part D 
requirements. To the extent that MTM can be provided within a plan's 
DMP while meeting all MTM service requirements, this approach would be 
permissible provided it complies with all other applicable Part D 
requirements. Further, if a plan wishes to target all PARBs for 
enrollment in its MTM program instead of only targeting ARBs, it is 
permitted to do so, provided that the plan meets all CMS requirements 
for both DMPs and MTM services. The criteria specified in the 
regulation reflect what is required under the Act, and do not preclude 
plans from electing to offer MTM services to an expanded population of 
beneficiaries who do not meet the eligibility criteria under Sec.  
423.153(d).\20\
---------------------------------------------------------------------------

    \20\ See HPMS memorandum dated April 5, 2019, ``CY 2020 
Medication Therapy Management Program Guidance and Submission 
Instructions'' at: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Memo-Contract-Year-2020-Medication-Therapy-Management-MTM-Program-Submission-v-041019-.pdf.
---------------------------------------------------------------------------

    Comment: Several commenters asked CMS for more direction in 
developing MTM programs that will meet the needs of the new cohort of 
beneficiaries.
    Response: CMS typically gives plans the latitude to develop MTM 
programs that meet their beneficiaries' needs within the framework of 
the applicable statutory and regulatory requirements. Most Part D plans 
have gained experience with their ARB population through DMPs and 
earlier Part D opioid overutilization policy, and we expect plans to 
draw on this experience when working with their clinical teams, 
including any downstream entities, in developing clinically appropriate 
MTM interventions for these individuals. Consistent with section 1860D-
4 (c)(2)(E) of the Act, MTM programs must be developed in cooperation 
with licensed and practicing pharmacists and physicians.
    Comment: Multiple commenters expressed concerns that the addition 
of ARBs to the MTM population could impact the Part D MTM Program 
Completion Rate for CMR Star Rating measure, and expressed concerns 
that including the new population of MTM-eligible beneficiaries in the 
CMR completion rate might adversely affect a plan's overall Star 
rating. A commenter cited internal data indicating an expected CMR 
acceptance rate of 23 percent for current MTM-eligible beneficiaries 
who also meet the DMP criteria for ARBs. Commenters requested that CMS 
proactively implement safeguards in the scoring of this measure--some 
commenters suggesting the measure be excluded from Star Ratings and 
others asking that ARBs be excluded from the measure--in order to 
ensure plans with a high population of ARBs are not adversely and 
unintentionally affected.
    Response: CMS appreciates these comments but believes it is 
premature to assume that ARBs will be less receptive to offers of MTM 
services than other beneficiaries prior to gaining program experience. 
Congress enacted a statutory requirement that Part D plans engage with 
this population through their MTM programs, and CMS expects plans to 
develop effective engagement strategies based on their beneficiary 
population and business model.
    The MTM CMR completion rate is a Pharmacy Quality Alliance (PQA) 
endorsed measure. The denominator currently used to derive the measure 
includes all individuals who met the MTM eligibility criteria; 
therefore, while the methodology for the measure is outside the scope 
of our proposal, as currently defined, the measure would include ARBs 
beginning with the 2022 measurement period. The extent to which any 
potential change in a plan's rating on this measure may affect its 
overall Star Rating would also depend on that plan's performance on all 
other Star Ratings measures. Lastly, CMS codified the methodology for 
the Part C and D Star Ratings program in the CY 2019 Medicare Part C 
and D Final Rule (83 FR 16519 through 16589), published in April 2018, 
for performance periods beginning with 2019; that final rule lays out 
the methodology for the 2021 Star Ratings and beyond. If the measure 
steward changes the specifications for the MTM CMR completion rate 
measure, the process for CMS to update the Star Ratings measures is 
codified at Sec.  423.184(d).
    Comment: A few commenters expressed concerns about the types of 
reporting requirements that may be included when ARBs are enrolled into 
MTM programs, and requested that CMS clarify what those requirements 
will be. A few commenters urged CMS to consider reducing reporting 
elements in view of the additional beneficiaries that will be added to 
MTM programs.
    Response: We are requiring plans to comply with the requirement to 
extend MTM to ARBs beginning on January 1, 2022, and therefore this 
requirement will not impact plan reporting until the 2022 plan year 
data, which is collected in early 2023. Part D reporting requirements 
for the 2021 plan year (CMS-10185; OMB control number: 0938-0992 
expires December 31, 2023) have been approved by OMB and are available 
at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/RxContracting_ReportingOversight.
    Comment: A commenter voiced support for conducting CMR sessions via 
telemedicine.
    Response: We appreciate the reminder that the CMR can be provided 
via telemedicine, which may be preferable in many situations. The 
regulation at Sec.  423.153(d)(1)(vii)(B)(1)(i) specifies that the 
annual CMR must be provided by an interactive, person-to-person, or 
telehealth consultation.
    Comment: A few commenters requested additional information on when 
a beneficiary may be considered to be ``unable to accept the offer to 
participate'' in a CMR. These commenters contend that it may be 
necessary to conduct outreach to a provider in cases where barriers due 
to social determinants of health (SDOH) may prevent the beneficiary 
from accepting the offer of a CMR, while conducting the CMR with the 
prescriber would allow the member to receive the benefits that go with 
MTM programs.
    Response: As we explained in the proposed rule, the only situation 
in which CMS would consider a beneficiary to be unable to accept an 
offer to participate in a CMR is when the beneficiary is cognitively 
impaired and cannot make decisions regarding his or her medical needs. 
The CMS Standardized Format provides instructions for those 
circumstances. The flexibility to perform the CMR with a prescriber, 
caregiver or other authorized individual does not apply to situations 
where the sponsor is unable to reach the beneficiary (such as no 
response by mail, no response after one or more phone attempts, or lack 
of phone number or address), if there is no evidence of cognitive 
impairment, or where the beneficiary declines the CMR offer. Further, 
perceived barriers due to a beneficiary's SDOH does not mean that the 
beneficiary is unable to participate in a CMR. MTM providers are 
expected to make sure that they engage the target population in a 
manner that these beneficiaries can

[[Page 5898]]

understand and use, regardless of any language or other barriers that 
exist. We also want to caution that the failure to provide services to 
beneficiaries disadvantaged by poverty, language, or other SDOH 
suggests discriminatory practices, which may be in violation of the 
Social Security Act or other federal requirements regarding access to 
services.
    Comment: A commenter asked CMS to clarify the definition of an ARB.
    Response: An ARB, as defined at Sec.  423.100, means a Part D 
eligible individual (1) who is: (i) Identified using clinical 
guidelines (also defined in Sec.  423.100); (ii) not an exempted 
beneficiary; and (iii) determined to be at-risk for misuse or abuse of 
such frequently abused drugs (FADs) under a Part D sponsor's drug 
management program in accordance with the requirements of Sec.  
423.153(f); or (2) with respect to whom a Part D sponsor receives a 
notice upon the beneficiary's enrollment in such sponsor's plan that 
the beneficiary was identified as an ARB (as defined in paragraph (1) 
of this definition) under the prescription drug plan in which the 
beneficiary was most recently enrolled and such identification had not 
been terminated upon disenrollment.
    Comment: A commenter asked whether CMS expects to ``grandfather'' 
existing ARBs who have an active coverage limitation placed prior to 
January 1, 2021 that extends into the 2021 plan year, or whether the 
new MTM requirement would apply only to ARBs who are newly identified 
after January 1, 2021.
    Response: As discussed earlier, under the regulation we are 
adopting in this final rule, Part D plan sponsors must comply with the 
requirement to include ARBs in MTM programs by January 1, 2022. 
Accordingly, all existing ARBs--that is, enrollees with an active 
limitation under a DMP as of January 1, 2022, although such limitation 
may have commenced prior to January 1, 2022--as well as ARBs identified 
on or after January 1, 2022, must be targeted for enrollment in MTM.
    Comment: CMS received a number of comments on how to improve the 
Standardized Format including suggestions on the content and format. 
Most commenters indicated that electronic sharing of completed CMRs to 
the prescriber's EHR would promote continuity of care. These commenters 
urged CMS to produce a template that encouraged HL7[supreg]-enabled 
submissions. A commenter asked when a new MTM Standardized Format will 
be available for use and when MTM providers will be required to start 
using any newly developed format.
    Response: We thank all commenters for their suggestions. Comments 
received in response to this regulation will be considered when 
finalizing the Standardized Format along with those received in 
response to the PRA package for the CMS Standardized Format (CMS-10396; 
OMB control number 0938-1154) that was published separately from the 
rule. An additional 30-day notice for CMS-10396 will be published for 
public comment following publication of this final rule, and a package 
will be delivered for OMB review. The 30-day notice will address the 
comments received in response to the rule- and non-rule solicitations, 
provide additional proposed revisions if applicable to address the 
comments, and propose a date for when the changes would become 
effective. The finalized Standardized Format will be released after 
approval by the OMB.
    Comment: A commenter was concerned that the pecuniary interest of 
the sponsor will be the primary driver for MTM reviews and that it 
would create an incentive to ``say no'' to appropriate and safe opioid 
therapies for hundreds of thousands of pain patients.
    Response: It appears that the commenter may be unfamiliar with the 
use and purpose of Part D MTM programs. The goal of MTM is to improve 
medication use and therapeutic outcomes driven by the individual 
beneficiary clinical needs and does not result in any denials of 
medications or services.
2. Information on Safe Disposal of Prescription Drugs That Are 
Controlled Substances for MTM Enrollees
    Section 6103 of the SUPPORT Act added a new requirement that Part D 
plans provide beneficiaries enrolled in their MTM programs with 
information about the safe disposal of prescription drugs that are 
controlled substances, including information on drug takeback programs, 
in-home disposal, and cost-effective means for safe disposal of such 
drugs. To implement this new requirement, we proposed that Part D 
sponsors would be required to provide this information to all 
beneficiaries enrolled in their MTM programs at least annually, as part 
of the CMR or through the quarterly TMRs or follow up. Furthermore, 
while not required, we encouraged sponsors to provide information on 
safe disposal of all medications, not just controlled substances, to 
MTM enrollees.
    Section 6103 of the SUPPORT Act states that the information 
provided to beneficiaries regarding safe disposal of prescription drugs 
that are controlled substances must meet the criteria established in 
section 1852(n)(2) of the Act, including information on drug takeback 
programs that meet such requirements determined appropriate by the 
Secretary and information on in-home disposal. Section 1852(n)(2) 
states that the Secretary shall, through rulemaking, establish criteria 
the Secretary determines appropriate to ensure that the information 
provided to an individual sufficiently educates the individual on the 
safe disposal of prescription drugs that are controlled substances. We 
described our proposed criteria and requirements for MA plans to 
furnish information on safe disposal of controlled substances when 
providing an in-home health risk assessment and our proposal to codify 
these requirements in a new provision of the regulations at Sec.  
422.111(j) in section III.C. of the proposed rule. In section III.E.2 
of the proposed rule, we proposed that Part D plans would be required 
to furnish materials in their MTM programs regarding safe disposal of 
prescription drugs that are controlled substances that meet the 
criteria specified in Sec.  422.111(j). Under this proposal, Part D 
plans, like MA plans, would retain the flexibility to refine their 
educational materials based on updated information and/or on 
beneficiary feedback, so long as the materials meet the proposed 
criteria. Section 1860D-4(c)(2)(B)(ii) of the Act expressly directs 
that the information on safe disposal furnished as part of an MTM 
program meet the criteria established under section 1852(n)(2) of the 
Act for MA plans. Accordingly, to ensure consistency and to avoid 
burdening MA-PD plans with creating separate documents addressing safe 
disposal for purposes of conducting in-home health risk assessments and 
their MTM programs, we explained our belief that it is appropriate to 
apply the same criteria that would apply under the proposed provision 
at Sec.  422.111(j) to MTM programs by including a reference to the 
requirements of Sec.  422.111(j) in the regulation at Sec.  423.153(d) 
governing MTM programs.
    Specifically, we proposed to revise Sec.  423.153(d)(1)(vii) to 
include a requirement that all MTM enrollees receive at least annually, 
as part of the CMR, a TMR, or another follow up service, information 
about safe disposal of prescription drugs that are controlled 
substances, take back programs, in-home disposal, and cost-effective 
means of safe disposal that meets the criteria in Sec.  422.111(j).

[[Page 5899]]

    Comment: A few commenters suggested that plans be allowed to 
include information on safe disposal in documents other than the TMR or 
CMR, or on a plan website. Another commenter suggested that the MTM 
program welcome letter (or written initial offer of the CMR) be used to 
convey safe disposal information as well, and asked if doing so would 
meet the intent of this requirement. This commenter stated that plans 
may have difficulty reaching beneficiaries after enrollment in the MTM 
program if they have disenrolled from the plan for any reason, and it 
would be useful for plans to have more ways to provide this important 
information.
    Response: As an initial matter, we note that plans have no 
obligation to provide MTM services to beneficiaries once they have 
disenrolled from the plan. Given the importance of information on the 
safe disposal of medicines, we support posting the information on plan 
or network pharmacy websites, but we do not believe that website 
postings alone will fulfill the statutory requirement that the 
information be provided to individual MTM recipients. However, we do 
agree with the comment recommending that safe disposal information 
could be provided in an MTM program welcome letter. While the statutory 
language at section 1860D-4(c)(2)(B)(ii) of the Act does not identify a 
specific format for providing this information, CMS believes that using 
the MTM welcome letter meets the statutory intent. Beneficiaries would 
then have an opportunity to ask any clarifying questions during a 
follow-up MTM service, including during the CMR. While not specifically 
addressed in the comments received, we would also support sending the 
safe disposal information electronically, for example through a member 
portal, provided the plan can document that the individual received the 
information. Accordingly, in this final rule we are modifying the 
proposed regulation text at Sec.  423.153(d)(1)(vii)(E) by including a 
reference to ``other MTM correspondence or service'' to give plans the 
flexibility to provide this information in the manner they determine is 
most effective for reaching the beneficiaries enrolled in their MTM 
program.
    Comment: All those who commented on the proposed requirement to 
include materials on safe disposal were supportive of the concept. A 
few commenters expressed appreciation that the proposed requirements in 
Sec.  423.153(d) echoed those proposed in Sec.  422.111(j). Some also 
commented that newly-developed disposal technologies that make the 
medications unusable, such as in-home deactivation kits, provide a 
viable option for safe disposal of controlled substances, and supported 
requiring information about these options in the educational materials.
    Response: We appreciate commenters' support for the concept of 
furnishing information on safe disposal to MTM enrollees. We agree that 
the types of products referenced by the commenters may present 
additional means for safe disposal of prescription drugs that would 
complement the approaches described in the proposed rule. Therefore, as 
discussed in section III.C of this preamble, in this final rule we are 
modifying the proposed regulation text at Sec.  422.111(j)(5) to permit 
plans to include information about the availability of in-home 
deactivation kits in the enrollee's community, where applicable. MA-PD 
plans will be able to use the same communication materials on safe 
disposal to educate MTM enrollees as they use for enrollees receiving 
this information as part of an in-home health risk assessment under MA.
    After consideration of the comments received, we are finalizing the 
proposed changes to the Part D MTM program requirements with the 
modifications discussed. We are finalizing our proposal to expand the 
definition of beneficiaries targeted for enrollment in MTM programs at 
Sec.  423.153(d)(2) to include ARBs, as defined in Sec.  423.100. We 
are finalizing the provision at Sec.  423.153(d)(1)(vii)(E) with 
modifications to allow plans to meet the safe-disposal educational 
requirement through use of a CMR, TMR, or other MTM correspondence or 
service, such as an MTM welcome letter. We are finalizing as proposed 
the requirement at Sec.  423.153(d)(1)(vii)(F) specifying that the 
information provided must comply with all requirements of Sec.  
422.111(j). Lastly, we are modifying the regulation text at Sec.  
423.153(d)(1)(vii)(E) and Sec.  423.153(d)(2)(ii) to specify that these 
requirements are applicable beginning on January 1, 2022. As noted in 
the Executive Summary of this final rule, the revisions to Sec.  
423.153(d)(2) as a whole are applicable 60 days from the date of 
publication in the Federal Register.

E. Automatic Escalation to External Review Under a Medicare Part D Drug 
Management Program (DMP) for At-Risk Beneficiaries (Sec. Sec.  423.153, 
423.590, and 423.600)

    CARA amended the Act to include new authority for Medicare Part D 
drug management programs effective on or after January 1, 2019. If an 
enrollee is identified as at-risk under a drug management program 
(DMP), the individual has the right to appeal an at-risk determination 
under the rules in part 423, subparts M and U. In addition to the right 
to appeal an at-risk determination, an enrollee has the right to appeal 
the implementation of point-of-sale claim edits for frequently abused 
drugs that are specific to an ARB or a limitation of access to coverage 
for frequently abused drugs to those that are prescribed for the 
beneficiary by one or more prescribers or dispensed to the beneficiary 
by one or more network pharmacies (lock-in). Section 2007 of the 
SUPPORT Act amended section 1860D-4(c)(5) of the Act to require that, 
if on reconsideration a Part D sponsor affirms its denial of a DMP 
appeal, in whole or in part, the case shall be automatically forwarded 
to the independent outside entity contracted with the Secretary for 
review and resolution.
    To implement the changes required by the SUPPORT Act, we proposed 
to revise the requirements related to adjudication timeframes and 
responsibilities for making redeterminations at Sec.  423.590 by adding 
paragraph (i) to state that if on redetermination the plan sponsor 
affirms, in whole or in part, its decision related to an at-risk 
determination under a DMP in accordance with Sec.  423.153(f), the plan 
sponsor must forward the case to the IRE by the expiration of the 
applicable adjudication timeframe under paragraph (a)(2), (b)(2), or 
(d)(1) of Sec.  423.590. We also proposed revisions to the requirements 
for the content of the initial notice at Sec.  423.153(f)(5)(ii)(C)(3) 
and the requirements for the second notice at Sec.  
423.153(f)(6)(ii)(C)(4)(iii). Specifically, we proposed that these 
notices explain that if on redetermination a plan sponsor affirms its 
at-risk decision, in whole or in part, the enrollee's case shall be 
automatically forwarded to the IRE for review and resolution.
    Finally, we proposed to revise Sec.  423.600(b) to clarify that the 
requirement that the IRE solicit the views of the prescribing physician 
or other prescriber applies to decisions that are auto-forwarded to the 
IRE.
    We summarize the comments we received on these proposals related to 
automatic escalation and respond to them as follows.
    Comment: Several commenters expressed support for our proposal that 
if on redetermination a plan sponsor affirms, in whole or in part, its 
denial related to an at-risk determination under a DMP in accordance 
with Sec.  423.153(f),

[[Page 5900]]

the plan sponsor must forward the case to the IRE for review and 
resolution. One commenter noted that it has been their experience in 
general that most patients do not formally contest their at-risk 
determination status, but the commenter supports a beneficiary's right 
to appeal. Some of the commenters that supported the proposal related 
to auto-escalation of these cases to the IRE also expressed specific 
concerns. A few commenters noted that requiring denied cases to be 
forwarded to the IRE by the expiration of the applicable adjudication 
timeframe will significantly decrease the amount of time that plans 
have to review at-risk redeterminations. These commenters stated that 
these types of cases generally take longer to complete due to more 
outreach and coordination between providers than other types of 
redetermination cases and that reducing the timeframe to complete these 
cases in order to prepare a case for the IRE will decrease the quality 
of the plan's review. One commenter stated the belief that CMS's 
proposed timeframe for auto-escalation is not realistic or achievable, 
noting that DMP cases are complicated, and multiple delegated entities 
must coordinate to prepare a complete case file for forwarding. 
Commenters stated that plans need time to prepare case files and to 
ensure their completeness by acquiring the complete case management 
information from the DMP team, and that plans should have the full 
adjudication time for review of these cases.
    Commenters noted that, in situations where a plan affirms its 
denial of an at-risk determination, it would pose operational burden 
and challenges to complete a thorough investigation, reach a 
determination, and automatically forward the case to the IRE within the 
72-hour adjudication timeframe for expedited determinations and the 7-
day timeframe for standard at-risk determinations. A couple of 
commenters noted that plans are afforded 24 hours after the expiration 
of the adjudication timeframe to prepare and forward the case file to 
the IRE in those Part D benefit appeal cases in which the plan misses 
its adjudication timeframe. Some of the commenters suggested that plans 
be afforded 24 hours to prepare and send the case file to the IRE and 
other commenters suggested 48 or 72 hours from the end of the 
adjudication timeframe. A commenter believes that the process of 
automatic escalation to external review should be consistent with Part 
D requirements for standard or expedited requests, so as to mitigate 
any additional administrative burden and requests that CMS ensure that 
this process mirror Part D requirements so that the systems and 
policies in place are seamless.
    Response: We thank the commenters for their overall support and 
agree with those commenters who expressed concern that requiring the 
administrative case file to be assembled and forwarded to the IRE 
within the applicable adjudication timeframe could unnecessarily 
curtail the amount of time a plan has to conduct a thorough review of 
the case. The regulations at Sec.  423.590(c) and (e) that govern Part 
D benefit redeterminations require a case to be auto-forwarded to the 
IRE when the plan misses the adjudication timeframe. Specifically, a 
plan has 24 hours from the end of the applicable adjudication timeframe 
to send the case file to the Part D IRE. For consistency with how cases 
currently subject to auto-forwarding to the IRE are handled, we believe 
it is reasonable and permissible under the statute to allow plans up to 
an additional 24 hours after the expiration of the applicable 
redetermination adjudication timeframe to assemble and forward the 
administrative case file to the IRE. In this final rule, the proposed 
regulation text at Sec.  423.590(i) has been modified to state that if 
on redetermination the plan sponsor affirms, in whole or in part, its 
denial related to an at-risk determination under a drug management 
program in accordance with Sec.  423.153(f), the Part D plan sponsor 
must forward the case to the IRE contracted with CMS within 24 hours of 
the expiration of the applicable adjudication timeframe under paragraph 
(a)(2), (b)(2), or (d)(1) of this section.
    Comment: A few commenters disagreed with the proposals related to 
the DMP notices. Commenters stated that providing the appeal 
notification on the first notice does not add value to the beneficiary, 
since the first notice has a 30-day window to gain additional 
information, if necessary, before a final decision is made to implement 
a lock-in or POS edits. These commenters recommend that appeal language 
only be included on the second notice. To reduce member confusion, a 
few commenters urged CMS to consider addressing escalation to the IRE 
only in the second notice as it relates to redeterminations 
specifically, and to ensure that it is clear the IRE escalation process 
will only apply when a redetermination in whole or in part is denied. 
Commenters also noted that if CMS is going to update member notices for 
the DMP, it is critically important for plans to receive updates to the 
notices in a timely manner to allow plans sufficient time to revise, 
implement, and test new notices. A few commenters also requested that 
CMS update the model redetermination denial notice to account for auto-
forwarding of an adverse DMP case to the Part D IRE.
    Response: We thank the commenters for their perspective on the 
notices intended to inform at-risk beneficiaries of their rights under 
a plan sponsor's DMP. We proposed that the initial and second notice 
explain that if on redetermination a plan sponsor affirms its at-risk 
decision, in whole or in part, the enrollee's case shall be 
automatically forwarded to the IRE for review and resolution. SUPPORT 
Act section 2007 specifically requires that notice of the automatic 
escalation of adverse decisions be included on the initial and second 
notice. Therefore, we do not believe we have the discretion to omit 
information on this right from the initial notice, as suggested by some 
of the commenters. With respect to the model redetermination notice, we 
plan to update that model consistent with this final rule. However, we 
note that this notice is a model that plan sponsors have the discretion 
to modify.
    Comment: A few commenters requested that CMS train the IRE 
appropriately to ensure consistent reviews of drug management cases. 
One commenter noted that these are unique case reviews and cannot 
simply be overturned by the IRE based on a provider attestation of 
medical necessity. The commenter also stated that the IRE should have 
specific criteria in place to conduct these reviews and, further, that 
plans should also have recourse to address instances when the IRE 
overturns a plan decision.
    Response: We thank the commenter for these comments and note that 
the IRE is already conducting reviews of DMP cases based on published 
regulations and guidance that govern plan sponsor activities with 
respect to drug management programs. The IRE review function is a 
beneficiary protection set forth in statute and there may be instances 
where the independent review performed by the IRE will result in a 
plan's decision being overturned based on a finding of medical 
necessity given the facts and circumstances of the enrollee's case, 
including clinical information furnished by the enrollee's prescriber. 
If a plan believes the IRE has made an error in its decision making, 
the IRE's reconsideration decision may be reopened consistent with the 
rules at Sec.  423.1980.
    Comment: A couple of commenters expressed support for the proposal 
to require automatic escalation of DMP to

[[Page 5901]]

external review, but also urged the Secretary to either exercise his 
authority or support legislation to extend such auto-escalation to 
external review for all adverse appeal decisions regarding Part D 
drugs, similar to the rules applicable to Medicare Advantage appeals.
    Response: We appreciate the commenters' support for the proposed 
rules related to automatic escalation of DMP appeals, but note that the 
comment related to extending automatic escalation to all Part D benefit 
appeals is outside the scope of this rule.
    Comment: While recognizing that the automatic escalation provision 
is required under the SUPPORT Act, some commenters expressed specific 
concerns with this proposal. One commenter encouraged CMS to find a 
path that allows the beneficiary to exercise their appeal rights 
following the standard appeals process outlined in Part C and D 
guidance, as must all other Medicare beneficiaries who receive an 
adverse redetermination. The commenter stated that the SUPPORT Act 
creates a discrepancy in the uniformity of the Medicare benefit by 
devising a unique process for ARBs to have their denied 
redeterminations automatically auto-forwarded to the IRE. The commenter 
stated that CMS should clarify how the IRE might reach a decision other 
than the decision the plan reached in consultation with the at-risk 
beneficiary's prescriber and requested that CMS share with plans the 
additional data sources the IRE may have that plans will not. The 
commenter also requested that CMS provide plans any training materials 
that may be provided to the IRE to help process these reconsiderations. 
Another commenter expressed concern that the process of automatic 
escalation to an external reviewer sets up the patient's care for 
review involving third parties who may be unreasonably biased with an 
anti-opioid mindset and incentivized by institutional conflicts of 
interest, such as the reduction of costs to insurance companies. This 
commenter also noted that it has been his experience that outside 
reviews fail to reflect adequate perspective on the patient, their 
problems, and their care and that the process inevitably involves the 
patient or their doctor negotiating a complex and time consuming phone 
triage system and may require an hour or more of a physician's time.
    Response: We appreciate the comments, but note that the automatic 
escalation of a beneficiary's case to the IRE is a statutory provision 
that creates a protection for beneficiaries who are in a DMP. Part of 
the competitive process of contracting with an outside independent 
entity involves consideration of any potential institutional conflicts 
of interest. The very nature of an outside independent review means 
that there may be cases where the IRE reaches a different decision from 
that reached by a plan, based on clinical information supplied by the 
enrollee's prescriber. The IRE is required to follow the same 
regulations and guidance related to DMPs as is followed by plan 
sponsors. There may be instances where the IRE's review of supporting 
documentation received from an enrollee's prescriber reasonably 
supports a different decision from that reached by the plan sponsor. 
With respect to the time an enrollee or prescriber may have to expend, 
automatic escalation to IRE review should reduce the time a beneficiary 
has to spend disputing a limitation on access under a DMP because, 
under this final rule, the beneficiary will no longer have to request 
IRE review. In addition, the IRE is required to solicit the views of 
the prescribing physician or other prescriber when it receives a case 
from a plan sponsor, which may reduce the time a physician or other 
prescriber will have to expend providing necessary clinical information 
to the IRE.
    Comment: A commenter asked CMS to clarify how an ARB will exercise 
his or her appeal rights and whether the auto-forwarded denied appeal 
be considered the first level of appeal.
    Response: As with Part D benefit appeals, an ARB exercises his or 
her right to appeal by requesting a redetermination from the plan, 
which is the first level of appeal. The IRE review is the second level 
of appeal, including those DMP cases that will be subject to auto-
forwarding under this final rule.
    Comment: A commenter questioned what the impact will be if the plan 
does not auto-forward the denied appeal within the required timeframe.
    Response: The SUPPORT Act requires plans to auto-forward to the IRE 
for review and resolution those redeterminations where a plan affirms 
its denial, in whole or in part. As with other regulatory requirements, 
CMS can exercise enforcement authority to ensure plan compliance. 
Pursuant to contract provisions at Sec.  423.505(b)(7), plan sponsors 
must comply with all requirements of 42 CFR part 423, subpart M 
governing coverage determinations, grievances, and appeals, and 
formulary exceptions and CMS may impose sanctions on any plan sponsor 
with a contract for violations listed in Sec.  423.752(a).
    Comment: A commenter questioned how these auto-forwarded 
redeterminations will be differentiated by CMS from other reviews 
forwarded to the IRE and requested that CMS clarify whether the auto-
forwarded denial or the IRE's decision on the auto-forwarded 
redetermination will be included in reporting or audit universes.
    Response: Adverse redetermination decisions related to coverage 
limitations imposed under a plan sponsor's DMP that will be auto-
forwarded to the IRE consistent with this final rule will be reported 
by plan sponsors as adverse redetermination decisions. For purposes of 
any necessary data gathering, the Part D IRE will be able to 
distinguish cases that are auto-forwarded for untimeliness from the DMP 
appeals auto-forwarded to the Part D IRE. With respect to the audit 
universes, if a plan sponsor's decision was made during the relevant 
universe period, those redeterminations will be reported in the 
redeterminations universe. If the determination was fully or partially 
overturned by the IRE, ALJ, or MAC during the relevant universe period, 
the overturn decision will be reported in the Part D effectuations of 
overturned decisions universe.
    Comment: Some commenters suggested that CMS define what a plan 
sponsor is to include in a case packet for auto-forwarded denials.
    Response: We appreciate the commenters' suggestion and note that 
the Part D IRE's reconsideration procedures manual and case file 
transmittal form lists the documents that should be included by plan 
sponsors as part of the administrative case file. These documents will 
be updated, as necessary. For example, the case file transmittal form 
will be modified so that a plan sponsor can clearly indicate that a 
case is being automatically forwarded to the Part D IRE as a result of 
an adverse DMP redetermination.
    Comment: A commenter asked whether the plan is required to notify 
the ARB, their prescriber(s) or others and, if so, questioned if there 
is a required timeframe to complete the notification.
    Response: Redetermination decisions related to a denied 
redetermination involving a DMP are subject to existing notice 
requirements at Sec. Sec.  423.590(a)(d) and (g).
    Comment: A commenter who expressed support for the proposal 
requested clarification on whether the Part D sponsor or the Part C 
plan would be responsible for making this determination when the member 
is enrolled in a standalone PDP. The commenter requested clarification 
on whether it is the Part D sponsor's responsibility to forward a 
redetermination to IREs for all drugs for

[[Page 5902]]

any member enrolled in a DMP. We believe the commenter is asking about 
a situation where an individual is enrolled in an MA plan and a 
separate, standalone Part D drug plan and whether it is the 
responsibility of the standalone Part D drug plan to forward an adverse 
DMP plan appeal to the IRE.
    Response: Consistent with section 1860D-4(c)(5)(E) of the Act, it 
is the responsibility of an enrollee's Part D plan sponsor to auto-
forward to the IRE an adverse redetermination decision related to an 
individual's identification as an ARB, a coverage determination made 
under a DMP, the selection of prescriber or pharmacy under the DMP and 
information to be shared for subsequent plan enrollment.
    Comment: A commenter that expressed support for automatically 
escalating redeterminations associated with DMP appeals to the Part D 
independent review entity (IRE) noted that automatically escalating an 
appeal for an at-risk determination to an IRE without having to wait 
for the enrollee or prescriber on their behalf to request a review will 
serve to reduce the lag time in final determinations being issued and 
enable patients to access needed care sooner. This commenter also noted 
support for proposed changes to the required initial and second notice 
in addition to adjudication timeframes and redetermination 
responsibilities. This commenter encouraged us to reiterate the need 
for the prescribing physician to provide all requested information 
associated with the adverse decision to the IRE within a timely manner. 
Further, the commenter urged us to consider requiring the IRE to make a 
good faith effort to obtain relevant information from the prescribing 
physician in instances in which there is not an automatic escalation as 
well to ensure consistency in the resolution of all cases involving 
Part D appeals.
    Response: We appreciate the support for these proposals and agree 
that it is important for the prescriber to submit the clinical 
information necessary for a thorough adjudication of the case. In this 
final rule, we are finalizing our proposal to modify the existing 
regulations at Sec.  423.600(b) such that the requirement that the IRE 
solicit the views of the prescribing physician or other prescriber and 
include a written account of the prescriber's views in the IRE's record 
will apply to adverse DMP redeterminations that will be auto-forwarded 
to the IRE.
    Comment: A commenter expressed the belief that automatic escalation 
to the IRE weakens the authority of Part D plans as partners to CMS in 
the fight against the opioid epidemic. An ARB appealing a decision to 
lock them into a specific pharmacy for opioid prescriptions would 
essentially ``skip the line'' if a plan denies their appeal and then 
upholds the denial upon review. The commenter stated the belief that 
this is unfair to non-ARBs, who must then wait behind ARBs for an IRE 
decision. The commenter also believes that this diminishes the ability 
of the plan to impact the behavior of providers and that rather than 
making changes to prescribed therapies, providers will wait for the 
result of the redetermination. Further, commenter believes that 
automatic escalation removes the ability of the plan to reconsider its 
decision when more information is submitted to it. The commenter also 
believes that automatic escalation will increase denials because the 
turnaround time clock will expire prior to the IRE having full 
information, and the beneficiary's denial is likely to be upheld. The 
commenter recommends, to the extent that CMS cannot relax the 
requirements in this final rule, that CMS provide the IRE with opioid-
specific training prior to receiving these automatically escalated 
cases, to minimize process-related denials. The commenter recommends 
that CMS broadly consider a creative approach to meeting the statutory 
intent behind this provision and delay its implementation, or at least 
enforcement, until it can implement a policy that does not punish Part 
D plans and does not punish beneficiaries (at-risk and otherwise) while 
appropriately administering the pharmacy lock-in program.
    Response: As previously stated, the SUPPORT Act requires plan 
sponsors to auto-forward adverse DMP redeterminations to the IRE for 
review and resolution. We do not believe we have the discretion to 
interpret the statutory language in a manner that results in a plan 
sponsor not being required to auto-forward a denied DMP redetermination 
to the IRE for review and resolution. We continue to believe that, 
given the extensive case management involved in these types of cases, 
there will be very few cases that will be subject to auto-forwarding. 
We note that the IRE is already performing reviews of DMP cases based 
on existing regulations and guidance. We believe the intent of the 
SUPPORT Act provision requiring automatic escalation to the IRE is to 
enhance protections for at-risk beneficiaries and not intended to 
``punish'' plans or beneficiaries. We disagree that this requirement 
weakens a plan sponsor's authority to partner with CMS in the fight 
against the opioid epidemic. As we've previously noted, the extensive 
case management involved with DMPs affords plans ample opportunity to 
work with an ARB to ensure appropriate limitations and will likely 
result in a very low volume of appeals.
    Based on the comments we received, we are finalizing, with 
modification, our proposal to require a Part D plan sponsor to auto-
forward to the IRE those redeterminations where a plan sponsor affirms, 
in whole or in part, its denial related to an at-risk determination 
under a DMP in accordance with Sec.  423.153(f). Consistent with 
existing processes for untimely cases that are auto-forwarded to the 
IRE, we are modifying our proposal to state in this final rule that 
plans will be required to forward adverse DMP redetermination decisions 
to the IRE within 24 hours after expiration of the applicable 
adjudication timeframe. In addition, we are finalizing the proposed 
revision at Sec.  423.600(b) that will apply the requirements related 
to the IRE soliciting the views of the prescribing physician or other 
prescriber if a case is forwarded to the IRE by a Part D plan sponsor. 
We are also finalizing the proposed requirements for the content of the 
initial notice at Sec.  423.153(f)(5)(ii)(C)(3) and the requirements 
for the second notice at Sec.  423.153(f)(6)(ii)(C)(4)(iii) to require 
that these notices explain that if on redetermination a plan sponsor 
affirms its at-risk decision, in whole or in part, the enrollee's case 
shall be automatically forwarded to the IRE for review and resolution. 
Finally, necessary modifications will be made to the Part D IRE's 
contract consistent with these final rules and related operational 
issues will be addressed in the IRE's reconsideration procedures 
manual. Pursuant to section 2007 of the SUPPORT Act, the automatic 
escalation provisions being finalized in this rule--at Sec.  
423.153(f)(5)(ii)(C)(3), Sec.  423.153(f)(6)(ii)(C)(4)(iii), Sec.  
423.590(i), and Sec.  423.600(b)--apply 60 days following publication 
of this final rule.

F. Suspension of Pharmacy Payments Pending Investigations of Credible 
Allegations of Fraud and Program Integrity Transparency Measures 
(Sec. Sec.  405.370, 422.500, 422.503, 423.4, 423.504, and 455.2)

1. Medicare Parts C and D Anti-Fraud Efforts
    CMS's role in overseeing the Medicare program includes ensuring 
that payments are made correctly and that fraud, waste, and abuse are 
prevented and detected. Failure to do so endangers the Trust Funds and 
may result in harm

[[Page 5903]]

to beneficiaries. CMS has established various regulations over the 
years to address potentially fraudulent and abusive behavior in 
Medicare Parts C and D. For instance, 42 CFR 424.535(a)(14)(i) 
addresses improper prescribing practices and permits CMS to revoke a 
physician's or other eligible professional's enrollment if he or she 
has a pattern or practice of prescribing Part B or D drugs that is 
abusive or represents a threat to the health and safety of Medicare 
beneficiaries, or both.
2. SUPPORT Act--Sections 2008 and 6063
a. Background
    Opioid use disorder (OUD) and deaths from prescription and illegal 
opioid overdoses have reached alarming levels. The Centers for Disease 
Control and Prevention (CDC) estimated 47,000 opioid overdose deaths in 
2017, and 36 percent of those deaths involved prescription opioids.\21\ 
On October 26, 2017, the Acting Health and Human Services Secretary, 
Eric D. Hargan, declared a nationwide public health emergency on the 
opioid crisis as requested by President Donald Trump.\22\ This public 
health emergency has since been renewed several times by Secretary Alex 
M. Azar II.\23\
---------------------------------------------------------------------------

    \21\ https://www.cdc.gov/drugoverdose/data/index.html.
    \22\ https://www.hhs.gov/about/news/2017/10/26/hhs-acting-secretary-declares-public-health-emergency-address-national-opioid-crisis.html.
    \23\ https://www.phe.gov/emergency/news/healthehactions/phe/Pages/opioid-19apr2019.aspx.
---------------------------------------------------------------------------

    Section 2008 of the SUPPORT Act amends and adds several sections of 
the Act to address the concept of a ``credible allegation of fraud.'' 
Specifically:
     Sections 2008(a) and (b) of the SUPPORT Act amends 
sections 1860D-12(b) and 1857(f)(3) of the Act, respectively, by adding 
new requirements for Medicare Part D plan sponsors and MA organizations 
offering MA-PD plans. Specifically, the provisions--
    ++ Apply certain parts of section 1862(o) of the Act, regarding 
payment suspensions based on credible allegations of fraud, to Medicare 
Part D plan sponsors and MA organizations offering MA-PD plans, 
allowing them to impose payment suspensions on pharmacies in the same 
manner as these provisions apply to CMS.
    ++ Require these Part D plan sponsors and MA organizations offering 
MA-PD plans to notify the Secretary regarding the imposition of a 
payment suspension on a pharmacy pending an investigation of a credible 
allegation of fraud (but does not extend the requirement to report to 
the Secretary other payment suspensions for which plan sponsors already 
have authority).
    ++ Require this notification to be made such as via a secure 
internet website portal (or other successor technology) established 
under section 1859(i).
     Section 2008(d) of the SUPPORT Act, which amended section 
1862(o) of the Act, states that a fraud hotline tip (as defined by the 
Secretary) without further evidence shall not be treated as sufficient 
evidence for a credible allegation of fraud.
    Although the effective date for these provisions of section 2008 of 
the SUPPORT Act is for plan years beginning on or after January 1, 
2020, we will be implementing these provisions with an applicability 
date that is for plan years beginning on or after January 1, 2022. This 
applicability date is necessary due to several factors. The first 
factor is the need to ensure that the web-based portal is complete and 
operational for plan sponsor's use. While the development of the web-
based portal began when the legislation was enacted, CMS was unable to 
complete the development of the portal in time for its full 
implementation in plan year 2021. In addition, the portal has required 
several key updates to reflect the requirements in this regulation. 
Additional factors include the need to ensure the web-based portal is 
complete and operational for plan sponsor's use; the time needed for 
plan sponsors to determine internal procedures to meet the requirements 
outlined in this rule; the need for CMS to obtain feedback from plan 
sponsors to address any challenges encountered with the web-based 
portal; and the need to provide plan sponsors with the opportunity to 
address any other operational challenges with implementing these 
provisions, including potential changes that may be needed due to the 
COVID-19 public health emergency. Furthermore, the applicability date 
is later than the effective dates in the SUPPORT Act because the 
publication of this final rule is occurring after the bid deadline for 
plan year 2021. However, where the statute is self-implementing, the 
delay in applicability of these regulations is not a barrier to 
enforcement of the statutory provisions.
    Section 6063(a) of the SUPPORT Act, which added a new paragraph 
(i)(1) to section 1859 of the Act, requires the following:
     The Secretary, after consultation with stakeholders, shall 
establish a secure web-based program integrity portal (or other 
successor technology) that would allow secure communication among the 
Secretary, MA plans, and prescription drug plans, as well as eligible 
entities with a contract under section 1893, such as Medicare program 
integrity contractors. The purpose is to enable, through the portal:
    ++ The referral by such plans of substantiated or suspicious 
activities (as defined by the Secretary) of a provider of services 
(including a prescriber) or supplier related to fraud, waste, or abuse 
for the purpose of initiating or assisting investigations conducted by 
the eligible entity; and
    ++ Data sharing among such MA plans, prescription drug plans, and 
the Secretary.
     The Secretary shall disseminate the following information 
to MA plans and prescription drug plans via the portal: (1) Providers 
and suppliers referred for substantiated or suspicious activities 
during the previous 12-month period; (2) providers and suppliers who 
are currently either excluded under section 1128 of the Act or subject 
to a payment suspension pursuant to section 1862(o) or otherwise; (3) 
providers and suppliers who are revoked from Medicare, and (4) in the 
case the plan makes a referral via the portal concerning substantiated 
or suspicious activities of fraud, waste, or abuse of a provider or 
supplier, the Secretary shall notify the plan if the related providers 
or suppliers were subject to administrative action under title XI or 
XVIII for similar activities.
     The Secretary shall, through rulemaking, specify what 
constitutes substantiated or suspicious activities of fraud, waste, or 
abuse, using guidance such as that provided in the CMS Pub. 100-08, 
Medicare Program Integrity Manual (PIM), chapter 4, section 4.8. In 
section 4.8 of the PIM, CMS provides guidance to its Medicare program 
integrity contractors on the disposition of cases referred to law 
enforcement. Similar to what is stated in section 2008(d) of the 
SUPPORT Act, a fraud hotline tip without further evidence does not 
constitute sufficient evidence for substantiated fraud, waste, or 
abuse.
     On at least a quarterly basis, the Secretary must make 
available to the plans information on fraud, waste, and abuse schemes 
and trends in identifying suspicious activity. The reports must include 
administrative actions, pertinent information related to opioid 
overprescribing, and other data determined appropriate by the Secretary 
in consultation with stakeholders. This information must be anonymized 
data submitted by plans without identifying the source of such 
information.

[[Page 5904]]

    Although the effective date for these provisions of section 6063(a) 
of the SUPPORT Act is beginning not later than 2 years after the date 
of enactment, or by October 24, 2020, we will be implementing these 
provisions with an applicability date that is for plan years beginning 
on or after January 1, 2022. This applicability date is necessary for 
the same reasons described previously in this section related to the 
provisions in section 2008 of the SUPPORT Act.
    Furthermore, section 6063(b) of the SUPPORT Act, which amended 
section 1857(e) of the Act, requires MA organizations and Part D plan 
sponsors to submit to the Secretary, information on investigations, 
credible evidence of suspicious activities of a provider of services 
(including a prescriber) or supplier related to fraud, and other 
actions taken by such plans, related to inappropriate prescribing of 
opioids. The Secretary shall, in consultation with stakeholders, 
establish a process under which MA organizations and Part D plan 
sponsors must submit this information. In addition, the Secretary shall 
establish a definition of inappropriate prescribing, which will reflect 
the reporting of investigations and other corrective actions taken by 
MA organizations and Part D plan sponsors to address inappropriate 
prescribing of opioids and the types of information that must be 
submitted.
    Although the effective date for these provisions of section 6063(b) 
of the SUPPORT Act is for plan years beginning on or after January 1, 
2021, we will be implementing these provisions with an applicability 
date that is for plan years beginning on or after January 1, 2022. This 
applicability date is necessary for the same reasons described 
previously in this section related to the provisions in section 2008 of 
the SUPPORT Act.
b. Need for Additional Measures
    Existing regulations for MA and Part D plan sponsors in Sec. Sec.  
422.503(b)(4)(vi)(G)(3) and 423.504(b)(4)(vi)(G)(3) specify that plan 
sponsors should have procedures to voluntarily self-report potential 
fraud or misconduct related to the MA and Part D programs to CMS or its 
designee. (We note that Sec.  422.503(b) generally outlines 
requirements that MA organizations must meet. Section 423.504(b) 
outlines conditions necessary to contract as a Part D plan sponsor.) 
Presently, MA organizations and Part D plan sponsors voluntarily report 
such data to CMS through either--(1) direct submissions to CMS, or (2) 
communication with the Investigations Medicare Drug Integrity 
Contractor (IMEDIC). Given the gravity of the nationwide opioid 
epidemic and the need for CMS and the plans to have as much information 
about potential and actual prescribing misbehavior as possible in order 
to halt such misbehavior, we are taking further regulatory action 
consistent with sections 2008 and 6063. Sections 2008 and 6063 of the 
SUPPORT Act provide the authority to establish regulations to implement 
a requirement for plans to report certain related data.
3. Proposed Provisions
    Consistent with the foregoing discussion, we proposed the following 
regulatory provisions to implement sections 2008 and 6063 of the 
SUPPORT Act. As explained, some of our proposals modify or supplement 
existing regulations, while others establish new regulatory paragraphs 
altogether. Regulations related to Part C are addressed in 42 CFR part 
422; those pertaining to Part D are addressed in 42 CFR part 423. 
Regulations pertaining to or contained in other areas of title 42 will 
be noted as such.
a. Definitions
    The definitions outlined in this section of this rule will be 
effective following the required statutory deadlines for each reporting 
piece described in the SUPPORT Act. In the proposed rule, we proposed 
the definitions of substantiated or suspicious activities of fraud, 
waste or abuse and fraud hotline tip would be effective beginning 
October 24, 2020, and the definitions of inappropriate prescribing of 
opioids and credible allegations of fraud would be effective beginning 
January 1, 2021.
(1) Substantiated or Suspicious Activities of Fraud, Waste, or Abuse
    We indicated earlier that section 6063(a) of the SUPPORT Act added 
a new section 1859(i)(1) to the Act requiring the establishment of a 
regulatory definition of ``substantiated or suspicious activities of 
fraud, waste, or abuse,'' using guidance such as that in CMS Pub. 100-
08, PIM, chapter 4, section. 4.8. To this end, we proposed to add to 
Sec. Sec.  422.500 and 423.4 a definition specifying that substantiated 
or suspicious activities of fraud, waste or abuse means and includes, 
but is not limited to allegations that a provider of services 
(including a prescriber) or supplier: Engaged in a pattern of improper 
billing; submitted improper claims with suspected knowledge of their 
falsity; submitted improper claims with reckless disregard or 
deliberate ignorance of their truth or falsity; or is the subject of a 
fraud hotline tip verified by further evidence. Consistent with the 
reference in section 6063(a) of the SUPPORT Act to chapter 4 of the 
PIM, our proposed definition largely mirrored that in section 4.8 of 
the PIM. We also believe that this definition is, importantly, broad 
enough to capture a wide variety of activities that could threaten 
Medicare beneficiaries and the Trust Funds. We solicited public comment 
on this definition.
    We received several comments on the definition of ``substantiated 
or suspicious activities of fraud, waste or abuse'' and our responses 
to those comments follow.
    Comment: A professional organization supported this definition and 
mentioned that it would ensure targeted streamlined fraud reporting.
    Response: We appreciate the comment and support of the definition 
and we are finalizing the definition as proposed.
    Comment: Several commenters raised concerns with the definition of 
substantiated and suspicious activity. Some commenters requested 
additional information regarding the scope of the definition. One 
commenter recommended that CMS provide additional guidance on the 
definition of ``pattern of improper billing.'' Other commenters wanted 
to know what specific criteria will be used for substantiated and 
suspicious reporting. Another commenter was concerned with CMS's use of 
language such as ``substantiated'' and ``suspicious.''
    Response: In defining what constitutes substantiated or suspicious 
activities of fraud, waste, and abuse, we looked to guidance currently 
in the Medicare Program Integrity Manual 4.8. Section 6063 of the 
SUPPORT Act further clarifies that a fraud hotline tip without further 
evidence shall not be treated as sufficient evidence for substantiated 
fraud, waste, or abuse. We believe the definition that we are 
finalizing will address the commenters' concerns as it reflects the 
SUPPORT Act requirement to establish the definition using guidance such 
as that provided in the Medicare Program Integrity Manual 4.8. In an 
effort to be consistent across our programs, we believe the definition 
as proposed provides a similar context for what is to be reported as 
the PIM outlines for fee-for-service. Based on the comments received 
and our responses we are finalizing the proposed definition without 
modification; however, the applicability date for this definition will 
be for plan years beginning on or after January 1, 2022 for reasons 
previously discussed in this section.

[[Page 5905]]

(2) Inappropriate Prescribing of Opioids
    Section 6063(b) of the SUPPORT Act, as mentioned previously, states 
the Secretary is required to establish: (1) A definition of 
inappropriate prescribing; and (2) a method for determining if a 
provider of services meets that definition. MA organizations and Part D 
Plan Sponsors must report actions they take related to inappropriate 
prescribing of opioids. We accordingly proposed to add the following 
definition of inappropriate prescribing with respect to opioids to 
Sec. Sec.  422.500 and 423.4. We proposed that inappropriate 
prescribing means that, after consideration of all the facts and 
circumstances of a particular situation identified through 
investigation or other information or actions taken by MA organizations 
and Part D Plan Sponsors, there is an established pattern of potential 
fraud, waste and abuse related to prescribing of opioids, as reported 
by the Plan Sponsors.
    In determining whether inappropriate prescribing of opioids has 
occurred we proposed that plan sponsors may consider any number of 
factors including, but not limited to the following: Documentation of a 
patient's medical condition; identified instances of patient harm or 
death; medical records, including claims (if available); concurrent 
prescribing of opioids with an opioid potentiator in a manner that 
increases risk of serious patient harm; levels of Morphine Milligram 
Equivalent (MME) dosages prescribed; absent clinical indication or 
documentation in the care management plan, or in a manner that may 
indicate diversion; State level prescription drug monitoring program 
(PDMP) data; geography, time and distance between a prescriber and the 
patient; refill frequency and factors associated with increased risk of 
opioid overdose.
    We believe the many steps that CMS, the CDC, and HHS have taken in 
response to the nation's opioid crisis have had an overall positive 
impact on clinician prescribing patterns, resulting in safer and more 
conscientious opioid prescribing across clinician types and across the 
settings where beneficiaries receive treatment for pain, and have also 
resulted in heightened public awareness of the risks associated with 
opioid medications. For example, recent HHS guidance \24\ highlights 
the importance of judicious opioid prescribing that minimizes risk and; 
urges collaborative, measured approaches to opioid dose escalation, 
dose reduction, and discontinuation; furthermore, a 2019 HHS Task Force 
report \25\ outlines best practices for multimodal approaches to pain 
care. In this definition, we recognized that there are legitimate 
clinical scenarios that may necessitate a higher level of opioid 
prescribing based on the clinician's professional judgement, including, 
the beneficiary's clinical indications and characteristics, whether the 
prescription is for an initial versus a subsequent dose, clinical 
setting in which the beneficiary is being treated, and various other 
factors. We sought public comments on specific populations or diagnoses 
that could be excluded for purposes of this definition, such as cancer, 
hospice, and/or sickle cell patients. Based upon widely accepted 
principles of statistical analysis and taking into account clinical 
considerations mentioned previously, we noted that CMS may consider 
certain statistical deviations to be instances of inappropriate 
prescribing of opioids. We requested evidence from clinical experts 
regarding evidence based guidelines for opioid prescribing across 
clinical specialties and care settings that could be considered to 
develop meaningful and appropriate outlier methodologies. Therefore, we 
proposed that inappropriate prescribing of opioids should be based on 
an established pattern as previously described in this section 
utilizing many parameters.
---------------------------------------------------------------------------

    \24\ ``HHS Guide for Clinicians on the Appropriate Dosage 
Reduction or Discontinuation of Long-Term Opioid Analgesics'' found 
at https://www.hhs.gov/opioids/sites/default/files/2019-10/8-Page%20version__HHS%20Guidance%20for%20Dosage%20Reduction%20or%20Discontinuation%20of%20Opioids.pdf.
    \25\ https://www.hhs.gov/ash/advisory-committees/pain/index.html.
---------------------------------------------------------------------------

    We solicited public comment on other reasonable measures of 
inappropriate prescribing of opioids.
    We received numerous comments regarding the definition of 
inappropriate prescribing and on other reasonable measures of 
inappropriate prescribing of opioids and our responses follow.
    Comment: Two professional associations supported the definition 
outlined in the rule.
    Response: We appreciate the comments from prescribing professionals 
that also support our proposed definition. We will be finalizing the 
definition, as described in this final rule.
    Comment: We received comments from one advocacy group which 
criticize the definition of ``inappropriate prescribing''. The comments 
made by the advocacy group were also referred to by several other 
individual commenters who endorsed their concerns. The advocacy group 
asserted that CMS's proposal contains an inappropriate view of the 
``risks'' of opioid prescribing for people in pain, which could be used 
for denial of pain treatment.'' As an alternative, they recommend 
better training of physicians in the management of chronic pain. 
Furthermore, the commenters noted that HHS' actions have focused on 
``what is likely to be a minor problem (physician overprescribing)'' 
instead of illegal drug use and abuse.
    Response: Section 6063 of the SUPPORT ACT required us to adopt a 
definition of inappropriate prescribing of opioids. In response to the 
statement that overprescribing may be a minor problem, we disagree and 
cite a real example of how prescribing authority can be used 
inappropriately. In September 2019, federal law enforcement officials 
announced ``charges against 13 individuals across five Appalachian 
federal districts for alleged offenses relating to the over 
prescription of controlled substances through `pill mill' clinics. Of 
those charged, 12 were charged for their role in unlawfully 
distributing opioids and other controlled substances and 11 were 
physicians. The alleged conduct resulted in the distribution of more 
than 17 million pills.'' \26\ In relation to concerns raised about 
provider education and training, we would note that the subject is out 
of scope for this regulation.
---------------------------------------------------------------------------

    \26\ https://www.justice.gov/opa/pr/second-appalachian-region-prescription-opioid-strikeforce-takedown-results-charges-against-13.
---------------------------------------------------------------------------

    Comment: One commenter stated that CMS should consider certain 
statistical outliers and/or individual beneficiary cases of 
overutilization while another commenter stated that the definition of 
inappropriate prescribing must be limited to suspected fraud, not only 
outlier prescribing patterns. Another commenter noted that CMS should 
amend the proposed definition of inappropriate prescribing to 
``potential'' with ``material and repeated intentional acts of''. 
Another commenter recommended that CMS add reasonable measures of 
inappropriate prescribing of opioids- for example, CMS should consider 
including any off-guideline use, including prescriptions for large 
quantities to opioid-na[iuml]ve members. Another commenter believed 
that a peer physician from the same specialty, after considering 
specific patient needs, is most qualified to determine whether opioids 
have been prescribing appropriately. Another commenter was concerned 
that without specifically defining ``inappropriate prescribing'' a 
subjective approach may be taken in initiating actions involving 
suspicious

[[Page 5906]]

activities that may warrant investigation.
    Response: We believe the proposed rule was clear in that plan 
sponsors may consider a number of factors when determining what 
constitutes inappropriate prescribing of opioids. The list of factors 
is not meant to be exhaustive list of factors that would contribute to 
the identification of fraud waste and abuse related to inappropriate 
prescribing of opioids. The information provided in the definition is 
sufficient and will assist the agency in identifying providers with 
patterns of potential fraud, waste and abuse related to opioid 
prescribing. It is important to note that most Part D plan sponsors 
already have detection and prevention measures in place to address 
cases of inappropriate prescribing of opioids.
    Comment: A few commenters believe the insurance companies' 
authority is too broad in determining inappropriate prescribing.
    Response: The Medicare prescription drug benefit is delivered 
through Medicare Part D plans and many of the plan sponsors are 
insurance companies. We have considered industry guidelines and 
policies in defining inappropriate prescribing. Most Part D plan 
sponsors already have Special Investigative Units which have detection 
and prevention procedures in place to address cases of inappropriate 
prescribing of opioids.
    Comment: A commenter stated that although the definition of 
inappropriate prescribing calls for a more comprehensive review, there 
are concerns that the focus will be on dose and quantity without 
consideration of other factors that affect patients and physicians.
    Response: As we have stated in our previous responses to comments, 
we believe the proposed rule was clear in that plan sponsors may 
consider a number of factors when determining what constitutes 
inappropriate prescribing of opioids. The list of factors is not meant 
to be an exhaustive list that would contribute to the identification of 
fraud waste and abuse related to inappropriate prescribing of opioids. 
In addition to the list of factors, we have also considered industry 
guidelines and policies in defining inappropriate prescribing. We 
believe the information provided is sufficient in assisting plans to 
identify established patterns of potential fraud, waste and abuse 
related to prescribing of opioids. As we stated previously in this 
section, most Part D plan sponsors already have detection and 
prevention measures in place to address cases of inappropriate 
prescribing of opioids. However, under section 6063 of the SUPPORT Act, 
plans will now be required to report any information related to the 
inappropriate prescribing of opioids and concerning investigations, 
credible evidence of suspicious activities of a provider of services 
(including a prescriber) or supplier, and other actions taken by the 
plan.
    Comment: There were numerous commenters who suggested that CMS 
consider exceptions such as Long Term Care, cancer survivors, high risk 
surgical patients, chronic pain, end stage chronic lung disease and 
rare genetic disorders, when reviewing for inappropriate prescribing. 
There were also comments that recommended that CMS consider prescriber 
specialties when defining inappropriate prescribing. One commenter 
suggested that CMS specify that the factors listed does not include an 
exhaustive list of patterns that would contribute to inappropriate 
opioid prescribing. A commenter also expressed concern that CMS 
creating blanket exclusions from the analysis has the potential for 
fraud and recommended that CMS not exclude any drug type, specific 
populations or diagnosis.
    Response: As mentioned in the preamble, we recognize that there are 
legitimate clinical scenarios that may necessitate a higher level of 
opioid prescribing. Cancer, hospice, and sickle cell patients have been 
identified as exclusions in other sections of the regulation, such as 
the updated drug management program provisions at Sec.  423.100. To 
ensure that vulnerable populations continue to have access to care, we 
are finalizing the proposed definition of inappropriate prescribing 
with a modification such that beneficiaries with cancer and sickle-cell 
disease, as well as those patients receiving hospice and long term care 
(LTC) services will be exempt from consideration for the inappropriate 
prescribing of opioids. We clarify that LTC, in this context, means a 
skilled nursing facility as defined in section 1819(a) of the Act, or a 
medical institution or nursing facility for which payment is made for 
an institutionalized individual under section 1902(q)(1)(B) of the Act. 
These exemptions were added to be consistent with other areas of the 
proposed regulation as well as the current regulatory exemptions at 
Sec.  423.100. However, just as plan sponsors may consider a number of 
factors such as MME levels, concurrent prescribing of opioids with an 
opioid potentiator, and time and distance between the prescriber and 
the patient when determining inappropriate prescribing of opioids, plan 
sponsors may also apply the same judgment when considering other 
diseases or clinical factors or scenarios that have not been listed in 
the definition. Plan sponsors should use all information available to 
them in determining inappropriate opioid prescribing. These exclusions 
also do not preclude plan sponsors from reporting on a voluntary basis 
under Sec. Sec.  422.503(b)(4)(vi)(G)(3) and 423.504(b)(4)(vi)(G)(3).
    Comment: Several comments were received in response to use of MME 
levels as a factor in determining opioid overprescribing. Commenters 
were concerned that CMS does not exempt opioid use disorder treatment 
from MME guidelines. Another commenter stated a consensus definition of 
MME dosages does not exist and expressed concern with a policy that 
allows Plan Sponsors to rely on MME dosages. Another commenter 
mentioned that the MME is not an appropriate factor in determining 
abuse. A commenter suggested excluding MME levels as a factor in any 
analysis of inappropriate prescribing.
    Response: We believe the proposed rule is clear in that plan 
sponsors may consider a number of factors when determining what 
constitutes inappropriate prescribing of opioids. Most Part D plan 
sponsors already have detection and prevention measures in place to 
address cases of inappropriate prescribing of opioids. It is our 
understanding that MME are already utilized as part of many plan 
sponsors measures to address FWA. As such, we believe MME is an 
important factor that might be considered when identifying 
inappropriate prescribing of opioids. The list of factors is not meant 
to be an exhaustive list of factors that would contribute to the 
identification of fraud waste and abuse related to inappropriate 
prescribing of opioids. The information provided in the definition is 
sufficient in assisting plans to identify established patterns of 
potential fraud, waste and abuse related to prescribing of opioids.
    Comment: There were comments seeking clarification regarding if a 
pharmacy would be considered a provider and could be identified as 
having ``Inappropriate Prescribing of Opioids,'' or if this proposed 
policy would only refer to actual medical professionals who can 
prescribe opioids.
    Response: Based on the comments, there may be some misunderstanding 
of the reporting requirements cited in section 2008 of the SUPPORT Act 
versus section 6063 of the SUPPORT Act. Section 2008 of the SUPPORT Act 
requires plan sponsors to notify the Secretary of the imposition of a 
pharmacy payment suspension that is

[[Page 5907]]

based on a credible allegation of fraud. That reporting will be done 
using a secure website portal. Section 6063 of the SUPPORT Act requires 
reporting information on investigations, credible evidence of 
suspicious activities of providers or suppliers related to fraud, and 
other actions taken by the plans related to inappropriate opioid 
prescribing. For purposes of section 6063(b), plan sponsors may 
consider a pharmacy a supplier.
    Comment: Commenters expressed concern with the use of geography, 
time and distance between the prescriber and the patient as a factor 
for opioid overprescribing. Specifically, one commenter stated that 
many people are forced to travel long distances not because of doctor 
shopping or pharmacy hopping, but because pain clinics have been shut 
down and primary doctors are refusing to see pain patients. Another 
commenter stated that for people with complex disabilities, 
geographically distant specialists may be the best (or only) care 
providers available. Another commenter stated that absent of fraud, 
high dosage and distance should not be considered indicators of 
inappropriate prescribing.
    Response: We realize that there may be some circumstances in which 
a beneficiary may travel a considerable distance for access to a 
pharmacy or provider, for legitimate reasons. Plan sponsors may 
consider any number of factors when determining what constitutes 
inappropriate prescribing of opioids, in addition to geography time and 
distance. The list included in the proposed rule is not meant to be an 
exhaustive list of factors that may be used in the identification of 
fraud waste and abuse related to inappropriate prescribing of opioids.
    Comment: We received several comments stating that illicit drugs, 
not prescription drugs, have contributed to the opioid crisis. 
Commenters also requested that CMS monitor to ensure that these actions 
do not encourage providers to be unnecessarily conservative when 
prescribing opioids which could limit access to older adults. 
Commenters also noted that CMS should encourage plan sponsors to align 
best practices, as published in the HHS Pain Management Best Practices 
Inter-Agency Task Force report.
    Response: In response to the statement that illicit drugs, not 
prescription drugs, have contributed to the opioid, we disagree and 
cite a real example of how prescribing of prescription opioids can be 
used inappropriately. In September 2019, federal law enforcement 
officials announced ``charges against 13 individuals across five 
Appalachian federal districts for alleged offenses relating to the over 
prescription of controlled substances through `pill mill' clinics. Of 
those charged, 12 were charged for their role in unlawfully 
distributing opioids and other controlled substances and 11 were 
physicians. The alleged conduct resulted in the distribution of more 
than 17 million pills.'' \27\ Our proposed provisions are to ensure 
that fraud, waste, and abuse are prevented and detected and our 
Medicare population is protected from harm from opioid prescriptions. 
We have established several regulations over the years to promote 
patient safety and address potentially fraudulent and abusive behavior 
in Medicare Parts C and D. We are considering ways to effectively 
monitor the impact of these provisions. The provisions in the SUPPORT 
Act that we proposed to implement will add additional ways to ensure 
effective monitoring and oversight of prescribing practices related to 
opioids.
---------------------------------------------------------------------------

    \27\ https://www.justice.gov/opa/pr/second-appalachian-region-prescription-opioid-strikeforce-takedown-results-charges-against-13.
---------------------------------------------------------------------------

    Based on the overwhelming feedback from health plans, professional 
societies, advocacy groups and individuals, we have determined there is 
a need to add exemptions when determining inappropriate prescribing of 
opioids. While there is no way to include every possible disease state 
that could be considered, we will add beneficiaries with cancer and 
sickle-cell disease, as well as those patients receiving hospice and 
long term care (LTC) services as exclusions. These disease states were 
selected not only because they are clinically applicable but they align 
with existing exemptions in other CMS policies, such as the updated 
drug management program provisions at Sec.  423.100. In addition, the 
applicability date for this definition will be for plan years beginning 
on or after January 1, 2022 for reasons previously discussed in this 
section.
(3) Credible Allegation of Fraud
    Somewhat similar to section 6063(a) of the SUPPORT Act, section 
2008(d) of the SUPPORT Act states that a fraud hotline tip (as defined 
by the Secretary) without further evidence shall not be treated as 
sufficient evidence for a credible allegation of fraud. The term 
``credible allegation of fraud'' is currently defined at Sec. Sec.  
405.370 and 455.2 (which, respectively, apply to Medicare and Medicaid) 
as an allegation from any source including, but not limited to the 
following: (1) Fraud hotline complaints; (2) claims data mining; and 
(3) patterns identified through provider audits, civil false claims 
cases, and law enforcement investigations. Allegations are considered 
to be credible when they have indicia of reliability, and, in the case 
of Sec.  455.2, the State Medicaid agency has reviewed all allegations, 
facts, and evidence carefully and acts judiciously on a case-by-case 
basis.
    To address the requirements of section 2008(d) of the SUPPORT Act, 
we proposed to revise the term ``credible allegation of fraud'' in 
Sec. Sec.  405.370 and 455.2 as follows. We proposed that the existing 
version of paragraph (1) in both Sec. Sec.  405.370 and 455.2 would be 
amended to state ``Fraud hotline tips verified by further evidence.'' 
The existing version of paragraph (2) and (3) would remain unchanged. 
Similarly, we proposed to add in Sec.  423.4 a definition of credible 
allegation of fraud stating that a credible allegation of fraud is an 
allegation from any source including, but not limited to: Fraud hotline 
tips verified by further evidence; claims data mining; patterns 
identified through provider audits, civil false claims cases, and law 
enforcement investigations. Allegations are considered to be credible 
when they have indicia of reliability. In the case of Sec.  423.4, we 
proposed that examples of claims data mining would include, but are not 
limited to, prescription drug events and encounter data mining. We 
solicited public comment on this definition.
    We received several comments on the definition of Credible 
Allegation of Fraud and our responses follow.
    Comment: A professional organization supported the proposed revised 
definition of credible allegation of fraud.
    Response: We appreciate the comments from prescribing professionals 
that also support our proposed definition. We are finalizing the 
definition, as proposed in this final rule.
    Comment: A commenter expressed concern that a credible allegation 
results in damage to the professional reputations of doctors and 
pharmacists.
    Response: We note that credible allegation of fraud in this context 
is used when plan sponsors are implementing payment suspensions of 
pharmacies. Plan sponsors already have the authority to implement a 
payment suspension at their discretion according to their contracts 
with the pharmacies. When they implement a payment suspension that is 
based on a credible allegation of fraud and meets the regulatory 
definition, now they must report it to CMS. We have defined

[[Page 5908]]

credible allegations of fraud under Sec.  405.370 in previous 
rulemaking. The regulations are being amended as specified in the 
SUPPORT Act section 2008(d). The intent is to only apply definitions 
for MA and Part D plans that are consistent with regulatory standards 
that are applied to both traditional Medicare and Medicaid. 
Accordingly, plan sponsors currently impose payment suspensions based 
on credible allegations of fraud and we recognize that MA and Part D 
plans currently use multiple sources in determining what may be 
considered ``credible allegation of fraud'' as part of ensuring 
measures have been implemented to prevent, detect and correct fraud, 
waste and abuse.
    Comment: Some commenters requested that CMS provide examples of 
credible evidence and provide clarification on the standards, 
thresholds and responsible party for reporting. One commenter believes 
that examples will assist plans in determining credible allegations of 
fraud and address fraudulent opioid prescribing. Another commenter 
recommended that CMS proactively communicate with plans on fraud 
schemes to assist in enhancing the plans oversight efforts.
    Response: The regulations are being amended as specified in the 
SUPPORT Act section 2008(d) to extend a consistent regulatory 
definition for MA and Part D plans. We have defined credible 
allegations of fraud under 405.370 in previous rulemaking. As noted 
previously, the Plans will be required to report payment suspensions of 
pharmacies to CMS based on credible allegations of fraud. Accordingly, 
we recognize that MA and Part D plans currently may use a variety of 
sources in determining what may be considered ``credible allegation of 
fraud'' as part of ensuring measures have been implemented to prevent, 
detect and correct fraud, waste and abuse. We also conduct regular 
training and education for Plan Sponsors on fraud detection and 
prevention and provides opportunities for the Plans to share 
information on fraud schemes. Therefore, we will continue to allow 
plans the flexibility in determining credible allegations of fraud and 
will finalize this provision without additional examples other than 
what is currently defined.
    Comment: A commenter recommended amending the proposed definition 
of credible allegation to an allegation from a plan of a material and 
repeated pattern of intentional violations of law or regulations that 
has been confirmed beyond suspicion through independent evidence. 
Allegations by third parties, including False Claims Act cases, law 
enforcement investigations and provider audits shall not constitute 
credible allegations of fraud.
    Response: We have defined credible allegations of fraud under 
405.370 in previous rulemaking. The regulations are being amended as 
specified in the SUPPORT Act section 2008(d). The intent of this 
provision is to implement the SUPPORT ACT which extends a consistent 
definition for MA and Part D plans. Accordingly, we recognize that MA 
and Part D plans currently use a variety of sources in determining what 
may be considered ``credible allegation of fraud'' as part of ensuring 
measures have been implemented to prevent, detect and correct fraud, 
waste and abuse. We will proceed as noted previously in this section 
with finalizing the proposed definition without modification.
    Comment: An association supported the proposed revision of the 
regulatory definition of credible allegation of fraud described in the 
proposed rule, changing ``fraud hotline complaints'' to ``fraud hotline 
tips verified by further evidence.'' Another association also 
specifically supported our proposal that a fraud hotline top without 
further evidence shall be not be treated as credible allegation of 
fraud.
    Response: We appreciate the support for the proposal to further 
define credible allegation of fraud by expanding the definition of 
fraud hotline complaint to fraud hotline tips verified by further 
evidence. We believe this will further assist plans in determining 
cases of fraud.
    Comment: A commenter recommended that CMS provide training programs 
for health plan fraud units and guidance regarding the definition of 
credible allegation.
    Response: We have defined credible allegations of fraud under 
405.370 in previous rulemaking. The regulations are being amended as 
specified in the SUPPORT Act section 2008(d). The intent is to only 
establish similar and consistent definitions for MA and Part D plans. 
We conduct regular training and education for Plan Sponsors on fraud 
detection and prevention and provides opportunities for the Plans to 
share information on fraud schemes. We recognize that MA and Part D 
plans currently use a variety of sources in determining what may be 
considered ``credible allegation of fraud'' as part of ensuring 
measures have been implemented to prevent, detect and correct fraud, 
waste and abuse.
    Comment: A commenter specifically did not support the definition of 
credible allegation of fraud given that further evidence is not 
defined.
    Response: The definition uses plain language and is intended to 
allow flexibility since evidence to corroborate the fraud hotline 
complaint or tip would vary on a case by case basis. Additionally, Part 
D sponsors have systems in place and experience with the evaluation and 
verification of fraud hotline tips.
    Based on the comments received and our responses we are finalizing 
the provision as proposed without modification; however, the 
applicability date for this definition will be for plan years beginning 
on or after January 1, 2022 for reasons previously discussed in this 
section.
(4) Fraud Hotline Tip
    Sections 2008(d) and 6063(a) of the SUPPORT Act require the 
Secretary to define a fraud hotline tip. To this end, we proposed to 
add to Sec. Sec.  405.370, 422.500, 423.4, and 455.2 a plain language 
definition of this term. We proposed that a fraud hotline tip would be 
defined as a complaint or other communications that are submitted 
through a fraud reporting phone number or a website intended for the 
same purpose, such as the federal government's HHS Office of the 
Inspector General (OIG) Hotline or a health plan's fraud hotline. This 
definition is intended to be broad enough to describe mechanisms such 
as the federal government's HHS OIG Hotline or a commercial health 
plan's fraud hotline. Many private plans, which have their own fraud 
reporting hotlines, participate as plan sponsors in Medicare Part D and 
this definition would seek to reflect their processes for reporting 
information on potential fraud, waste and abuse. We solicited public 
comment on this definition.
    We received several comments on the definition of Fraud Hotline 
Tip. Our responses to those comments follow.
    Comment: Several commenters supported the proposed definition of a 
fraud hotline tip including a professional association. Commenters that 
were supportive agreed that this definition will assist plans on 
ensuring investigative measures are taken and focus on those that 
indicate fraud.
    Response: We appreciate the support and feedback on the proposal to 
further define a fraud hotline tip. As mentioned in the proposed rule 
we believe the definition is broad enough to describe mechanisms such 
as the federal government's HHS OIG Hotline or a commercial health 
plan's hotline.

[[Page 5909]]

    Comment: A commenter also recommended that CMS provide examples of 
other communications that may be submitted through a fraud reporting 
phone number or website.
    Response: As mentioned in the proposed regulation, the definition 
is intended to be broad in an effort to allow flexibility. Part D 
sponsors are currently required to have systems established to receive 
and process fraud hotline tips. Therefore, we believe many Part D 
sponsors have the experience with using ``other communications'' which 
could include information such as supporting documentation submitted 
with the tip that may be used to support a complaint or document 
potential fraud.
    Comment: Another commenter urged that CMS ensure tips are verified 
before they are used to suspend a provider or prescriber.
    Response: The definition proposed does include language to state 
that a fraud hotline tip must be verified by further evidence. As 
mentioned in the proposed regulation the definition is intended to be 
broad in an effort to allow flexibility since many plan sponsors have a 
fraud hotline and systems established for receiving and verifying 
potential fraud.
    Based on the comments received and our responses we are finalizing 
the provision as proposed without modification; however, the 
applicability date for this definition will be for plan years beginning 
on or after January 1, 2022 for reasons previously discussed in this 
section.
b. Reporting
(1) Vehicle for Reporting
    We stated that we planned to utilize a module within the HPMS as 
the program integrity portal for information collection and 
dissemination. We stated that the portal would serve as the core 
repository for the data addressed in sections 2008 and 6063 of the 
SUPPORT Act. We stated that the program integrity portal would not 
duplicate reporting requirements and is the only source that would be 
used to report and disseminate information as required in the final 
rule. Such data and the regular submission and dissemination of this 
important information would, in our view, strengthen CMS' ability to 
oversee plan sponsors' efforts to maintain an effective fraud, waste, 
and abuse program. We further believe that data sharing via use of a 
portal would, in conjunction with our proposals, help accomplish the 
following objectives in our efforts to alleviate the opioid epidemic:
     Enable CMS to perform data analysis to identify fraud 
schemes.
     Facilitate transparency among CMS and plan sponsors 
through the exchange of information.
     Provide better information and education to plan sponsors 
on potential fraud, waste, and abuse issues, thus enabling plan 
sponsors to investigate and take action based on such data.
     Improve fraud detection across the Medicare program, 
accordingly allowing for increased recovery of taxpayer funds and 
enrollee expenditures (for example, premiums, co-insurance, other plan 
cost sharing).
     Provide more effective support, including leads, to plan 
sponsors and law enforcement.
     Increase beneficiary safety through increased oversight 
measures.
    We received a few comments on our planned reporting vehicle and our 
responses follow.
    Comment: Several commenters noted reporting through a new HPMS 
module will create duplication of information and recommended that CMS 
institute one consistent reporting mechanism since plans can report 
directly to the MEDIC or into the HPMS, allow greater access to 
expedite reporting and provide further clarification where Part D 
sponsors should report.
    Response: The program integrity portal will not duplicate reporting 
requirements and is the only source that will be used to report and 
disseminate information as required in the final rule.
    Comment: A commenter inquired about the difference between the new 
portal and existing HPMS module and also questioned how plans will be 
assured that CMS will investigate the allegations submitted.
    Response: The current Analytics and Investigations Collaboration 
Environment for Fraud, Waste, and Abuse (AICE-FWA) module in HPMS will 
continue to serve as a repository for data projects that plan sponsors 
currently use as leads and a resource in conducting oversight of their 
fraud detection and prevention efforts. The new program integrity 
portal in HPMS will be the primary source for plan sponsors to submit 
information related to the inappropriate prescribing of opioids, 
payment suspensions of Part D pharmacies, and referral of substantiated 
or suspicious activities of a provider of services or supplier related 
to fraud, waste, and abuse.
(2) Type of Data To Be Reported by Plans
    Sections 422.503(b)(4)(vi)(G)(3) and 423.504(b)(4)(vi)(G)(3), as 
noted, state that plan sponsors should have procedures to voluntarily 
self-report potential fraud or misconduct related to the MA and Part D 
programs, respectively, to CMS or its designee. To conform to the 
aforementioned requirements of sections 2008(a) and (b) and section 
6063(b) of the SUPPORT Act, we proposed to add new regulatory language, 
effective beginning in 2021, in parts 422 and 423 as stated throughout 
this section.
    First, we proposed new language at Sec. Sec.  
422.503(b)(4)(vi)(G)(4) and 423.504(b)(4)(vi)(G)(4) to include the new 
provisions. The new Sec. Sec.  422.503(b)(4)(vi)(G)(4) and 
423.504(b)(4)(vi)(G)(4) would state that the MA organization or Part D 
plan sponsor, respectively, must have procedures to identify, and must 
report to CMS or its designee either of the following, in the manner 
described in paragraphs (b)(4)(vi)(G)(4) through (6) of this section:
     Any payment suspension implemented by a plan, pending 
investigation of credible allegations of fraud by a pharmacy, which 
must be implemented in the same manner as the Secretary does under 
section 1862(o)(1) of the Act; and
     Any information concerning investigations, credible 
evidence of suspicious activities of a provider of services (including 
a prescriber) or supplier, and other actions taken by the plan related 
to the inappropriate prescribing of opioids.
    Second, the new Sec. Sec.  422.503(b)(4)(vi)(G)(5) and 
423.504(b)(4)(vi)(G)(5) would require the data referenced in proposed 
Sec. Sec.  422.503(b)(4)(vi)(G)(4) and 423.504(b)(4)(vi)(G)(4) to be 
submitted via the program integrity portal. We proposed that MA 
organizations and Part D plan sponsors would have to submit the data 
elements, specified later in this section, in the program integrity 
portal when reporting payment suspensions pending investigations of 
credible allegations of fraud by pharmacies; information related to the 
inappropriate prescribing of opioids and concerning investigations and 
credible evidence of suspicious activities of a provider of services 
(including a prescriber) or supplier, and other actions taken by plan 
sponsors; or if the plan reports a referral, through the portal, of 
substantiated or suspicious activities of a provider of services 
(including a prescriber) or a supplier related to fraud, waste or abuse 
to initiate or assist with investigations conducted by CMS, or its 
designee, a Medicare program integrity contractor, or law enforcement 
partners. The data elements, as applicable, are as follows:


[[Page 5910]]


 Date of Referral
 Part C or Part D Issue
 Complainant Name.
 Complainant Phone.
 Complainant Fax.
 Complainant Email.
 Complainant Organization Name.
 Complainant Address.
 Complainant City.
 Complainant State.
 Complainant Zip.
 Plan Name/Contract Number.
 Plan Tracking Number.
 Parent Organization.
 Pharmacy Benefit Manager.
 Beneficiary Name.
 Beneficiary Phone.
 Beneficiary Health Insurance Claim Number (HICN)
 Beneficiary Medicare Beneficiary Identifier (MBI).
 Beneficiary Address.
 Beneficiary City.
 Beneficiary State.
 Beneficiary Zip.
 Beneficiary Date of Birth (DOB).
 Beneficiary Primary language.
 Beneficiary requires Special Accommodations. If Yes, Describe.
 Beneficiary Medicare Plan Name.
 Beneficiary Member ID Number.
 Whether the Beneficiary is a Subject.
 Did the complainant contact the beneficiary? If Yes, is there 
a Report of the Contact?
 Subject Name.
 Subject Tax Identification Number (TIN).
 Does the Subject have Multiple TIN's? If Yes, provide.
 Subject NPI.
 Subject DEA Number.
 Subject Medicare Provider Number.
 Subject Business.
 Subject Phone Number.
 Subject Address.
 Subject City.
 Subject State.
 Subject Zip.
 Subject Business or Specialty Description.
 Secondary Subject Name.
 Secondary Subject Tax Identification Number (TIN)
 Does the Secondary Subject have Multiple TIN's? If Yes, 
provide.
 Secondary Subject NPI.
 Secondary Subject DEA Number.
 Secondary Subject Medicare Provider Number.
 Secondary Subject Business.
 Secondary Subject Phone Number.
 Secondary Subject Address.
 Secondary Subject City.
 Secondary Subject State.
 Secondary Subject Zip.
 Secondary Subject Business or Specialty Description.
 Complaint Prior MEDIC Case Number.
 Period of Review.
 Complaint Potential Medicare Exposure.
 Whether Medical Records are Available.
 Whether Medical Records were Reviewed.
 Whether the submission has been Referred to Law Enforcement. 
Submission Accepted? If so, provide Date Accepted.
 What Law Enforcement Agency(ies) has it been Referred to.
 Whether HPMS Analytics and Investigations Collaboration 
Environment for Fraud, Waste, and Abuse (AICE-FWA) was Used.
 Whether the submission has indicated Patient Harm or Potential 
Patient Harm.
 Whether the submission has been Referred. If so, provide Date 
Accepted.
 What Agency was it Referred to.
 Description of Allegations/Plan Sponsor Findings.

    We noted that the requirement for reporting payment suspensions 
pending investigations of credible allegations of fraud by pharmacies 
under new Sec.  422.503(b)(4)(vi)(G)(4) would only apply to Medicare 
Part C in the context of Medicare Advantage Prescription Drug Plans 
(MA-PD plans). We stated our belief that this information is necessary 
to enable CMS to fully and completely understand the identity of the 
applicable party, the specific behavior involved, and the status of the 
action. We solicited public comment on these requirements.
    We received several comments on the ability to impose payment 
suspensions on pharmacies and our responses to those comments follow.
    Comment: A commenter supported CMS' implementation of the SUPPORT 
Act language that a fraud hotline tip, without further evidence, is not 
a credible fraud allegation for payment suspension purposes. However, 
the commenter was concerned that CMS did not include what guidelines 
should be taken into consideration for procedures and data collection.
    Response: We appreciate the commenter's support. However, many plan 
sponsors currently implement payment suspensions based on credible 
allegations of fraud and other reasons that may be contractual in 
nature. We believe that plan sponsors have established procedures and 
data collection based on their existing internal policies and 
procedures and as part of their fraud, waste and abuse oversight and 
monitoring efforts. The data will be reported through a program 
integrity portal that is discussed further later in this regulation.
    Comment: Commenters requested that CMS further clarify the 
definition of a payment suspension, such as what entities are subject 
to payment suspensions, whether payment suspensions are applicable to 
physicians, and the applicable standards and responsible parties for 
making determinations.
    Response: We believe the proposed regulation is clear in defining 
that a Part D pharmacy payment suspension based on credible allegation 
of fraud is applicable to Part D pharmacies. Additionally, we believe 
the proposed regulation is clear in stating that Part D plan sponsors 
are responsible for determining if a payment suspension should be 
implemented. Part D plan sponsors currently impose payment suspensions 
for other reasons that may be contractual in nature. Part D plan 
sponsors are responsible for oversight of their contracted entities, 
such as pharmacy benefit managers (PBMs) and pharmacies, and have 
established policies and procedures in their contractual arrangements.
    Comment: A commenter recommended that CMS consider a targeted 
approach to payment suspensions, which would include pharmacy claim 
adjudications suspensions that would allow non-problematic claims from 
suspected pharmacies to be processed and paid. Another commenter 
questioned if CMS will have a process to reverse or deny payments.
    Response: Part D plan sponsors and MA-PD plans have the authority 
to impose payment suspensions based on a credible allegation of fraud. 
However, Part D plan sponsors and MA-PD plans also may consider a 
targeted approach to payment suspensions pursuant to contractual 
agreements. Part D plan sponsors and MA-PD plans are responsible for 
oversight of their contracted entities, such as PBMs and pharmacies, 
and have established policies and procedures in their contractual 
arrangements.
    Comment: A commenter opposed CMS' proposal to suspend payments to 
fee-for-service (FFS) providers and suppliers pending a credible 
allegation of fraud, given that patients and providers can be at risk 
for an uncertain amount of time. The commenter also opposed the 
definition for credible allegation of fraud based on the need to 
establish clear guidance on how long a payment suspension will last and 
the concern that LTC's will be financially liable.

[[Page 5911]]

    Response: We appreciate this feedback; however, although we 
proposed a modification to the reference to fraud hotline complains in 
42 CFR 405.370, our proposal did not discuss payment suspensions for 
fee-for-service providers generally. Instead, the scope of this rule is 
limited to payment suspensions imposed on pharmacies by Part D plan 
sponsors. Part D plan sponsors currently conduct pharmacy payment 
suspensions based on credible allegations of fraud. This final rule is 
requiring Part D plan sponsors to report to CMS any pharmacy payment 
suspensions based on credible allegations of fraud through a website 
portal. The length of a payment suspension may vary based on the 
situation and the plan sponsors own business agreements.
    Comment: We received a couple of comments regarding how the 
reporting of payment suspensions may interfere or preempt state-level 
requirements regarding payment to pharmacies.
    Response: We have contractual agreements with the Part D plan 
sponsors and do not oversee contractual relationships between a plan 
sponsor, PBM and participating pharmacies. Part D Plan sponsors already 
have the authority to implement payment suspensions for pharmacies 
based on credible allegations of fraud. However, Section 2008 of the 
SUPPORT Act requires Part D plan sponsors to report those payment 
suspensions to the Secretary.
    The requirement for Part D plan sponsors to report pharmacy payment 
suspensions based on credible allegations of fraud does not replace 
state law and this new federal requirement will not affect existing 
state statutes and regulations. We believe addressing specific state 
statutes and regulations are outside the scope of this regulation.
    Comment: We received several comments expressing concerns with 
ensuring pharmacies have due process rights, an appeals process and 
advance notice prior to implementing a payment suspension. One 
commenter opposed this proposed regulation because it lacks fundamental 
due process protections for pharmacies. Another commenter noted that 
pharmacies should not be subject to payment suspension without greater 
certainty of fraud. Additionally, the commenter noted that pharmacies 
should receive advance notice of potential allegations of fraud and 
afforded an expeditious appeals process prior to any payment 
suspension. Commenters also noted that payment suspensions should not 
occur until there is legal evidence and also requested that CMS provide 
guidance on ensuring that plan actions against pharmacies are fully 
grounded with evidence and provides pharmacies the ability to quickly 
address complaints and prevent suspension of payment.
    Response: Section 2008 authorizes Part D sponsors and MA-PD plans 
to suspend payments based on a credible allegation of fraud. Part D 
plan sponsors and MA-PD plans may currently impose payment suspensions 
for other reasons that may be contractual in nature. We have clarified 
the definition for credible allegation of fraud, fraud hotline tip, and 
substantiated and suspicious activities of fraud, waste and abuse. We 
decline to accept the recommendation because Part D plan sponsors and 
MA-PD plans are responsible for oversight of their contracted entities, 
such as PBMs and pharmacies and have established policies and 
procedures in their contractual arrangements.
    We received a few comments on the data elements to be submitted by 
plans and our responses follow.
    Comment: A commenter recommended that CMS allow flexibility in 
submitting data elements and allow Part D sponsors to enter ``blank'' 
fields if certain information is not available and not restrict the 
number of users. Commenter also recommended that information provided 
to Part D sponsors from the website portal be used for informational 
purposes only. However, if action is required on behalf of the Part D 
sponsors, then CMS should clearly specify.
    Response: In response to the comment, we are clarifying that plan 
sponsors will be provided reporting flexibility within the portal when 
information is not available or not relevant to the referral being 
reported. The comment also allowed us the opportunity to re-evaluate 
the level of detail that we were requiring in the regulatory text for 
the data reported. We are modifying the regulatory text to reflect 
broad categories of information that will be collected rather than 
individual data elements. The data categories, as applicable, include 
referral information and actions taken by the plan sponsor on the 
referral.
    Examples of the types of data to be collected in these categories 
include, but are not limited to, identifying information on the 
complainant, beneficiary, and subject of the referral, description of 
the referral (that is, services not rendered, prescriptions billed but 
the beneficiary never received, and identity theft), and any actions 
taken (that is, conducted an audit of the provider, referred the 
provider to the IMEDIC or Law Enforcement, or removed a provider from 
their network). The categories of data that we are making final in the 
regulatory text will provide flexibility.
    The commenter also inquired if action is required on behalf of the 
Part D sponsors based on information provided from the website portal. 
The quarterly reports we are sharing will assist plan sponsors with 
their monitoring and oversight efforts. These reports themselves are 
not a sufficient basis for a Medicare Part D plan sponsor to take 
action without conducting its own supporting analysis of specific data. 
We urge plan sponsors to confirm potential fraud waste and abuse 
through a reliance upon their own established protocols. Any actions 
taken as a result of the reports and the Sponsors follow-up activities 
should be reported through the website portal. We also note, in 
response to the commenter, that plan sponsors will also have the 
ability to allow access to multiple users.
    Comment: Commenters also requested that CMS clarify why the 
required data elements list both the HICN and the MBI. Commenters also 
requested clarification who should the reporting be submitted to and 
the method that should be utilized.
    Response: In response to the comment, we are clarifying that only 
the MBI will be utilized, as part of the broad category of referral 
information, to ensure that the beneficiary's information is captured 
appropriately. Plan sponsors will be required to report information 
through the program integrity portal in HPMS.
    Based on the comments received and our responses we are modifying 
the regulatory text regarding the data to be reported. The final 
regulation text reflects the broad categories of data that CMS will 
employ in the construction of the data that will be required for plans 
to submit to the program integrity portal. In addition, the 
applicability date for plan sponsor reporting will be for plan years 
beginning on or after January 1, 2022 for reasons previously discussed 
in this section.
(3) Timing of Plan Sponsor's reporting
    We proposed in new Sec. Sec.  422.503(b)(4)(vi)(G)(6)(i) and 
423.504(b)(4)(vi)(G)(6)(i) MA organizations and Part D plan sponsors 
would be required to notify the Secretary, or its designee of a payment 
suspension described in Sec. Sec.  422.503(b)(4)(vi)(G)(4)(i) and 
423.504(b)(4)(vi)(G)(4)(i) 14 days prior to implementation of the 
payment suspension. This timeframe will allow

[[Page 5912]]

us to provide our law enforcement partners sufficient notice of a 
payment suspension to be implemented that may impact an ongoing 
investigation into the subject. We proposed that Sec. Sec.  
422.503(b)(4)(vi)(G)(6)(ii) and 423.504(b)(4)(vi)(G)(6)(ii) plans would 
be required to submit the information described in Sec. Sec.  
422.503(b)(4)(vi)(G)(4)(ii) and 423.504(b)(4)(vi)(G)(4)(ii) no later 
than January 30, April 30, July 30, and October 30 of each year for the 
preceding periods, respectively, of October 1 through December 31, 
January 1 through March 31, April 1 through June 30, and July 1 through 
September 30. We proposed that plans would be required to submit 
information beginning in 2021. For the first reporting period (January 
15, 2021), the reporting will reflect the data gathered and analyzed 
for the previous quarter in the calendar year (October 1-December 31). 
We believe that quarterly updates would be frequent enough to ensure 
that the portal contains accurate and recent data while giving plans 
sufficient time to furnish questioned information. We solicited public 
comment on the timing of reporting by plans
    We received several comments on the timing of reporting by plans 
and our responses to those comments follow.
    Comment: We received numerous comments regarding the 14-day advance 
notice to CMS for payment suspensions. Most commenters are concerned 
that this gives the bad actors too much time to continue the fraudulent 
activity which could result in millions of dollars lost, prevent 
overutilization of services and more importantly, beneficiary harm. A 
commenter suggested a 72-hour wait period instead of 14 days. Another 
commenter recommended allowing plans 72 hours to notify CMS after the 
suspension rather than 14 days prior to the suspension. One commenter 
recommended immediate payment suspension of pharmacies and then provide 
referral within 14 days to CMS. Another commenter mentioned that 
allowing plans to submit payment suspension immediately and provide an 
update monthly will reduce burden for plans sponsors and PBMs. Another 
commenter recommended CMS provide a list of providers for plans to 
review prior to initiation of a payment suspension which would require 
plans to notify the agency within 14 days prior to implementing. 
Additionally, if providers are not included in the notification plans 
would notify the agency within 5-10 days of the payment suspension 
which would align with many Medicaid state guidelines. Commenters also 
expressed confusion regarding whether plans were being prohibited from 
suspending immediately. Another commenter recommended removal of a 
suspension if it is determined that there is no good cause.
    Response: Based on comments received requesting a reduced timeframe 
for advance notice of imposing payment suspensions and balancing that 
with concerns raised by our federal law enforcement partners to ensure 
deconfliction, we will finalize the provision with a 7-day advance 
notice requirement with a limited exception. The advance notice 
provides collaboration and necessary deconfliction with law enforcement 
but also allows an exception for instances where more immediate payment 
suspension is warranted. For example, the exception would allow for 
immediate suspension when a plan has concerns regarding a credible 
allegation of fraud which may involve potential patient harm.
    Comment: Commenters also recommended that CMS allow exceptions from 
the proposed quarterly reporting when disclosure may jeopardize an 
ongoing investigation. Commenters also requested that CMS extend 
reporting to 30 days of the close of the quarter versus the proposed 15 
days to allow data gathering and quality assurance before the report 
submission.
    Response: Based on the comments received we will modify the 
proposed provision to extend the reporting timeframe for plan sponsors 
to 30 days after the close of the quarter. We will not modify to allow 
exceptions to the reporting requirement. Based on the comments received 
and our responses in this section we are finalizing the following two 
policies with modification.
     We will require a 7-day advance notice with exemptions in 
certain cases, such as potential for beneficiary harm.
     We will adjust the timeline for submission to 30 days 
after the close of the quarter. The applicability date for plan sponsor 
reporting has been postponed until January 1, 2022.
(4) Requirements and Timing of CMS' Reports
    As mentioned earlier in this final rule, section 6063(a) of the 
SUPPORT Act requires the Secretary make available to the plans, not 
less frequently than quarterly, information on fraud, waste, and abuse 
schemes and trends in identifying suspicious activity. The reports must 
include administrative actions, pertinent information related to opioid 
overprescribing, and other data determined appropriate by the Secretary 
in consultation with stakeholders. Moreover, the information must be 
anonymized data submitted by plans without identifying the source of 
such information.
    Section 6063 of the SUPPORT Act requires the Secretary provide 
reports no less frequently than quarterly. Consistent with this 
requirement, we proposed in the new Sec. Sec.  
422.503(b)(4)(vi)(G)(7)(i) through (iv) and 423.504(b)(4)(vi)(G)(7)(i) 
through (iv) that we will provide MA organizations and Part D plan 
sponsors with data report(s) or links to data no later than April 15, 
July 15, October 15, and January 15 of each year based on the 
information in the portal, respectively, as of the preceding October 1 
through December 31, January 1 through March 31, April 1 through June 
30, and July 1 through September 30. We proposed to provide this 
information beginning in 2021. For the first quarterly report (April 
15, 2021), the report will reflect the data gathered and analyzed for 
the previous quarter submitted by the plan sponsors on January 15, 
2021. Similar to the timing requirements related to new Sec. Sec.  
422.503(b)(4)(vi)(G)(6)(ii) and 423.504(b)(4)(vi)(G)(6)(ii), we believe 
that quarterly updates would strike a suitable balance between the need 
for frequently updated information while giving us time to review and 
analyze this data in preparation for complying with new Sec. Sec.  
422.503(b)(4)(vi)(G)(4) through (7) and 423.504(b)(4)(vi)(G)(4) through 
(7). We solicited public comment on the timing of CMS dissemination of 
reports to plans.
    We received no comments on this proposal and therefore are 
finalizing this provision without modification; however, the 
applicability date for the quarterly reports will be for plan years 
beginning on or after January 1, 2022 for reasons previously discussed.

IV. Enhancements to the Part C and D Programs

A. Out-of-Network Telehealth at Plan Option

    On April 16, 2019, CMS finalized requirements for MA plans offering 
additional telehealth benefits (ATBs).\28\ Section 50323 of the BBA of 
2018 created a new subsection (m) of section 1852 of the Act, 
authorizing MA plans to offer ATBs to enrollees starting in plan year 
2020 and treat ATBs as basic benefits. In the April 2019 final rule, we 
finalized a new regulation at Sec.  422.135

[[Page 5913]]

to implement that authority. As part of the parameters for the 
provision of ATBs, we finalized a requirement, at Sec.  422.135(d), 
that MA plans furnishing ATBs only do so using contracted providers, 
and Sec.  422.135 specifically provides that benefits furnished by a 
non-contracted provider through electronic exchange (defined in the 
regulation) may only be covered by an MA plan as a supplemental 
benefit.
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    \28\ https://www.federalregister.gov/documents/2019/04/16/2019-06822/medicare-and-medicaid-programs-policy-and-technical-changes-to-the-medicare-advantage-medicare.
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    In the February 2020 proposed rule, we solicited comment on whether 
Sec.  422.135(d) should be revised to allow all MA plan types, 
including PPOs, to offer ATBs through non-contracted providers and 
treat them as basic benefits under MA.
    We received many responses to this request for comment. We thank 
the commenters for the time and effort that went into developing these 
detailed responses and feedback for CMS. We will carefully review and 
consider all input received from stakeholders as we determine whether 
to revise Sec.  422.135(d) to allow MA plans to offer ATBs through non-
contracted providers. At this time, we are not revising any 
requirements at Sec.  422.135, and any revisions regarding ATBs will be 
proposed through future notice and comment rulemaking.

B. Supplemental Benefits, Including Reductions in Cost Sharing (Sec.  
422.102)

    In the Medicare Program; Establishment of the Medicare Advantage 
Program Final Rule, published in the Federal Register on January 28, 
2005 (hereinafter referred to as the January 2005 MA final rule) (70 FR 
4588, 4617), CMS established that an MA plan could reduce cost sharing 
below the actuarial value specified in section 1854(e)(4)(B) of the Act 
only as a mandatory supplemental benefit and codified that policy at 
Sec.  422.102(a)(4). In order to clarify the scope of section 
1854(e)(4)(A) of the Act, we proposed in the February 2020 proposed 
rule to amend Sec.  422.102(a)(4) and add new rules at Sec.  
422.102(a)(5) and (a)(6)(i) and (ii) to further clarify the different 
circumstances in which an MA plan may reduce cost sharing for covered 
items and services as a mandatory supplemental benefit; we also 
proposed to specifically authorize certain flexibility in the 
mechanisms by which an MA plan may make reductions in cost sharing 
available.
    Currently, reductions in cost sharing are an allowable supplemental 
benefit in the MA program and may include:
     Reductions in the cost-sharing for Parts A and B benefits 
compared to the actuarially equivalent package of Parts A and B 
benefits; and
     Reductions in cost-sharing for Part C supplemental 
benefits, for example provided for specific services for enrollees that 
meet specific medical criteria, such that similarly situated enrollees 
(that is, all enrollees who meet the identified criteria) are treated 
the same and enjoy the same access to these targeted benefits.
    We proposed to codify regulation text to clarify that reductions in 
cost sharing for both (1) Part A and B benefits and (2) covered items 
and services that are not basic benefits are allowable supplemental 
benefits but may only be offered as mandatory supplemental benefits at 
Sec.  422.102(a)(4) and (5). We proposed to revise the current language 
at Sec.  422.102(a)(4) by inserting the phrase ``for Part A and B 
benefits'' after the cite to section 1854(e)(4)(A) of the Act, and to 
add a new paragraph (a)(5) to specify that reduced cost sharing may be 
applied to items and services that are not basic benefits. Under our 
proposal, the reductions in cost sharing for both categories may only 
be provided as a mandatory supplemental benefit.
    We explained in the proposed rule that MA plans may currently 
choose to structure mandatory supplemental benefits that are in the 
form of cost sharing reductions in a few ways. For example, the current 
rules permit MA plans to offer, as a supplemental benefit, a manual 
reimbursement process or use of a debit card to reduce cost sharing 
towards plan covered services or to provide coverage of 100 percent of 
the cost of covered items. MA plans may also decide to offer, as a 
supplemental benefit, a reduction in enrollee's costs through a maximum 
allowance. An MA plan may establish a dollar amount of coverage that 
may be used to reduce cost sharing towards plan covered services and 
subject to a plan-established annual limit; enrollees can ``spend'' the 
allowance on cost sharing for whichever covered benefits the enrollee 
chooses. In both scenarios, MA plans are expected to administer the 
benefit in a manner that ensures the debit card and/or allowance can 
only be used towards plan-covered services. We proposed to codify these 
flexibilities in how reductions in cost sharing are offered at Sec.  
422.102(a)(6)(i) and (ii). We clarified in the proposed rule that these 
flexibilities are only for Part C supplemental benefits, as defined in 
Sec.  422.100(c) and discussed in section VI.F. of the proposed rule 
(and section V.E. of this final rule) and that cost sharing for Part D 
drugs is not included in these flexibilities.
    As proposed, the flexibilities identified would be permitted only 
as a mandatory supplemental benefit, which is why we proposed to codify 
them in Sec.  422.102(a). Further, we explained that the flexibility 
was only for items and services that are identified in the MA plan's 
bid and marketing and communication materials as covered benefits and 
proposed the regulation text using the terms ``covered benefits'' and 
``coverage of items and services'' to make that clear. Under our 
proposal and consistent with current guidance in Chapter 4 of the 
Medicare Managed Care Manual, Sec.  40.3 (allowing debit cards to be 
used for plan-covered over-the-counter (OTC) items under the conditions 
that the card is exclusively linked to the OTC covered items and has a 
dollar limit tied to the benefit maximum), MA plans would not be able 
to offer use of a debit card for purchase of items or services that are 
not covered. We stated that a debit card could be utilized as a 
reimbursement mechanism or as a means for the MA plan to make its 
payment for an item or service; in either case, the use of the card 
would have to be tied to coverage of the benefit. Like all other MA 
coverage, the flexibilities we proposed would be limited to the 
specific plan year and we clarified that this authority to use debit 
cards or a basket of benefits up to a set value from which an enrollee 
can choose cannot be rolled over into subsequent years. We proposed 
specific text in paragraph (a)(6) limiting these forms of supplemental 
benefits to the specific plan year to emphasize that rolling over 
benefits to the following plan year is not permitted.
    We explained in the proposed rule that for both benefit options, MA 
plans would have the flexibility to establish a maximum plan benefit 
coverage amount for supplemental benefits or a combined amount that 
includes multiple supplemental benefits, such as a combined maximum 
plan benefit coverage amount that applies to dental and vision 
benefits. We reiterated that plans may not offer reimbursement, 
including through use of a debit card, to pay for items and services 
that are not covered by the plan and that reductions in cost sharing as 
a supplemental benefit are subject to an annual limit that the enrollee 
can ``spend'' on cost sharing for whichever covered benefits the 
enrollee chooses. Under our proposal, MA plans could use a receipt-
based reimbursement system or provide the dollar amount on a debit card 
(linked to an appropriate merchant and item/service codes) so that the 
enrollee may pay the cost sharing at the point of service. Our proposal 
was to codify and clarify existing guidance and practices and we stated 
that it was not expected

[[Page 5914]]

to have additional impact above current operating expenses. We also 
stated that the proposal would not impose any new collection of 
information requirements.
    We thank commenters for helping inform CMS' Reductions in Cost 
Sharing policy. We received 11 comments on this proposal; we summarize 
them and our responses follow:
    Comment: Many comments were supportive of this proposal.
    Response: We thank commenters for their feedback.
    Comment: A commenter suggested CMS confirm that plans may implement 
allowances as a multi-year benefit.
    Response: We cannot confirm this and it would not be permitted. As 
proposed and finalized, the changes adopted here are for benefits 
offered in each plan year and cannot be rolled over or spread across 
multiple plan years. This is necessary for a number of reasons. CMS 
only has one-year contracts with MAOs; as such, there is no guarantee 
that a particular plan will continue into the following year. 
Additionally, there is also no guarantee an enrollee will remain in a 
plan from year to year as an enrollee has the option to change plans 
each year. Further, and more importantly, bids must be submitted by MA 
organizations each year, showing the revenue requirements for 
furnishing benefits for the contract year; bids are compared to 
benchmarks that are set each year and used to determine the amount of 
beneficiary rebates under Sec.  422.266. Under Sec.  422.266, these 
rebates may be used to pay the premium for the supplemental benefits 
described in Sec.  422.102(a)(6) or to buy down Part B or Part D 
premiums; use of the beneficiary rebate for payment of a premium for 
supplemental benefits in a different plan year is not permitted and 
would be inconsistent with the statutory requirement in section 
1854(b)(1)(C) of the Act that MA plans provide the rebate to enrollees 
for the applicable year. It is not consistent with our regulations on 
bidding (Sec. Sec.  422.250 through 422.266) for an MA plan to have a 
multi-year benefit.
    Comment: A commenter suggested CMS allow plans to offer reductions 
in cost sharing for items and services that are not covered. This 
commenter also suggested CMS not subject reductions to cost sharing or 
allowances to an annual limit.
    Response: In order to have a reduction in cost sharing, there has 
to be a covered benefit. We allow plans to have a debit card to cover 
cost sharing but they must identify the benefits as covered either in 
the plan benefit package (PBP) category or notes in the bid. Consistent 
with this, all the items and services for which payment may be made (in 
the form of a reduction in cost sharing that would otherwise apply for 
the item or service or in the form of the MA plan's payment of its 
share of the amount owed to the provider) must meet the requirements to 
be a supplemental benefit. These requirements are discussed in section 
V.C. of this final rule regarding our proposal to amend Sec.  
422.100(c)(2) to codify the requirements for supplemental benefits.
    Comment: A commenter requested CMS provide additional guidance on 
how plans can make sure that supplemental benefits furnished in the 
form of an allowance meet the ``primarily health related'' requirement 
as enrollees typically have discretion in how they use these allowance-
based dollars.
    Response: The MA plan must ensure that its coverage, whether 
through reimbursement or direct payment, of items and services is 
consistent with the rules for supplemental benefits. The flexibility 
provided in this allowance benefit to permit the enrollee to choose 
among covered benefits does not change the rules for what may be 
covered. For an MA plan that uses a receipt-based reimbursement method 
of administering this allowance benefit, the MA plan must ensure that 
the receipts support a determination that reimbursement is being 
provided only for items and services that are covered supplemental 
benefits. We understand that debit and stored value cards can be 
programmed to permit their use only for purchase of specific items and 
services and at certain locations, such as cost sharing payments at a 
physician's office or payment for primarily health-related items such 
as bandages at a pharmacy. If an MA organization is unable to limit use 
of a debit or stored value card to the appropriate providers and 
covered benefits (such as through programming limits to certain 
merchant codes or inventory information approval system codes) to 
ensure compliance with Sec. Sec.  422.100(c)(2) and 422.102(a), use of 
a debit or stored value card as a means of reimbursing or providing 
reductions in cost sharing may not be appropriate by that MA 
organization. We note that the Internal Revenue Service has provided 
guidance on how debit and stored value cards are permitted in 
connection with health savings accounts and flexible spending accounts 
when the cards are capable of being limited to qualified expenses; see, 
for example: Revenue Ruling 2003-43, 2003-21 I.R.B. 935, available at 
IRS.gov/pub/irs-drop/rr-03-43.pdf. We also clarify here that use of a 
stored value or debit card is not the covered supplemental benefit; 
such cards are only a means by which the MA plan makes direct payment 
to the provider for or reimbursement to the enrollee for the covered 
items and services.
    The covered items and services that are paid or reimbursed this way 
must meet the requirements and standards to be supplemental benefits 
(or to be basic benefits in the case of reducing the cost sharing for a 
Part A or B covered benefit). Related to this, we reiterate that that 
payment of or reimbursement of cost sharing for Part D benefits by an 
MA plan is not a permissible supplemental benefit. To clarify this, we 
are finalizing Sec.  422.102(a)(5) with additional text that Part D 
cost sharing may not be reduced or paid as a Part C supplemental 
benefit. MA plans may, under Sec.  422.266, use rebates to pay the 
premiums for Part D benefits, including the premiums for supplemental 
drug coverage described at Sec.  423.104(f)(1)(ii). For more 
information on the types of items and services that may be covered by 
an MA plan as a supplemental benefit, we direct readers to the April 
27, 2018 memo titled ``Reinterpretation of ``Primarily Health Related'' 
for Supplemental Benefits'' and section V.C of this rule, which 
codifies those requirements for details.
    Comment: A commenter expressed concern about potential limits on 
these benefits and the idea that financial need must be proven in order 
to allow access.
    Response: Reduced cost sharing as a supplemental benefit must 
follow the requirements concerning supplemental benefits, which include 
uniformity requirements Sec.  422.100(d) discussed in section V.C of 
this final rule. That is, if a plan chooses to offer reduced cost 
sharing as a supplemental benefit, it must be offered uniformly to plan 
enrollees. MA plans may not offer supplemental benefits based on 
financial need. Because of the unique nature of Special Supplemental 
Benefits for the Chronically Ill (SSBCI) and the statutory authority 
for those benefits to not be primarily health related, the recently 
adopted rule at Sec.  422.102(f)(2)(iii) permits an MA plan to consider 
social determinants of health as a factor to help identify chronically 
ill enrollees whose health could be improved or maintained with SSBCI. 
(85 FR 33801, 33804) However, MA plans may not use social determinants, 
such as financial need, as the sole basis for determining eligibility 
for SSBCI.
    Comment: A commenter mentioned that while stated in the preamble, 
CMS did not include specific regulation text stating that reduced cost 
sharing for basic benefits, specifically as it relates to

[[Page 5915]]

the value of Part A and B benefits, is permitted.
    Response: In the proposed rule, we included amendatory instructions 
to clarify that reductions in cost sharing for Part A and B benefits 
may only be offered as mandatory supplemental benefits at Sec.  
422.102(a)(4) and (5). Specifically, CMS proposed to revise the current 
language at Sec.  422.102(a)(4) by inserting the phrase ``for Part A 
and B benefits''. (85 FR 9213) Thus, specific regulation text 
clarifying that reduced cost sharing for basic benefits, specifically 
for Part A and B benefits, is permitted as a supplemental benefit was 
included in the proposed language. We are finalizing this language.
    After consideration of the comments received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing the changes to Sec.  422.102(a)(4) and (a)(6)(i) and (ii) as 
proposed and are adding language to Sec.  422.102(a)(5) further 
clarifying that cost sharing for Part D drugs is not included in these 
flexibilities.

C. Referral/Finder's Fees (Sec. Sec.  422.2274 and 423.2274)

    In the Medicare Program; Contract Year 2015 Policy and Technical 
Changes to the Medicare Advantage and the Medicare Prescription Drug 
Benefit Programs Final Rule, published in the Federal Register on May 
23, 2014 (79 FR 29960) (the May 2014 final rule), CMS codified rules in 
Sec. Sec.  422.2274(h) and 423.2274(h) for MA organizations and Part D 
sponsors to pay agents and brokers for referrals of beneficiaries for 
enrollment in MA and Part D plans, also known as finder's fees. 
Currently, under Sec. Sec.  422.2274(h) and 423.2274(h), CMS sets a 
referral fee limit that reflects an amount CMS determined is reasonably 
expected to provide financial incentive for an agent or broker to refer 
a beneficiary for an enrollment into a plan that is not the most 
appropriate to meet his or her needs. This is consistent with sections 
1851(j)(2) and 1860D-1(l) of the Act, which direct that the Secretary 
set limits on compensation to ensure that the use of compensation 
creates incentives for agents and brokers to enroll individuals in the 
Medicare Advantage plan that is intended to best meet their health care 
needs. In an HPMS memo dated May 29, 2020, CMS limited referral fees to 
$100 for MA plans and $25 for PDP plans. Since referral fees are part 
of the definition of the term compensation in Sec. Sec.  422.2274 and 
423.2274, organizations may not pay independent agents more than the 
regulatory limits; CMS regulates referral fees as part of CMS's 
regulations on the compensation paid by the plan to an agent/broker for 
an enrollment, even if referral fees are paid separately from 
commissions or compensation for completed enrollments. CMS explained in 
the February 2020 proposed rule that because referral fees are already 
incorporated into compensation, limiting the amount of a referral fee 
does not impact the statutory requirement that CMS guidelines for 
compensation to an agent or broke incentivize the agent or broker 
enrolling a beneficiary in the plan that best meets their health care 
needs. CMS also explained in the proposed rule that for captive and 
employed agents and brokers, who only sell coverage for one 
organization, referral fees would not have any impact on how much the 
captive or employed agent is himself or herself paid.
    Therefore, CMS proposed to remove Sec. Sec.  422.2274(h) and 
423.2274(h) and thereby eliminate the specific limitation on the amount 
a referral or finder fee paid by a plan to an agent or broker. CMS 
explained generally how the current regulation treats compensation as 
background for our proposal. As currently codified at Sec. Sec.  
422.2274(b) and 423.2274(b), compensation for initial enrollments may 
not exceed the fair market value and compensation for renewal 
enrollments may not exceed 50 percent of the fair market value. 
Compensation is defined in the same current regulation, at paragraph 
(a), as all monetary or non-monetary remuneration of any kind relating 
to the sale or renewal of a policy including, but not limited to, 
commissions, bonuses, gifts, prizes or awards, and referral or finder 
fees. By eliminating the individual referral fee limit, our proposal 
would restructure the regulation to only provide a limit on referral 
fees within the overall limit of Fair Market Value (FMV) that applies 
to all compensation. CMS proposed to clarify that MA organizations and 
Part D sponsors have the ability to compensate agents for referrals, 
provided that the total dollar amount does not exceed FMV. CMS 
explained that the primary value for this proposed additional 
flexibility would be in connection with independent agents, as CMS 
believes that for captive and employed agents, referral/finder fees do 
not play a factor in making sure the agent enrolls the beneficiary in 
the best plan, since captive and employed agents only sell for one 
organization. CMS therefore proposed to eliminate the current specific 
limit on finder or referral fees that is codified at paragraph (h). CMS 
also explained that because the definition of compensation already 
includes referral or finder fees (which CMS did not propose to change), 
the result of this specific proposal would be an overall limit on 
compensation for initial and renewal enrollments that would include 
finder or referral fees. In section VI.H. of the proposed rule, CMS 
proposed additional changes for Sec. Sec.  422.2274(g) and 423.2274(g) 
regarding agent and broker compensation for Part C and Part D 
enrollments; and under those proposals, the definition of compensation 
would continue to include finder or referral fees. As a result, the 
limits on overall compensation continued to include finder or referral 
fees under the proposed rule. CMS solicited comment on whether removing 
the limit on referral/finder's fees would generate concerns such as 
those discussed in the 2010 Call Letter for MA organizations issued 
March 30, 2009; CMS's October 19, 2011, memo entitled ``Excessive 
Referral Fees for Enrollments;'' or the May 2014 final rule that 
codified the referral/finder's fees limits in regulation. As 
background, these concerns included marketing practices designed to 
circumvent compensation limitations.
    The comments CMS received on this specific proposal regarding 
referral/finders' fees and our responses to them follow.
    Comment: Several commenters stated that referrals and enrollments 
are different activities and therefore, CMS should consider payment for 
these activities separately. The commenters pointed out that referrals 
are used to generate sales leads, that not all leads result in an 
enrollment, and when a lead does result in enrollment, referral and 
finder's fees are typically not paid to the individual completing the 
sale. Some commenters pointed out that referral fees are not always 
provided to individuals as part of the compensation they are paid for 
an enrollment. The commenters suggested referral fees be removed from 
compensation and that a separate, reasonable limit be placed on 
referral fees. A commenter pointed out that the removal of the limit on 
referral fees would result in larger, well-financed health plans paying 
brokers more for referrals and that this would cause smaller health 
plans to lose out on broker referrals.
    Response: CMS agrees with the commenters that referral fees and 
compensation are different types of payments and that plans distinguish 
between referral fees for sales leads and compensation to agents and 
brokers for enrollments. We understand that referral fees are a 
distinct part of market practices which we have determined, based on 
comments, should not be

[[Page 5916]]

modified. We also realize that our proposal to remove specific limits 
on referral fees may put plans that can pay higher referral fees at an 
advantage over other plans. Based on the issues identified through 
comments we are maintaining the status quo. As such, CMS is finalizing 
a separate limit on referral fees in Sec. Sec.  422.2274(f) and 
423.2274(f) and is codifying the dollar figures currently used as the 
limits for referral fees. The current sub-regulatory policy has in 
place a $25 referral fee limit for PDPs and a $100 referral fee limit 
for MA-PDs. The proposal was to remove the current limits since 
referral fees are part of compensation paid to an agent for an 
enrollment. However, commenters pointed out that referral fees are not 
always provided to individuals as part of the compensation they are 
paid for an enrollment. Therefore, we are finalizing a specific dollar 
limit on fees paid for a single referral, recommendation, provision (as 
in providing a lead), or other means of referring a beneficiary to an 
agent, broker or other entity for potential enrollment in a plan 
instead of finalizing our proposal.
    Section 1851(j)(2)(D) of the Social Security Act requires CMS to 
establish limitations to ensure that the use of compensation creates 
incentives for the agent/broker to enroll a beneficiary in a plan that 
best meets their needs. CMS does not require referral fees to be 
contingent on a beneficiary being enrolled in a plan because referral 
fees are essentially payments for sales leads. Plans may determine the 
circumstances as to when they pay referral fees (for example, based on 
whether the lead chooses to enroll in the plan), provided such payment 
is in accordance with the requirements in this final rule. Therefore, 
referral fees are a different type of payment than the payments that we 
regulate as compensation to an agent or broker for enrollment of a 
beneficiary in a plan. Based on this, CMS is finalizing changes to the 
definition of the term ``compensation'' (codified in Sec. Sec.  
422.2274(a) and 423.2274(a)) to remove referral or finder fees from the 
list of what compensation includes. As discussed in more detail in 
section V.E of this final rule, compensation as defined in paragraph 
(a) is regulated as payment that is based on enrollment in a plan. CMS 
is finalizing a new Sec. Sec.  422.2274(f) and 423.2274(f) to provide 
that payments may be made to individuals for the referral, 
recommendation, provision, or other means of referring beneficiaries to 
an agent/broker or other entity for potential enrollment into a plan 
and that such payments may not exceed $100 for a referral into an MA or 
MA-PD plan and $25 for a referral into a standalone PDP.
    Comment: A commenter requested more transparency into payment of 
both referral fees and renewal fees. The commenter also suggested that 
CMS eliminate the renewal compensation for agents, stating that 98 
percent of beneficiaries remain in the same plan or make a plan change 
to a ``like'' plan (that is, a plan that is similar enough to the 
previous plan that it does not result in a change of the renewal 
payment status to the agent/broker). The commenter stated that the 
renewal compensation created an un-level playing field between 
community-based non-profit plans and national competitors.
    Response: We believe that the commenter may be conflating referral 
fees and renewal compensation. Referral fees are paid by plans for 
sales leads while renewal compensation is paid by a plan to an agent or 
broker for enrollments. The dollar amount of the limit on referral fees 
under the current regulation was set by CMS in subregulatory guidance, 
applying the regulatory standard that referral fees not exceed an 
amount that could be reasonably expected to provide a financial 
incentive to enroll a beneficiary in a plan that is not appropriate to 
the beneficiary's needs. Here, we are finalizing a specific dollar 
amount as the limit on referral fees: $100 for a referral into an MA or 
MA-PD plan and $25 for a referral into a PDP plan. Plans may pay an 
amount per referral that is less than this limit but must not pay more 
than this limit. By establishing a specific dollar limit for referral 
fees in regulation, CMS is creating a level playing field for all plans 
who pay referral fees according to this policy. CMS is not including 
any type of increase to the referral fees since referrals do not 
require the same type of effort or have the same requirements that are 
associated with compensation.
    The limit on renewal compensation is 50 percent of the fair market 
value (FMV) set for initial enrollment year compensation, as provided 
in Sec. Sec.  422.2274(b)(ii) and 423.2274(b)(ii) of the current 
regulations and in Sec. Sec.  422.2274(d)(3) and 423.2274(d)(3) of this 
final rule. As defined in Sec. Sec.  422.2274(a) and 423.2274(a) in 
this final rule, FMV is calculated each year by increasing the prior 
year's FMV dollar amount by the MA Growth Percentage for aged and 
disabled beneficiaries, which is published for each year in the rate 
announcement issued pursuant to Sec.  422.312. This provision permits a 
change each year in compensation to agents and brokers that aligns with 
the change in the growth of per capita costs. Agents provide valuable 
assistance to beneficiaries whether the beneficiary is enrolling into a 
plan for the first time or staying in their existing plan. Many 
beneficiaries depend on their agents to assist them in reviewing their 
choices each year and helping them make a determination on whether to 
remain in their existing plan or to move into a new plan. Renewal 
compensation provides an incentive to provide such assistance to 
enrollees and we believe such compensation is appropriate to limit 
under our statutory responsibility to regulate compensation for agents 
and brokers. In addition, permitting renewal compensation avoids 
providing an inadvertent and unintended incentive for agents and 
brokers to churn beneficiaries through new enrollments into different 
plans each year in order to generate stable income.
    After consideration of the comments and for the reasons outlined in 
the proposed rule, we are finalizing the definition of ``compensation'' 
(Sec. Sec.  422.2274(a) and 423.2274(a)) without including referral and 
finder's fees and are finalizing a new paragraph (f) in Sec. Sec.  
422.2274 and 423.2274 to impose specific limits on the payment amount 
for referral and finder's fees for MA and Part D enrollments.

D. Medicare Advantage (MA) and Part D Prescription Drug Program Quality 
Rating System (Sec. Sec.  422.162, 422.164, 422.166, 422.252, 423.182, 
423.184, and 423.186)

1. Introduction
    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 give advance notice regarding 
enhancements to the Part C and D Star Ratings program. In the April 
2019 final rule, CMS amended Sec. Sec.  422.166(a)(2)(i) and 
423.186(a)(2)(i) to update the methodology for calculating cut points 
for non-Consumer Assessment of Healthcare Providers and Systems (non-
CAHPS) measures by adding mean resampling and guardrails, codified a 
policy to adjust Star Ratings for disasters, and finalized some measure 
updates. In the June 2020 final rule, CMS finalized an increase in the 
weight of patient experience/complaints and

[[Page 5917]]

access measures from 2 to 4 for the 2023 Star Ratings. To further 
increase the predictability and stability of the Star Ratings system, 
we also finalized our proposal to directly remove outliers through 
Tukey outlier deletion before applying the clustering methodology to 
calculate the cut points, but we delayed the application of Tukey 
outlier deletion until the 2022 measurement year which coincides with 
the 2024 Star Ratings. We also finalized the removal of the Rheumatoid 
Arthritis Management measure and updated the Part D Statin Use in 
Persons with Diabetes measure weighting category for the 2021 
measurement year and the 2023 Star Ratings.
    In the Medicare and Medicaid Programs; Policy and Regulatory 
Revisions in Response to the COVID-19 Public Health Emergency Interim 
Final Rule placed on display at the Office of the Federal Register 
website on March 31, 2020 (hereinafter referred to as the March 31st 
COVID-19 IFC), CMS adopted a series of changes to the 2021 and 2022 
Star Ratings to accommodate the disruption to data collection posed by 
the COVID-19 pandemic. The changes adopted in the March 31st COVID-19 
IFC addressed the need of health and drug plans and their providers to 
adapt their current care practices in light of the public health 
emergency (PHE) for COVID-19 and the need to care for the most 
vulnerable patients, such as the elderly and those with chronic health 
conditions. In addition to needing to address data collections 
scheduled for 2020 during the initial part of the PHE, we believe that 
there will be changes in measure-level scores because of increased 
healthcare utilization due to COVID-19, reduced or delayed non-COVID-19 
care due to advice to patients to delay routine and/or elective care, 
and changes in non-COVID-19 inpatient utilization. We realize that this 
will impact the data collected during the 2020 measurement year which 
will impact the 2022 Part C and D Star Ratings. Thus, as part of the 
March 31st COVID-19 IFC, we made some adjustments to account for the 
potential decreases in measure-level scores so health and drug plans 
can have some degree of certainty knowing how the Star Ratings will be 
adjusted and can continue their focus on patients who are most in need 
right now.
    Specifically, the March 31st COVID-19 IFC:
     Eliminates the requirement to collect and submit 
Healthcare Effectiveness Data and Information Set (HEDIS) and Medicare 
Consumer Assessment of Healthcare Providers and Systems (CAHPS) data 
otherwise collected in 2020 and replaces the 2021 Star Ratings measures 
calculated based on those HEDIS and CAHPS data collections with earlier 
values from the 2020 Star Ratings (which are not affected by the PHE 
for COVID-19);
     Establishes how we would calculate or assign Star Ratings 
for 2021 in the event that CMS's functions had become focused on only 
continued performance of essential Agency functions and the Agency and/
or its contractors did not have the ability to calculate the 2021 Star 
Ratings;
     Modifies the current rules for the 2021 Star Ratings to 
replace any measure that had a systemic data quality issue for all 
plans due to the COVID-19 outbreak with the measure-level Star Ratings 
and scores from the 2020 Star Ratings;
     Replaces the measures calculated based on HOS data 
collections with earlier values that are not affected by the public 
health threats posed by COVID-19 for the 2022 Star Ratings in the event 
that we were unable to complete Health Outcomes Survey (HOS) data 
collection in 2020 (for the 2022 Star Ratings) due to the PHE for 
COVID-19;
     Removes guardrails (i.e., measure-specific caps on cut 
point changes from one year to the next) for the 2022 Star Ratings by 
delaying their application to the 2023 Star Ratings;
     Expands the existing hold harmless provision for the Part 
C and D Improvement measures to include all contracts for the 2022 Star 
Ratings; and
     Revises the definition of ``new MA plan'' so that for 
purposes of 2022 QBPs based on 2021 Star Ratings only, new MA plan 
means an MA contract offered by a parent organization that has not had 
another MA contract in the previous 4 years, in order to address how 
the 2021 Star Ratings are based in part on data for the 2018 
performance period.
    Please see the March 31st COVID-19 IFC for further information on 
these changes for the 2021 and 2022 Star Ratings. In addition, the 
Medicare and Medicaid Programs, Clinical Laboratory Improvement 
Amendments (CLIA), and Patient Protection and Affordable Care Act; 
Additional Policy and Regulatory Revisions in Response to the COVID-19 
Public Health Emergency Interim Final Rule (CMS-3401-IFC) which 
appeared in the Federal Register on September 2, 2020 (hereinafter 
referred to as the September 2nd IFC), modifies application of the 
extreme and uncontrollable circumstances policy for the calculation of 
the 2022 Part C and D Star Ratings to address the PHE for COVID-19 to: 
(1) Remove the 60 percent exclusion rule for cut point calculations for 
non-CAHPS measures; and (2) remove the 60 percent exclusion rule for 
the determination of the performance summary and variance thresholds 
for the Reward Factor. These changes were made by amending the 
regulations at Sec. Sec.  422.166(i)(11) and 423.186(i)(9).
    In the February 2020 proposed rule, in addition to the policies 
addressed in the June 2020 final rule, we proposed to implement 
substantive updates to the specifications of the Health Outcomes Survey 
(HOS) outcome measures, add two new Part C measures to the Star Ratings 
program, clarify the rules around consolidations when data are missing 
due to data integrity concerns, and add several technical 
clarifications. We also proposed to codify additional existing rules 
for calculating MA Quality Bonus Payment (QBP) ratings. We proposed 
these changes to apply to the 2021 measurement period and the 2023 Star 
Ratings, but as discussed in this final rule, we are finalizing these 
policies from the proposed rule (that is, data would be collected and 
performance measured) for the 2022 measurement period and the 2024 Star 
Ratings.
    CMS appreciates the feedback we received on our proposals. In the 
sections that follow, which are arranged by topic area, we summarize 
the proposal and comments we received on each proposal and provide our 
responses.
2. Definitions (Sec.  422.252)
    We proposed to amend the definition at Sec.  422.252 for new MA 
plans by clarifying how we apply the definition. Under our proposed 
changes, New MA plan would mean a plan that: (1) Is offered under a new 
MA contract; and (2) is offered under an MA contract that is held by a 
parent organization defined at Sec.  422.2 that has not had an MA 
contract in the prior 3 years. In addition, we proposed to add text to 
the definition to explicitly explain that the parent organization is 
identified as of April of the calendar year before the payment year to 
which the final QBP rating applies, and contracts associated with that 
parent organization are also evaluated using contracts in existence as 
of April of the 3 calendar years before the payment year to which the 
final QBP rating applies.
    Under our current policy, we identify the parent organization for 
each MA contract in April of each year and then whether any MA 
contracts have been held by that parent organization in the immediately 
preceding 3 years to determine if the parent organization meets the 3-
year standard. For example,

[[Page 5918]]

if a parent organization is listed for an MA contract in April 2019, 
and that parent organization does not have any other MA contracts at 
any point during April 2017-April 2019, the plans under the MA contract 
would be considered new MA plans for 2020 QBP purposes.
    We received no comments on the proposed amended definition in Sec.  
422.252 for a new MA plan and are finalizing the policy as proposed for 
the reasons outlined in the proposed rule and this final rule. However, 
we are not finalizing the last sentence included in the proposed 
regulation text because the proposed regulation text mistakenly 
included a sentence repeating how we would identify parent 
organizations in April of the calendar year before the payment 
year.\29\ Although we are finalizing this provision as applicable 
beginning January 1, 2022, we reiterate that it codifies current 
policies that have been in place since 2012 (76 FR 21486). In addition, 
we note that the regulation text finalized here includes the language 
adopted in the March 31st COVID-19 IFC (CMS-1744-IFC) to govern how the 
definition is applied for 2021 Star Ratings (85 FR 19290).
---------------------------------------------------------------------------

    \29\ The following sentence is excluded from the regulatory 
text: Under our current policy, we identify the parent organization 
for each MA contract in April of each year and then whether any MA 
contracts have been held by that parent organization in the 
immediately preceding 3 years to determine if the parent 
organization meets the 3-year standard.
---------------------------------------------------------------------------

3. Contract Consolidations (Sec. Sec.  422.162(b)(3)(iv), 
422.164(g)(1)(iii)(A), 423.182(b)(3)(ii), and 423.184(g)(1)(ii)(A))
    The process for calculating the measure scores for contracts that 
consolidate is specified as a series of steps at Sec. Sec.  
422.162(b)(3) and 423.182(b)(3). We proposed to add a rule to account 
for instances when the measure score is missing from the consumed or 
surviving contract(s) due to a data integrity issue as described at 
Sec. Sec.  422.164(g)(1)(i) and (ii) and 423.184(g)(1)(i) and (ii). CMS 
proposed to assign a score of zero for the missing measure score in the 
calculation of the enrollment-weighted measure score. We proposed that 
these rules would apply for contract consolidations approved on or 
after January 1, 2021. First, we proposed minor technical changes to 
the regulation text in Sec. Sec.  422.162(b)(3)(iv)(A) and (B) and 
423.182(b)(3)(ii)(A) and (B) to improve the clarity of the regulation 
text. Second, we proposed to redesignate the current regulation text 
(with the technical changes) as new paragraphs (b)(3)(iv)(A)(1) and 
(b)(3)(iv)(B)(1) and (b)(3)(ii)(A)(1) and (b)(3)(ii)(B)(1) of these 
regulations and to codify this new rule for contract consolidations 
approved on or after January 1, 2021 as Sec. Sec.  
422.162(b)(3)(iv)(A)(2) and (b)(3)(iv)(B)(2) and 
423.182(b)(3)(ii)(A)(2) and (b)(3)(ii)(B)(2). We also proposed an 
additional rule at Sec. Sec.  422.164(g)(1)(iii)(A) and 
423.184(g)(1)(iii)(A) to address how the Timeliness Monitoring Project 
(TMP) or audit data are handled when two or more contracts consolidate. 
We proposed that the TMP or audit data will be combined for the 
consumed and surviving contracts before carrying out the methodology as 
provided in paragraphs B through N (for Part C) and paragraphs B 
through L (for Part D). We proposed that these rules would apply for 
contract consolidations approved on or after January 1, 2021 and the 
proposed regulation text included language to that effect. We proposed 
to redesignate the current regulation text as new paragraphs 
(g)(1)(iii)(A)(1) and (g)(1)(ii)(A)(1) of these regulations and to 
codify this new rule for contract consolidations on or after January 1, 
2021 as paragraphs (g)(1)(iii)(A)(2) and (g)(1)(ii)(A)(2).
    In this section of this rule, we summarize the comments we received 
and provide our responses and final decisions.
    Comment: Commenters supported the proposals related to how to 
calculate scores when either the surviving or the consumed contract has 
a measure-level data integrity issue. A commenter recommended in these 
instances that the preview reports should include the combined TMP data 
for contracts that consolidate.
    Response: We appreciate these comments and will be combining the 
TMP data in preview reports for the surviving and consumed contracts.
Summary of Regulatory Changes
    After consideration of the comments and for the reasons set forth 
in the proposed rule and our responses to the related comments, we are 
finalizing the changes as proposed to Sec. Sec.  422.162(b)(3)(iv), 
422.164(g)(1)(iii)(A), 423.182(b)(3)(ii), and 423.184(g)(1)(ii)(A) with 
a revision to the applicable date. Given the timing of the finalization 
of this rule, we are finalizing the provisions as applying to contract 
consolidations that are approved on or after January 1, 2022.
4. Adding and Updating Measures (Sec. Sec.  422.164, 423.184)
    The regulations at Sec. Sec.  422.164 and 423.184 specify the 
criteria and procedures for adding, updating, and removing measures for 
the Star Ratings program. As discussed in the April 2018 final rule, 
due to the regular updates and revisions made to measures, CMS does not 
codify a list in regulation text of the measures (and specifications) 
adopted for the MA and Part D Star Ratings Program (83 FR 16537). CMS 
lists the measures used for the Star Ratings each year in the Medicare 
Part C & D Star Ratings Technical Notes or similar guidance document 
with publication of the Star Ratings. In the February 2020 proposed 
rule, CMS proposed measure changes to the Star Ratings program for 
performance periods beginning on or after January 1, 2021.
a. Proposed Measure Updates--Updates to the Improving or Maintaining 
Physical Health Measure and Improving or Maintaining Mental Health 
Measure From the HOS (Part C).
    In accordance with Sec.  422.164(d)(2), we proposed substantive 
updates to two measures from the Medicare Health Outcomes Survey (HOS): 
The Improving or Maintaining Physical Health measure and Improving or 
Maintaining Mental Health measure.
    First, we proposed to change the case-mix adjustment (CMA) for 
these measures. Case-mix adjustment is critical to measuring and 
comparing longitudinal changes in the physical and mental health of 
beneficiaries across MA contracts. To ensure fair and comparable 
contract-level scores, it is important to account for differences in 
beneficiary characteristics across contracts for these two measures. 
CMS proposed to modify the current approach used for adjusting for 
differences in the case-mix of enrollees across contracts for these two 
measures. The proposed approach would improve the case-mix model 
performance and simplify the implementation and interpretation of case-
mix results when particular case-mix variables, such as household 
income, are missing. The current method for handling missing case-mix 
variables results in a reduced number of case-mix variables used for a 
beneficiary because it does not use any of the case-mix variables in a 
group of adjusters if one is missing from the group (see 2021 Medicare 
Part C & D Star Ratings Technical Notes Attachment A for a full 
description of the current HOS case-mix methodology). CMS stated in the 
proposed rule that this ``all-or-nothing'' approach for each group of 
adjusters may not be as efficient as alternative approaches for 
handling missing case-mix adjusters. Under the proposed change, when an 
adjuster is missing for

[[Page 5919]]

a beneficiary, it would be replaced with the mean value for that 
adjuster for other beneficiaries in the same contract who also supply 
data for the Improving or Maintaining Physical Health and Improving or 
Maintaining Mental Health measures. This proposed approach has been 
used for the Medicare Advantage and Prescription Drug Plan CAHPS 
surveys for many years (see 2021 Medicare Part C & D Star Ratings 
Technical Notes Attachment A for a description of the CAHPS case-mix 
methodology). In simulation models, this approach either outperformed 
the current approach for predicting outcomes or matched the current 
approach. The proposed rule also explained how the proposed approach is 
easier to implement than the current approach as replacing the missing 
adjuster values with the contract mean scores for those adjusters 
rather than deleting the grouping of adjusters is less burdensome 
because it involves fewer steps and is easier to replicate and 
understand.
    Second, we proposed to increase the minimum required denominator 
from 30 to 100 for the two measures. The proposed increase to the 
minimum denominator would bring these measures into alignment with the 
denominator requirements for the HEDIS measures that come from the HOS 
survey and increase the reliability for these measures compared to the 
current reporting threshold of 30.
    In this section of this rule, we summarize the comments we received 
and provide our responses and final decisions.
    Comment: A majority of commenters expressed support for a 
simplified case-mix methodology, increased minimum denominator, and 
CMS's continued efforts to improve the quality and transparency of HOS 
measures. Some commenters stated that the new methodology for dealing 
with missing data will make the case-mix algorithm more accurate and 
help ensure fair and comparable contract level results by strengthening 
the measures' ability to adjust for beneficiary level differences. A 
commenter suggested removing HOS measures from the Star Ratings 
entirely, but most who expressed concerns about the proposed changes 
recommended CMS move the two HOS outcome measures to the display page 
for 2 years to allow stakeholders sufficient time to review. Some 
commenters noted that these changes are substantive.
    Response: CMS appreciates the support for the proposed 
methodological changes. CMS agrees that the case-mix change is a 
substantive update as described at Sec.  422.164(d)(2), so the 
provision there for placing an updated measure on the display page for 
at least 2 years prior to using the updated measure to calculate and 
assign Star Ratings applies. Thus, CMS will move these two HOS outcomes 
measures, Improving or Maintaining Physical Health and Improving or 
Maintaining Mental Health, as updated, to the display page for the 2024 
and 2025 Star Ratings. Though CMS has the option of retaining the 
current specifications of these outcome measures in Star Ratings while 
stakeholders review and study the updated measures, our regulations do 
not require their retention during this interim period. Given the 
importance of patient-reported outcome measures in the Star Ratings 
program, CMS is opting to let stakeholders review the updated measures 
on the display page without simultaneously considering an alternate 
specification in the Star Ratings. We explained in the April 2018 final 
rule that we may continue use of a legacy measure if the updated 
measure expands the population covered in the measure or the measure 
otherwise is critical to the Star Ratings (83 FR 16537).
    Comment: A commenter stated that these two HOS measures reflect 
experiences, not outcomes, and therefore should not be weighted as 
outcome measures. Another commenter stated that it is inappropriate to 
assign self-reported measures the weight of 3. A few commenters 
suggested CMS reduce the weight of the two HOS outcome measures to 1.5 
or 2. Several commenters requested CMS clarify the weight of the two 
updated measures once they are reintroduced to the Star Ratings.
    Response: The Improving or Maintaining Physical Health measure and 
Improving or Maintaining Mental Health measure both focus on key 
outcomes for a health plan: Improving or maintaining the physical 
health and mental health of its enrollees. These measures reflect the 
outcomes of the plan's entire membership based on the members' 
perceptions of their own health. Thus, these measures do not measure 
patient experiences or beliefs about the health plan but measure 
changes over 2 years in the physical and mental health status of the 
enrollees in an MA contract. The weights of measures are assigned by 
measure type as codified at Sec.  422.166(e). These measures (Improving 
or Maintaining Physical Health and Improving or Maintaining Mental 
Health) are considered outcome measures; thus, as codified at Sec.  
422.166(e)(1)(i), they receive a weight of 3. Under CMS's process to 
add, update, and remove measures used to calculate the Star Ratings 
codified at Sec.  422.164, substantive updates to an existing measure 
result in the updated measure being on the display page for at least 2 
years prior to its reintroduction to the Star Ratings. For weighting 
purposes, a substantively updated measure is treated as a new measure, 
and as described at Sec.  422.166(e)(2), will receive a weight of 1 for 
the first year in the Star Ratings. In subsequent years, an updated 
measure is assigned the weight associated with its category. Thus, the 
Improving or Maintaining Physical Health and Improving or Maintaining 
Mental Health measures will receive a weight of 1 in the 2026 Star 
Ratings and a weight of 3 in the 2027 Star Ratings and beyond.
    Comment: Several commenters expressed concern about the cultural 
relevance of the survey questions, the applicability of the two HOS 
outcome measures to the LIS/DE and disabled populations, and the 
robustness of the case-mix models to control for these differences. A 
commenter suggested the Improving or Maintaining Physical Health 
measure conflates functional status with health and pointed out that 
persons with functional limitations can still be in good health. 
Another commenter questioned the role of death in the statistical 
adjustment models that examine changes in expected physical health.
    Response: There continues to be additional work in the research 
community on both identifying the impact of social risk factors on 
health outcomes and how to best to control for their impact on clinical 
quality measurement such that comparisons across contracts yield 
accurate representations of true differences in quality as opposed to 
reflections of changes in the composition of beneficiaries within a 
contract or across contracts over time. CMS also continues to test and 
refine the HOS instrument with these issues in mind to ensure that 
survey questions are relevant to different populations. The current 
longitudinal measures, Improving or Maintaining Physical Health and 
Improving or Maintaining Mental Health, adjust for a wide variety of 
beneficiary demographic and socioeconomic characteristics to control 
for differences in these characteristics across contracts. MA 
organizations are held accountable for risk-adjusted changes in 
functioning, including mortality, because to ignore death as a physical 
health outcome would result in misleading results. We agree that people 
with functional limitations can be in

[[Page 5920]]

good health and this is accounted for in the Improving or Maintaining 
Physical Health measure since it examines person-level changes from a 
baseline period to a follow-up period 2 years later. The HOS 
methodology takes into account the case mix of enrollees within each 
plan and controls for pre-existing baseline differences, including age, 
sociodemographic characteristics, functional status, and chronic 
medical conditions as reported in the HOS survey, to statistically 
adjust each plan's expected outcomes, including survival rate, based on 
national averages when calculating the results for Improving or 
Maintaining Physical Health. Mortality is not considered in the 
calculation of Improving or Maintaining Mental Health.
    Comment: Several commenters expressed concern about the HOS survey, 
including whether increasing the minimum denominator to 100 would 
improve the stability of the specific measures. A few commenters urged 
CMS to consider an even larger increase. Another commenter recommended 
that CMS not implement the change until there is clear evidence it will 
enhance measure stability in the Star Ratings. Several commenters 
suggested involving stakeholders in future changes to the survey 
methodology, because of their implications for measures. Many 
commenters noted that these are significant changes to specifications, 
while additional changes may also be needed to improve the measures, 
such as to further increase reliability and stability of the measures.
    Response: We have considered stakeholder feedback in the 
development of measures of clinical outcomes in the Part C and Part D 
Star Ratings program. The HOS was developed over the course of 2 
decades under the guidance of several Technical Expert Panels (TEPs) of 
industry experts and its survey questions are derived from well-
established patient reported outcome measures (PROs) that reflect 
clinical standards. Patients are the ultimate source of information on 
patient outcomes and CMS is committed to developing meaningful measures 
for quality measurement and improvement that enhance outcomes for 
beneficiaries. CMS continues to solicit stakeholder feedback on PROs, 
most recently through the 2020 draft Call Letter dated January 30, 2019 
and the Star Ratings TEP on April 30, 2019. Additionally, CMS routinely 
seeks broad stakeholder input regarding measure enhancements, while 
maintaining scientific objectivity and independence throughout the 
process.
    Our analyses do not show volatility of HOS measures in the Star 
Ratings, and in particular of the two outcome measures, which because 
of their weight in the Star Ratings calculation are of most concern to 
plans and sponsors. As an example, most plans maintained or gained 
stars on HOS measures between 2019 and 2020, and while there is some 
movement in the Star Ratings, the change is generally not acute. Only 
one plan dropped from 5 stars to 1 star for Improving or Maintaining 
Physical Health, while 68 percent of plans had no change or an increase 
in stars for the measure, and 85 percent had no change or an increase 
in stars for Improving or Maintaining Mental Health. Analyses of 
movement in Star Ratings for these outcome measures do not raise 
concerns about stability, even over longer periods of time.
    While CMS does not have concerns about the stability of the two 
outcome measures derived from HOS, we understand how much plans have at 
stake in their HOS-derived Star Ratings. Out of an abundance of caution 
and to be responsive to stakeholder concerns, we are taking a number of 
steps. One is to increase the denominator size to further increase 
reliability. In addition, and as CMS stated in the 2021 Rate 
Announcement, we are exploring alternative PROs as potential 
replacements for the existing HOS outcome measures in the future; we 
are particularly interested in less complex replacements that would 
facilitate MA plans directing their quality improvement efforts on a 
health focus relevant to their enrollee population.
    Comment: A commenter suggested the HOS survey should not be fielded 
during the COVID-19 pandemic because of the burden the survey places on 
plan members and the impact of the pandemic on their health, and 
recommended that HOS baselines be considered unavailable through 2023.
    Response: As stated in the March 31st COVID-19 IFC (CMS-1744-IFC), 
CMS delayed the HOS survey for 2020 until the late summer so as not to 
risk the health and safety of survey vendor staff during the initial 
stages of the pandemic. Since survey vendors have put in place 
procedures to safely administer the surveys, consistent with the HPMS 
memo released on July 20, 2020 titled ``2020 Medicare Health Outcomes 
Survey (HOS) and HOS-Modified (HOS-M),'' CMS fielded the HOS and HOS-M 
surveys in mid-August through mid-November of 2020. Longitudinal 
studies like the HOS are vital to understanding the immediate and long-
term impacts of the COVID-19 pandemic on beneficiaries and health care. 
The survey is voluntary for plan members so they are empowered to 
decide whether to respond.
    Comment: A commenter requested help identifying their members who 
complete the survey so that they can do a root-cause analysis of any 
issues reported or found. The commenter mentioned a long lag time of 
approximately 3 years between baseline survey administration and when 
plans receive results and requested real-time data on patient outcomes.
    Response: It is by design that CMS does not provide the identity of 
respondents until both baseline and follow-up surveying are complete in 
order to preserve the integrity of the sample and reliability of the 
results. Patient outcomes cannot be calculated using only baseline 
data, since the outcomes measured through this survey are the changes 
in physical and mental health status over time. It is important to 
protect the confidentiality of the survey respondents to limit the 
possibility of plans focusing solely on baseline survey respondents for 
quality improvement (in order to achieve higher scores) rather than a 
broad segment of the plan enrollment (which would improve the quality 
of care provided to the plan's overall population). HOS is a cohort 
study, and each year, the survey is administered to a new cohort, or 
group, from each contract both at the beginning and end of a 2-year 
period. The analysis of longitudinal data is complex, but CMS is 
actively striving to decrease the timeframe between completion of 
follow-up survey data collection and distribution of performance 
measurement data while maintaining the usefulness, reliability, and 
accuracy of the measures. In addition, CMS is working toward improved 
presentation of HOS performance measurement results that will include 
updates to the annual baseline and performance measurement reports and 
enhancements to the HPMS HOS module, beginning in CY 2021.
    Comment: A few commenters requested as much detail be made public 
about the statistics for HOS as CMS publishes for CAHPS.
    Response: While the timing and presentation of HOS and CAHPS 
results differ, both surveys provide comprehensive information and 
reports to each contract describing contract-specific findings and also 
publish information about the methodology and case-mix adjustments. As 
HOS is a longitudinal survey and CAHPS is an annual, cross-sectional 
survey, there are differences in methodology and statistics. CMS 
provides stakeholders and the public with similar levels of

[[Page 5921]]

transparency and detail on both surveys. HOS case-mix variables are 
published in each contract's Performance Measurement Report and 
coefficients are published on the HOS website and in Attachment A of 
the Star Ratings Technical Notes each year. Contract-specific baseline 
reports are currently distributed to plans in the spring of the year 
following baseline data collection. Performance Measurement reports are 
distributed in the summer of the year following follow-up data 
collection. Star Ratings data and aggregate score analysis reports are 
available in the HOS module in HPMS to allow easier data validation and 
score comparisons at the contract, state, region, and national levels 
for the core HOS physical and mental health outcome measures. 
Additional information about HOS and its methodology can be found at 
www.HOSonline.org. While there are differences, we believe that the 
extent and scope of HOS data provided to organizations is more than 
sufficient and comparable to the CAHPS data furnished to plans.
    Comment: A commenter expressed some concern about the overlap of 
existing measures with the measure proposed in the 2021 Advanced 
Notice.
    Response: In the 2021 Advance Notice, we stated that we planned to 
post the longitudinal Physical Functioning Activities of Daily Living 
(PFADL) change measure on the 2021 and 2022 display pages and that we 
may consider that PFADL measure for the Star Ratings in the future, 
pending rulemaking. Prior to potentially proposing this measure through 
future rulemaking, CMS would submit this measure through the Measures 
Under Consideration process to be reviewed by the Measure Applications 
Partnership which is a multi-stakeholder partnership that provides 
recommendations to HHS on the selection of quality and efficiency 
measures for CMS programs, as required by Section 3014 of the 
Affordable Care Act. The 2021 Advance Notice also stated that given the 
complexities of the existing HOS measures, CMS is committed to 
exploring alternative PROs to replace the existing HOS outcome 
measures. We are particularly interested in replacements that would be 
simpler and more direct for plans to use and to focus their quality 
improvement efforts. If we propose to add the PFADL measure to the Star 
Ratings in future rulemaking, we will consider using it to replace 
existing measures.
Summary of Regulatory Changes
    After consideration of the comments and for the reasons set forth 
in the proposed rule and our responses to the related comments 
summarized in this final rule, we are finalizing the proposed 
specification changes for the Improving or Maintaining Physical Health 
measure and Improving or Maintaining Mental Health measure but for 
measurement year 2022 instead of 2021. These measures would be moved to 
display for the 2024 and 2025 Star Ratings as the case-mix 
specification change is substantive as described at Sec.  422.164(d)(2) 
and returned to the Star Ratings program for the 2026 Star Ratings.
b. Proposed Measure Additions
    As discussed in the April 2018 final rule (83 FR 16440), new 
measures may be added to the Star Ratings through rulemaking and 
Sec. Sec.  422.164(c)(3) and (4) and 423.184(c)(3) and (4) provide for 
reporting new measures on the display page for a minimum of 2 years 
before they are added to the Star Ratings program. In advance of 
adopting new measures through rulemaking, CMS also solicits feedback 
using the Advance Notice and Rate Announcement process. CMS is working 
with the National Committee for Quality Assurance (NCQA) to expand 
efforts to better evaluate a plan's success at effectively 
transitioning care from a clinical setting to home. In the 2019 Call 
Letter, CMS discussed these two potential new Part C measures and 
finalized them in the 2020 Call Letter for the 2020 display page, which 
used 2018 measurement year data. In the February 2020 NPRM, CMS 
proposed to add the HEDIS Transitions of Care and the HEDIS Follow-up 
after Emergency Department Visit for People with Multiple High-Risk 
Chronic Conditions measures to the 2023 Star Ratings covering the 
contract year 2021 performance period. We stated that we would have 
these new Part C measures on the display page for 3 years, starting 
with the 2020 display page, prior to adding them to the Star Ratings 
program. In addition, we also discussed in the proposed rule how we 
would follow the pre-rulemaking process that is used in other CMS 
programs under section 1890A of the Social Security Act. Both of these 
proposed measures were submitted and reviewed through that process.
(1) Transitions of Care (Part C)
    The HEDIS Transitions of Care (TRC) measure is the percent of 
discharges for members 18 years or older who have each of the four 
indicators during the measurement year: (1) Notification of inpatient 
admission and discharge; (2) receipt of discharge information; (3) 
patient engagement after inpatient discharge; and (4) medication 
reconciliation post-discharge. The TRC measure was first placed on the 
2020 display page.
    We explained in the proposed rule how NCQA, based on stakeholder 
input, was exploring a few non-substantive measure specification 
changes. The first change, for all measure indicators, is to broaden 
the forms of communications from one outpatient medical record to other 
forms of communication such as admission, discharge, and transfer 
record feeds, health information exchanges, and shared electronic 
medical records. The second is to change the notifications and receipts 
from `on the day of admission or discharge or the following day' to `on 
the day of admission or discharge or within the following two calendar 
days.' A third is to change one of the six criteria of the Receipt of 
Discharge Information indicator from `instructions to the primary care 
providers or ongoing care provider for patient care' to `instructions 
for patient care post-discharge.' We stated how these three changes are 
considered non-substantive since they include additional tests that 
would meet the numerator requirements as described at Sec.  
422.164(d)(1)(iv)(A), add alternative data sources as described at 
Sec.  422.164(d)(1)(v), and do not change the population covered by the 
measure. Our proposal therefore was to adopt the TRC measure with or 
without the updates NCQA was considering at the time the proposed rule 
was issued. After publication of the NPRM, we also discussed this 
measure in the CY 2021 Advance Notice and Rate Announcement, 
reiterating how NCQA was considering these three non-substantive 
updates to the measure that we currently have on display. The comments 
CMS received to the CY 2021 Advance Notice and Rate Announcement were 
similar to those being addressed here. These include requests for 
clarifications and additional time to implement the measure, as well as 
concerns about the coordination of information especially with out-of-
network providers.
    The intent of this measure is to improve the quality of care 
transitions from an inpatient setting to home, as effective 
transitioning will help reduce hospital readmissions, costs, and 
adverse events. The TRC measure excludes members in hospice and is 
based on the number of discharges, not members. Currently the TRC 
measure is on the display page and we proposed to

[[Page 5922]]

add this measure to the 2023 Star Ratings covering the contract year 
2021 measurement period. On July 1, 2020, NCQA published the 
HEDIS[supreg] Measurement Year 2020 & Measurement Year 2021 Volume 2: 
Technical Specifications for Health Plans \30\ which included the 
listed measure specification changes to be implemented for data 
collected in 2021 covering the 2020 measurement period. Therefore, all 
three non-substantive updates have been adopted by the measure steward.
---------------------------------------------------------------------------

    \30\ http://store.ncqa.org/index.php/performance-measurement.html#vol2).
---------------------------------------------------------------------------

    In this section of this rule, we summarize the comments we received 
and provide our responses and final decisions.
    Comment: Many commenters fully support the intent of this measure 
which is to improve continuity of care for MA members as they 
transition from inpatient to outpatient settings.
    Response: CMS thanks commenters for the support of this measure. 
The TRC measure has been on the display page since 2020 covering the 
2018 measurement period and we believe it provides important 
information about MA plan quality. Under this final rule, CMS will keep 
this measure, with the updates NCQA finalized following the publication 
of the proposed rule, which included these measure specification 
changes to be implemented for data collected in 2021 covering the 2020 
measurement period. The TRC measure will remain on the 2023 display 
page (for the 2021 measurement year) in light of the timing of this 
final rule, and will move off the display page for the 2022 measurement 
period for use in calculating the 2024 Star Ratings.
    Comment: Several commenters recommended that the measure indicators 
should include all providers who can appropriately support a 
beneficiary during a care transition, including providers other than 
PCPs. A commenter suggested that pharmaceutical outreach activities be 
included in the `patient engagement after discharge' category.
    Response: The measure does allow for a variety of provider types 
and care providers to take action to meet the intent of the TRC 
indicators. However, the information that is used to meet the numerator 
of each indicator must be documented in the outpatient record that is 
accessible by the PCP or ongoing care provider. An ongoing care 
provider is defined as ``the practitioner who assumes responsibility 
for the member's care.'' This definition is provided in the measure 
specifications and is intentionally broad because NCQA recognizes there 
are a variety of provider types who might be coordinating patient care. 
As proposed and adopted, the specifications for this measure do include 
a variety of providers that may be taking over the responsibility of 
managing the patient's care. The TRC measure is for the most part 
focused on getting information into any outpatient record that is 
accessible to the PCP or ongoing care provider. Pharmaceutical outreach 
activities would be included in the `patient engagement after 
discharge' category if they are included in the patient's outpatient 
records. The Medication Reconciliation indicator is the only indicator 
where a provider type is specified for who can take action since it 
specifies that medications must be reconciled by a prescribing 
practitioner, clinical pharmacist, or registered nurse.
    Comment: A commenter argued that not only a patient's PCP but their 
plan should be notified of an admission and a discharge. Another 
commenter suggested that notifications of inpatient admissions and 
discharges should prioritize alignment for dually eligible members 
(that is, both the patient's Medicare and Medicaid providers should be 
notified).
    Response: CMS appreciates these comments and shared them with NCQA, 
the measure steward. Currently, the measure only focuses on 
notifications that go to the PCP or ongoing care provider. The measure 
is specified for Medicare plans, so plans will determine the provider 
that meets the intent of the measure (which may include Medicaid 
providers treating dually eligible enrollees). Although the measure 
only focuses on notifications that go to the PCP or ongoing care 
provider, there is nothing in this measure that would prevent 
notifications also going to the health plan, subject to otherwise 
applicable laws on privacy and disclosure of health information. 
Further, we still believe it is important to implement this measure 
since transitions from the inpatient setting often result in poor care 
coordination, including communication gaps between inpatient providers 
and the PCP or ongoing care provider; unplanned medication changes; 
incomplete diagnostic work-ups; and inadequate patient, caregiver, and 
provider understanding of diagnoses, medication, and follow-up needs. 
This measure will put more emphasis on these issues for both providers 
and health plans.
    Comment: Some commenters suggested that the original timeframe for 
notifications is too short, especially for out-of-network facilities.
    Response: In the proposed rule and in the 2021 Rate Announcement, 
we stated how NCQA is considering a revision to the timeframe for the 
Notification of Inpatient Admission and Receipt of Discharge 
Information indicators for this measure to ``the day of admission or 
discharge, or within the following two calendar days.'' This change 
clarifies expectations for documentation related to admissions or 
discharges that take place over the weekend. This change was approved 
by NCQA's Committee on Performance Measurement following the release of 
the proposed rule and is included in the HEDIS[supreg] Measurement Year 
2020 & Measurement Year 2021 Volume 2: Technical Specifications for 
Health Plans released on July 1, 2020, to be implemented for data 
collected in 2021 covering the 2020 measurement period. Starting with 
the 2022 Display measure, the TRC measure will include the expanded 
timeframe for the receipt of discharge information.
    Comment: Several commenters stated that the composite nature of the 
measure may not appropriately account for variation of performance on 
the different elements and may not allow for understanding of the 
individual components. A number of commenters suggested that the four 
components of the composite measure be reported as separate Star 
Ratings measures.
    Response: To minimize the number of new Star Rating measures to 
lessen complexity in the Star Ratings program, CMS is planning to 
average the four components into one composite measure for reporting in 
the Star Ratings program. Currently, the four components and the 
composite measure that combines the four components are reported on the 
display page. The four components of this composite measure will 
continue to be reported as separate measures on the display page so as 
to be available to plans for use in their quality improvement projects 
and to other stakeholders who want an additional breakdown of the data 
even though only the composite measure will be used in the Star 
Ratings. The composite measure will be displayed on Medicare Plan 
Finder as one measure focused on TRC to simplify the information 
publicly available on the website for consumers and so as not to 
overwhelm them with too many measures. This approach allows CMS to 
publicly report all included data, while directing audiences to the 
most helpful level of complexity for the reported results.
    Comment: Some commenters suggested the current Medication 
Reconciliation Post-Discharge measure should remain as a separate Star 
Ratings measure since they believe it drives

[[Page 5923]]

improved outcomes, while others recommended retiring the current 
Medication Reconciliation measure after implementation of the TRC 
measure. Ultimately, commenters requested to know what impact the 
introduction of the TRC measure will have on the current Medication 
Reconciliation measure. A commenter suggested that if the Medication 
Reconciliation measure is to be incorporated into the TRC measure, NCQA 
should continue to permit organizations to use the hybrid data 
collection method.
    Response: As noted in the proposed rule and the 2021 Rate 
Announcement, NCQA was considering revisions to the TRC measure to the 
requirement of using one medical record from a specific provider to, 
instead, allow numerator information to be captured from ``the 
outpatient medical record as well as other information accessible to 
the primary care provider or ongoing care provider''. This change, 
which is included in the HEDIS[supreg] Measurement Year 2020 & 
Measurement Year 2021 Volume 2: Technical Specifications for Health 
Plans released on July 1, 2020, will be implemented for the 2020 
measurement year and enables the specification to capture additional 
communication forms (for example, admissions, discharges, and transfers 
feeds, shared electronic medical records) that occur regularly in the 
field and meet the intent of the TRC measure. This change also ensures 
that scores for the Medication Reconciliation Post-Discharge component 
of the TRC measure and the scores for the standalone Medication 
Reconciliation Post-Discharge measure currently in the Star Ratings 
match exactly. As such, the additional stand-alone Medication 
Reconciliation Post-Discharge measure would no longer need to be 
separately reported by health plans. The hybrid option for reporting 
the Medication Reconciliation component of the TRC measure will remain 
for the foreseeable future.
    Comment: Some commenters stated that the recent changes to the TRC 
measure described in the proposed rule are substantive and so the 
measure should remain on the display page.
    Response: CMS believes that the updates to this measure are non-
substantive since they add additional tests that would meet the 
numerator requirements as described at Sec.  422.164(d)(1)(iv)(A), 
include alternative data sources as described at Sec.  
422.164(d)(1)(v), and do not change the population covered by the 
measure. As discussed in the April 2018 final rule, if additional codes 
are added that increase the number of numerator hits for a measure 
during or before the measurement period, such a change is not 
considered substantive because the sponsoring organization generally 
benefits from that change. In addition, the type of administrative 
change made here has no impact on the current clinical practices of the 
plan or its providers. However, CMS has decided to delay the 
implementation of this measure to the 2022 measurement year for the 
2024 Star Ratings year given the timing of this final rule and in 
recognition of the challenges of implementing new measures during the 
COVID-19 pandemic. This will provide an additional year for plans prior 
to implementation in the Star Ratings program.
    Comment: A few commenters recommended that the TRC measure not be 
included in the Star Ratings until it is further improved. Other 
commenters noted that processes are not always in place to provide 
notifications to PCPs in a consistent or timely manner, especially for 
out-of-network facilities. A commenter suggested that this measure is 
primarily a measure of data interoperability and exchange capabilities 
between providers, capabilities which are not under plans' control. 
Several commenters mentioned the substantial amount of medical review 
work entailed for this measure, especially for the notification of 
admissions and discharges. Plans often require physicians to submit 
records for abstraction which places a considerable burden on physician 
practices. In other words, although this measure is a plan measure, 
commenters pointed out that data collection is often the responsibility 
of physician groups and plans do not have sufficient control or 
involvement to achieve consistent high performance. Further, a 
commenter expressed concern that the measure moves away from NCQA's 
focus on moving towards more digital measures. Several commenters 
requested further clarity on measure specifications such as how plans 
should indicate the use of other acceptable communication forms for 
this measure.
    Response: The intent of the TRC measure is to ensure a seamless 
transition from inpatient to outpatient settings for MA enrollees to 
improve the delivery and coordination of care following an inpatient 
stay. When a beneficiary moves from an inpatient to outpatient setting, 
there is often poor coordination of care, communication lapses between 
the inpatient and outpatient providers, inadvertent medication changes, 
and a lack of understanding among patients, caregivers, and providers 
about the follow-up and ongoing care needs following the 
hospitalization. Given the critical importance of a seamless transition 
from the inpatient to outpatient setting, CMS believes it is important 
to adopt the current measure and for plans to make sure their providers 
are ensuring that there is a seamless transition between the inpatient 
to outpatient setting.
    This measure is intended to address the very gaps in communication 
and interoperability that are noted in the comments. Unfortunately, the 
current state of standards and coding do not support a fully 
administrative or digital specification at this time. NCQA is 
continuing to work with standards developers on addressing this issue 
and will assess the feasibility of converting this measure to a fully 
administrative specification when the standards for information sharing 
and coding are updated to support such an approach. The measure 
assesses if the notification of admission or receipt of discharge 
information was received and documented within the timeframe specified 
in the measure and is agnostic about the form of communication for the 
Notification of Admission and Receipt of Discharge Information 
indicators. CMS shared these comments with NCQA, the measure steward, 
for consideration as they make future updates to this measure.
    Comment: Some commenters stated this measure focuses on 
documentation of events rather than the substance of the transition 
experience.
    Response: CMS believes this measure does focus on the substance and 
purpose of the transition experience, which is to improve health 
outcomes. The measure is not simply about documentation but about 
whether notification was made, discharge information was received, 
patients were engaged, and medication was reconciled. Poor hospital 
transitions are not only associated with poor health outcomes but also 
increased health care utilization and cost, duplicative medical 
services, medication errors, and increased emergency department visits 
and readmissions. Incentivizing better transition experiences, where 
these activities take place and are documented for a treating provider 
who furnishes post-discharge care, is an important goal served by this 
measure.
    Comment: A commenter suggested that I-SNP members should be 
excluded from the measure.
    Response: I-SNP members should be receiving the same care 
coordination as enrollees of other plan types so CMS believes it is 
appropriate to use this measure for such plans as well. NCQA

[[Page 5924]]

has examined an exclusion for I-SNP members in the past and discussed 
this exclusion with its advisory panels. The panels agreed that I-SNP 
members should be included in the measure because this is a vulnerable 
population that requires care coordination. We agree with that 
conclusion and will use this measure for I-SNPs as well as other MA 
plans.
Summary of Regulatory Changes
    After consideration of the comments and for the reasons set forth 
in the proposed rule and our responses to the related comments, we are 
finalizing the addition of the Transitions of Care (Part C) measure in 
the Star Ratings program with a delay of 1 year in light of the timing 
of this final rule. That is, CMS will implement this measure using data 
from the 2022 measurement year for the 2024 Star Ratings year. This 
measure is currently on the display page with the current 
specifications. The Transitions of Care measure with the updates 
recently finalized by NCQA for the 2020 measurement year will be on the 
display page for 2022 and 2023 before being used in the 2024 Star 
Ratings. By delaying the addition of this measure to the Star Ratings 
program until 2024 Star Ratings, this also allows plans more time in 
recognition of the challenges of implementing new measures in the 
program during the COVID-19 pandemic.
(2) Follow-Up After Emergency Department Visit for People With Multiple 
High-Risk Chronic Conditions (Part C)
    CMS proposed to add a new HEDIS measure assessing follow-up care 
provided after an emergency department (ED) visit for people with 
multiple high-risk chronic conditions. This measure is the percentage 
of ED visits for members 18 years and older who have high-risk multiple 
chronic conditions who had a follow-up service within 7 days of the ED 
visit between January 1 and December 24 of the measurement year. The 
measure is based on ED visits, not members. Eligible members whose ED 
visits are used in the measure must have two or more of the following 
chronic conditions: Chronic obstructive pulmonary disease (COPD) and 
asthma; Alzheimer's disease and related disorders; chronic kidney 
disease; depression; heart failure; acute myocardial infarction; atrial 
fibrillation; and stroke and transient ischemic attack. The following 
meet the criteria to qualify as a follow-up service for purposes of the 
measure: An outpatient visit (with or without telehealth modifier); a 
behavioral health visit; a telephone visit; transitional care 
management services; case management visits; and complex care 
management. Patients with multiple chronic conditions are more likely 
to have complex care needs, and follow-up after an acute event, like an 
ED visit, can help prevent the development of more severe 
complications. We proposed to add this measure to the 2023 Star Ratings 
covering the contract year 2021 measurement period.
    In this section of this rule, we summarize the comments we received 
and provide our responses and final decisions.
    Comment: Many commenters fully support the intent of this measure 
which is to provide continuity and coordination of care to persons with 
multiple chronic conditions.
    Response: CMS thanks commenters for the support of this measure.
    Comment: Several commenters did not support the measure. Some 
suggested that the 7-day time period for receipt of a follow-up service 
is too short. Commenters argued that it can take more than 7 days for 
an ED claim to be processed and submitted to a plan, actions which must 
occur before a PCP is aware of a patient's ED visit. They stated this 
situation is compounded by the fact that ED visits require no 
preauthorization, so a PCP has no forewarning of a potential ED visit. 
They stated that though there are many actions which define a follow-up 
service--such as outpatient or telehealth physical or behavioral health 
visits, phone visits, or care management services--the average time to 
schedule a follow-up meeting with a PCP is typically longer than 7 
days.
    Response: CMS continues to believe that the measure is appropriate 
for use in the Star Ratings. This measure is focused on a very 
vulnerable population that should have prompt follow-up after a visit 
to the ED. The 7-day timeframe was recommended by NCQA's advisory 
panels and chosen for its potential to improve quality of care, 
especially because patients with multiple chronic conditions who do not 
receive follow-up after visiting the ED show increased rates of 
hospital admissions and 30-day readmissions. In addition, the lack of 
real-time data exchange is a critical system issue that the NCQA 
advisory panels cited should be addressed by this measure.
    The Medicare population includes a large number of individuals and 
older adults with high-risk multiple chronic conditions who often 
receive care from multiple providers and settings and, as a result, are 
more likely to experience fragmented care and adverse healthcare 
outcomes, including an increased likelihood of ED 
visits.31 32 Medicare beneficiaries with multiple chronic 
conditions require high levels of care coordination, particularly as 
they transition from the ED to the community. During these transitions, 
they often face communication lapses between ED and outpatient 
providers and inadequate patient, caregiver and provider understanding 
of diagnoses, medication and follow-up needs.33 34 35 36 
This poor care coordination results in an increased risk for medication 
errors, repeat ED visits, hospitalizations, nursing home admissions, 
and death.37 38 Medicare beneficiaries with multiple chronic 
conditions not only experience poorer health outcomes, but also greater 
health care utilization (for example, physician use, hospitalizations, 
ED use, and medication use) and costs (for example, medication, out-of-
pocket, and total health care).\39\ Medicare beneficiaries with 
multiple chronic conditions are some of the heaviest users of high-
cost, preventable services such as those

[[Page 5925]]

offered by the ED.40 41 An estimated 75 percent of health 
care spending is on people with multiple chronic 
conditions.42 43 Improving the timeliness of communications 
about ED care, as required to perform well on these measures, should 
not only improve care, but reduce costs as well. Because of this 
context, we believe that collection and use of this measure in the Star 
Ratings is important in order to incent contracts to provide the best 
care possible for vulnerable enrollees.
---------------------------------------------------------------------------

    \31\ AHRQ. 2010. Multiple Chronic Conditions Chartbook. ``2010 
Medical Expenditure Panel Survey Data.'' https://www.ahrq.gov/sites/default/files/wysiwyg/professionals/prevention-chronic-care/decision/mcc/mccchartbook.pdf (Accessed January 11, 2017).
    \32\ Agency for Healthcare Quality and Research (AHRQ). 2012. 
``Coordinating Care for Adults with Complex Care Needs in the 
Patient-Centered Medical Home: Challenges and Solutions.'' https://pcmh.ahrq.gov/sites/default/files/attachments/coordinating-care-for-adults-with-complex-care-needs-white-paper.pdf.
    \33\ Altman, R., J.S. Shapiro, T. Moore and G.J. Kuperman. 2012. 
``Notifications of hospital events to outpatient clinicians using 
health information exchange: A post-implementation survey.'' Journal 
of Innovation in Health Informatics 20(4).
    \34\ Coleman, E.A., R.A. Berenson. 2004. ``Lost in transition: 
Challenges and opportunities for improving the quality of 
transitional care.'' Annals of Internal Medicine 141(7).
    \35\ Dunnion, M.E., and B. Kelly. 2005. ``From the emergency 
department to home.'' Journal of Clinical Nursing 14(6), 776-85.
    \36\ Rowland, K., A.K. Maitra, D.A. Richardson, K. Hudson and 
K.W. Woodhouse. 1990. ``The discharge of elderly patients from an 
accident and emergency department: Functional changes and risk of 
readmission.'' Age Ageing 19(6), 415-18.
    \37\ Hastings, S.N., E.Z. Oddone, G. Fillenbaum, R.J. Sloane and 
K.E. Schmader. 2008. ``Frequency and predictors of adverse health 
outcomes in older Medicare beneficiaries discharged from the 
emergency department.'' Medical Care 46(8), 771-7.
    \38\ Niedzwiecki, M., K. Baicker, M. Wilson, D.M. Cutler and Z. 
Obermeyer. 2016. ``Short-term outcomes for Medicare beneficiaries 
after low-acuity visits to emergency departments and clinics.'' 
Medical Care 54(5), 498-503.
    \39\ Lehnert, T., D. Heider, H. Leicht, S. Heinrich, S. 
Corrieri, M. Luppa, S. Riedel-Heller and H.H. Konig. 2011. ``Review: 
health care utilization and costs of elderly persons with multiple 
chronic conditions.'' Medical Care Research & Review 68(4), 387-420.
    \40\ CMS. 2012. Chronic Conditions among Medicare Beneficiaries, 
Chartbook, 2012 Edition. Baltimore, MD. https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/chronic-conditions/downloads/2012chartbook.pdf (Accessed July 19, 
2016).
    \41\ Lochner, K.A., and C.S. Cox. 2013. Prevalence of multiple 
chronic conditions among Medicare beneficiaries, United States, 
2010. https://www.cdc.gov/pcd/issues/2013/12_0137.htm (Accessed 
January 11, 2017).
    \42\ CDC. 2009. The power of prevention: Chronic disease . . . 
the public health challenge of the 21st century. http://www.cdc.gov/chronicdisease/pdf/2009-power-of-prevention.pdf (Accessed January 
24, 2017).
    \43\ Care Innovations. 2013. ``Cost Control for Chronic 
Conditions: An Imperative for MA Plans.'' The Business Case for 
Remote Care Management (RCM). https://www.rmhpcommunity.org/sites/default/files/resource/The%20Business%20Case%20for%20RCM.pdf 
(Accessed January 24, 2017).
---------------------------------------------------------------------------

    Comment: Some commenters noted that the measure judges plans for 
actions that facilities must take. Plans stated they are not always 
informed by facility providers of ED visits, especially by out-of-
network or out-of-area facilities. Plans claimed sending notifications 
of an ED visit is under the sole influence of the facility. On the 
other hand, facility providers argued the measure puts burden on them 
to provide information to the plans on a very quick basis. Both plans 
and facility providers stated that data sharing between plans and 
facilities is difficult. A commenter suggested this measure might be 
more suited as a facility quality measure.
    Response: CMS recognizes the challenges inherent in quickly and 
successfully communicating patient information among different types of 
providers. CMS believes, however, that plans are in a critical position 
to help coordinate the care of their members and help improve the 
timeliness and quality of the communications that occur among EDs, 
inpatient facilities, and outpatient providers. This is important 
because the Medicare population includes a large number of individuals 
and older adults with high-risk multiple chronic conditions (MCC) who 
often receive care from multiple providers and settings and, as a 
result, are more likely to experience fragmented care and adverse 
healthcare outcomes, including an increased likelihood of ED visits. 
NCQA's first year analysis results for this measure indicated that most 
MA contracts (approximately 92 percent) were able to report a valid 
rate for the measure the first year that the measure was implemented.
    Comment: Some commenters wanted CMS to delay the inclusion of the 
measure in the Star Ratings program and suggested that it will take 
time to establish data sharing protocols among providers and 
facilities, especially with out-of-network facilities. They stated data 
sharing protocols are challenging.
    Response: The Follow-up after Emergency Department Visit for People 
with Multiple High-Risk Chronic Conditions measure was placed on the 
2020 display page covering the 2018 measurement year. This measure was 
slated to remain on the display page through 2022. This measure, 
however, will remain an additional year on the display page since CMS 
is now delaying the implementation of this measure to the 2022 
measurement or performance year and the 2024 Star Ratings year given 
the timing of this final rule. This gives plans more time to establish 
data sharing protocols that allow them to facilitate timely follow-up 
after ED visits.
    Comment: Some commenters requested modifications of the measure 
specifications. For example, some commenters wanted the list of 
services categorized as follow-up services expanded to include 
community resources, medication reconciliation, and services from long-
term care facilities. Also, commenters suggested excluding patients 
released from the ED to skilled nursing facilities; not including 
managed long-term services and supports plans since they already have 
follow-up services in place; excluding inappropriate ED visits; 
excluding observations stays as a follow-up service; and including 
metabolic acidosis, cancer, and diabetes as chronic conditions.
    Response: The purpose of this measure is to focus on the care 
provided by MA plans. CMS is working to expand efforts to better 
evaluate health plans' successes at effective care coordination, and we 
believe the addition of this measure will both add to our understanding 
of plan efforts to effectively coordinate care as well as encourage all 
plans to further focus on improving care coordination for their 
vulnerable enrollees. We have shared these comments with NCQA, the 
measure developer, and they will consider additional exclusions and 
inclusions for future updates to the measure, but we believe the 
measure as currently specified gets at the direct efforts of MA plans 
coordinating the care of Medicare enrollees with multiple high-risk 
chronic conditions following an ED visit. Therefore, we are adopting 
the measure for use in the Star Ratings program.
    Comment: A few commenters mentioned that since psychiatric 
diagnoses are always coded secondary to any physical diagnosis, there 
are HIPAA and confidentiality concerns about disclosing information on 
patients with secondary substance abuse or psychiatric diagnoses. Such 
disclosures require patient consent. In addition, some commenters 
stated that it can be difficult to accurately capture data to track 
appropriate follow-up psychiatric care given confidentiality concerns.
    Response: MA plans and providers must comply with applicable 
privacy and information protection laws and CMS is not providing 
guidance in this final rule on the specific assertions about 
restrictions under applicable privacy and information protection laws, 
such as HIPAA or 45 CFR part 2. However, the measure does not require a 
plan or facility to violate applicable law. CMS and NCQA will continue 
to monitor any issues that might arise due to patient confidentiality 
or consent with regard to information sharing. NCQA, in its testing 
protocols, has not observed this issue to cause any major barriers to 
reporting this measure to date.
    Comment: A couple of commenters recommended risk adjustment to 
account for plans with large low socio-economic status, dual eligible 
and homeless populations.
    Response: We will include this measure as one of the candidate 
measures for the calculation of the Categorical Adjustment Index (CAI). 
As stated at Sec. Sec.  422.166(f)(2)(iii) and 423.186(f)(2)(iii), CAI 
values are determined using all measures in the candidate measure set 
after applying the following exclusions: The measure is already 
adjusted for socio-economic status, the measure focuses on a plan or 
provider-level issue, the measure is scheduled for retirement in the 
Star Ratings year that the CAI is being applied, or the measure is a 
SNP-only measure. It is also important to note that this measure 
focuses on prompt follow-up for beneficiaries with multiple chronic 
conditions which is a very vulnerable population. If additional risk 
factors such as low socio-economic status further increase these 
patients' levels of vulnerability, it is even more critical for this 
population to have

[[Page 5926]]

prompt follow-up after visiting the ED. Further, this measure takes 
into account a wide variety of follow-up services to count, including 
telephone calls and telehealth visits, making it easier for the plan to 
tailor the follow-up to the enrollee or to specific enrollee 
populations. For example, if a beneficiary does not have transportation 
to get to an appointment with a provider, the follow-up can happen 
through a phone call with the provider.
    Comment: A couple of comments stated that no new measures should be 
introduced into the Star Ratings program this year given the COVID-19 
pandemic.
    Response: Under our proposal this measure was slated to remain on 
the display page through 2022 Star Ratings and be used for the 2023 
Star Ratings. This measure, however, will remain on the display page 
through 2023 since CMS is now delaying the implementation of this 
measure to the 2022 measurement year and the 2024 Star Ratings as a 
result of the timing of this final rule. Additionally, this will give 
plans an additional year to adjust to this new measure given any 
challenges from the COVID-19 pandemic.
Summary of Regulatory Changes
    After consideration of the comments and for the reasons set forth 
in the proposed rule and our responses to the related comments 
summarized earlier in this final rule, we are finalizing the addition 
of the Follow-up after Emergency Department Visit for People with 
Multiple High-Risk Chronic Conditions (Part C) measure in the Star 
Ratings program beginning with the 2022 measurement year and the 2024 
Star Ratings. This delay compared to our proposal addresses both the 
timing of this final rule and the recognition that it is more 
challenging to adapt to new measures during the COVID-19 pandemic.
    The changes to the Star Ratings measures we are adopting in this 
final rule are summarized in Table D1.

                                     Table D1--New and Revised Individual Star Rating Measures for Performance Periods Beginning On or After January 1, 2022
   [The measure descriptions listed in this table are high-level descriptions. 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, more specific identification of a measure's: (1) Numerator, (2) denominator, (3)
  calculation, (4) timeframe, (5) case-mix adjustment, and (6) exclusions. The Technical Notes document is updated annually, consistent with the applicable final rules adopting changes to the
   Star Ratings system. 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. For example, Star Ratings for the year 2020 are produced in the fall of 2019. If a measurement period is listed as `the calendar year 2 years prior to
                                the Star Ratings year' and the Star Ratings year is 2020, the measurement period is referencing the 1/1/2018-12/31/2018 period.]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                               Statistical
                                                                             Measure  category                         Measurement                             method for          Reporting
             Measure              Measure description         Domain             and weight         Data source          period          NQF endorsement     assigning star     requirements by
                                                                                                                                                                 ratings         contract type
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         Part C Measure
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Transitions of Care (TRC).......  Percentage of        Managing Chronic     Process Measure:     HEDIS *.........  The calendar year   Not Available......  Clustering......  MA-PD and MA-only.
                                   discharges for       (Long Term)          Weight of 1.                           2 years prior to
                                   members 18 years     Conditions.                                                 the Star Ratings
                                   of age and older                                                                 year.
                                   who had each of
                                   the following: (1)
                                   Notification of
                                   admission and post-
                                   discharge: (2)
                                   receipt of
                                   discharge
                                   information, (3)
                                   patient
                                   engagement, and
                                   (4) medication
                                   reconciliation.
                                 ---------------------------------------------------------------------------------------------------------------------------------------------------------------
Follow-up after ED Visit for      Percentage of        Managing Chronic     Process Measure:     HEDIS *.........  The calendar year   Not Available......  Clustering......  MA-PD and MA-only.
 People with Multiple High-Risk    emergency            (Long Term)          Weight of 1.                           2 years prior to
 Chronic Conditions (FMC).         department (ED)      Conditions.                                                 the Star Ratings
                                   visits for members                                                               year.
                                   18 years and older
                                   who have multiple
                                   high-risk chronic
                                   conditions who had
                                   a follow-up
                                   service within 7
                                   days of the ED
                                   visit. Eligible
                                   members must have
                                   two or more of the
                                   following chronic
                                   conditions: COPD
                                   and asthma;
                                   Alzheimer's
                                   disease and
                                   related disorders;
                                   chronic kidney
                                   disease;
                                   depression; heart
                                   failure; acute
                                   myocardial
                                   infarction; atrial
                                   fibrillation; and
                                   stroke and
                                   transient ischemic
                                   attack.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* NCQA HEDIS Measurement Year 2020 & Measurement Year 2021, Volume 2.

5. Extreme and Uncontrollable Circumstances (Sec. Sec.  422.166(i), 
423.186(i))
    We proposed to modify Sec. Sec.  422.166(i)(8) and 423.186(i)(6) to 
clarify the rules for how the adjustment for extreme and uncontrollable 
circumstances would apply where there are missing data, including data 
missing because of a data integrity issue as defined at Sec. Sec.  
422.164(g)(1) and 423.184(g)(1). In addition, we solicited comment in 
the proposed rule on a previously adopted policy regarding application 
of the adjustment for extreme and uncontrollable circumstances where a 
contract's service area was affected by disaster(s) in successive 
years, including whether additional changes were necessary.
    We explained in the February 2020 proposed rule how we adopted the 
current policy for treating contracts impacted by separate disasters 
that occur in successive years taking into account concerns about 
looking back too many years for contracts affected by disasters 
multiple years in a row; we are also concerned about including too many 
measurement periods in 1 year of Star Ratings. We explained that the 
adjustment for extreme and uncontrollable circumstances also must 
consider operational feasibility, because using different thresholds 
for contracts affected by disasters in different ways would be very 
complicated for administration and for providing the necessary 
transparency to MA organizations, Part D plan sponsors, and 
beneficiaries who use and rely on the Star Ratings. We reiterated that 
we must balance concerns about using older data with concerns about 
using data based on performance that has been impacted by

[[Page 5927]]

consecutive disasters. We explained as well how we believe that the 
current regulation achieves an appropriate balance.
    We finalized in the April 2019 final rule a policy effective for 
the 2022 Star Ratings for contracts with at least 25 percent of 
enrollees in FEMA-designated Individual Assistance areas that were 
affected by different disasters for 2 consecutive years. Such multiple 
year-affected contracts will receive the higher of the current year's 
Star Rating or what the previous year's Star Rating would have been in 
the absence of any adjustments that took into account the effects of 
the previous year's disaster for each measure. For example, if a 
multiple year-affected contract reverts to their 2021 Star Rating on a 
given measure for the 2022 Star Ratings, the 2021 Star Rating is not 
used in determining the 2023 Star Rating; rather, the 2023 Star Rating 
is compared to what the contract's 2022 Star Rating would have been, 
absent any disaster adjustments.
    The rule for treatment of multiple year-affected contracts was 
established to limit the age of data that will be carried forward into 
the Star Ratings. We use the measure score associated with the year 
with the higher measure Star Rating regardless of whether the score is 
higher or lower that year. We finalized this policy to address when 
contracts are affected by separate extreme and uncontrollable 
circumstances that occur in successive years for the adjustments to 
CAHPS, HOS, HEDIS, and other measures. The provisions at Sec. Sec.  
422.166(i)(2)(v), (i)(3)(v), (i)(4)(vi), and (i)(6)(iv) and 
423.186(i)(2)(v) and (i)(4)(iv) include this rule for how ratings for 
these measures are adjusted in these circumstances. We solicited 
comment on this policy and whether further adjustments are necessary.
    In this section of this rule, we summarize the comments we received 
and provide our responses and final decisions.
    Comment: A commenter appreciated CMS's proposed amendment to add to 
Sec. Sec.  422.166(i)(8) and 423.186(i)(6) to clarify that missing data 
include situations where there is a data integrity issue as defined at 
Sec. Sec.  422.164(g)(1) and 423.184(g)(1).
    Response: We appreciate the support for the data integrity policy. 
Sections 422.166(i)(8) and 423.186(i)(6) currently provide that for an 
affected contract that has missing data in the current or previous 
year, the final measure rating comes from the current year unless an 
exemption described elsewhere in the regulation applies. We proposed a 
clarification and are finalizing changes to state that the term 
``missing data'' under the rule includes data where there is a data 
integrity issue as defined in Sec. Sec.  422.164(g)(1) and 
423.184(g)(1). Under the rules as finalized, when there is a data 
integrity issue in the current or previous year, the final measure 
rating comes from the current year.
    Comment: A few commenters supported CMS's policy to adjust Star 
Ratings for FEMA-designated Individual Assistance area disasters for 
contracts that have been affected by consecutive year disasters and had 
at least 25 percent of enrollees residing in those areas. A commenter 
suggested CMS consider lowering this percentage if the situation 
warrants, and another requested that CMS drop the threshold for relief 
below the current 25 percent to determine the contracts impacted and 
the current 60 percent to exclude contracts from the cut point 
calculations for doubly-affected contracts or provide relief based on 
the proportion of members likely impacted.
    Response: We appreciate the support for the methodology for 
multiple year-affected contracts codified at Sec. Sec.  
422.166(i)(2)(v), (i)(3)(v), (i)(4)(vi), and (i)(6)(iv) and 
423.186(i)(2)(v) and (i)(4)(iv). We continue to believe that the 25 
percent threshold is appropriate in the vast majority of situations 
where the adjustment for extreme and uncontrollable circumstances would 
apply. The 25 percent threshold for measure star adjustments was 
codified in the April 2019 final rule to ensure that disaster 
adjustments are limited to contracts that we believe may have 
experienced a real impact from extreme and uncontrollable circumstance 
in terms of operations or ability to serve enrollees. We believe using 
the same 25 percent threshold for multiple year-affected disaster 
adjustments as for single year disaster adjustments is appropriate for 
the same reasons and to ensure administrative efficiency and 
transparency for applying this adjustment. We addressed similar 
concerns about the 25 percent threshold being too high in the April 
2019 final rule (84 FR 15773 through 15774). The 60 percent threshold 
for excluding numeric values for affected contracts from cut points and 
Reward Factor calculations was also codified in the April 2019 final 
rule; that threshold is not relevant to the adjustment for multiple 
year-affected contracts and we do not believe that it is necessary or 
appropriate to change that threshold here. We explained that threshold 
in the April 2019 final rule (84 FR 15771 through 15774).
    Comment: A few commenters requested that CMS reconsider the current 
policy for adjusting Star Ratings calculations in consecutive years of 
extreme and uncontrollable circumstances and instead consider a multi-
year lookback period, which would include the most recent period not 
impacted by extreme and uncontrollable circumstances. A commenter 
suggested CMS could use the parent organization average or the industry 
average instead.
    Response: As we stated in the April 2019 final rule, we are 
concerned about looking back too many years for contracts affected by 
disasters multiple years in a row, as well as about including too many 
measurement periods in 1 year of Star Ratings. This could result in 
looking back different years for different contracts since we would 
need to look back to the latest year with no disasters for each 
contract. Carrying forward very old data into the Star Ratings for many 
years, especially in situations where large numbers of contracts are 
impacted by disasters in a given year or in areas that are more prone 
to disasters, could erode incentives for plans to provide high quality 
care for their beneficiaries even in the face of a disaster.
    Further, using a multi-year lookback for contracts affected by 
disasters would be operationally very complex since for each contract 
we could be comparing to a different year of data that is unaffected, 
in particular in areas that are prone to disasters, and could put CMS 
at risk of not producing Star Ratings in time for open enrollment. It 
would also make it difficult to provide transparency to plans and could 
be misleading to consumers. CMS has an obligation to ensure that Star 
Ratings data are useful for providing comparative plan information to 
beneficiaries because part of the purpose and authority for the Star 
Ratings is to provide comparative information to beneficiaries under 
sections 1851(d) and 1869D-1(c) of the Act. We strive to provide as up-
to-date and accurate information on plan quality and performance as 
possible to beneficiaries. For areas that are prone to disasters in 
particular, beneficiaries deserve to have some indication if that means 
that the plan they are considering does not perform well when a 
disaster strikes or maintains high quality ratings despite those 
challenges. We finalized the existing policy for contracts that are 
affected by disasters in successive years in order to balance concerns 
about either using older data or using data based on performance 
impacted by consecutive disasters.

[[Page 5928]]

    As to the suggestion to assign the parent organization average or 
industry average for contracts that have been impacted by disasters for 
multiple years, we do not believe this appropriately holds contracts 
accountable for their performance or allows them to distinguish 
themselves in disaster situations. We remind contracts that Sec. Sec.  
422.504(o) and 423.505(p) require MA organizations and Part D sponsors 
to develop, maintain, and implement a business continuity plan that 
ensures restoration of operations following disruptions such as 
disasters. Contracts are still responsible for providing care to their 
beneficiaries during disasters, so it would not be fair or appropriate 
to simply award them a rating that is based on the performance of other 
plans. Further, the Star Ratings are used for payment purposes and 
using the performance of other plans as the basis to award a quality 
bonus increase or increased rebate percentage to a contract is 
inconsistent with the purpose of those payment policies to reward MA 
organizations that excel.
    Comment: A commenter suggested CMS could consider a hold harmless 
provision for plans with significant losses in Star Ratings across the 
multi-year lookback period.
    Response: The disaster policies already address how extreme and 
uncontrollable circumstances may have a negative impact on the Star 
Ratings of an MA or Part D plan. We do not believe additional hold 
harmless provisions are needed for multiple year-affected contracts as 
it could weaken plan accountability and incentives to provide high 
quality care in disaster situations.
    Comment: Several commenters suggested CMS expand the current rule 
for contracts impacted by two different disasters in consecutive years 
to include contracts impacted by a single disaster spanning multiple 
years.
    Response: The introductory language of paragraph (i) of both 
Sec. Sec.  422.166 and 423.186 states that we use the incident start 
date to determine which year of Star Ratings can be adjusted for a 
particular disaster, regardless of whether the incident period lasts 
until another calendar year. As we explained in the April 2019 final 
rule (84 FR 15774), in some cases the incident period end date changes, 
which would make it difficult operationally to determine which Star 
Ratings year is impacted. We believe limiting adjustments for a single 
disaster to 1 year is appropriate to avoid adversely impacting CMS's 
operational timelines for analyzing data and calculating Star Ratings. 
For example, if a disaster is extended into the next measurement year 
we would potentially need to recalculate and reissue ratings. We also 
want to limit the impact and effects on contracts that do meet the 
definition of ``affected contract.'' We are concerned, for example, 
about the integrity of the ratings and reliability of the comparisons 
if cut points do not take into account the performance of an increasing 
number of affected contracts or if cut points have to be recalculated 
after they are released. We also want to preserve transparency of the 
Star Ratings for consumers by not using data from many different 
measurement years.
    Comment: A couple commenters requested clarification about how CMS 
handles situations where a contract is affected by multiple disasters 
in the same year.
    Response: We use the percent of enrollment impacted by qualifying 
disasters to determine eligibility for disaster adjustments. That is, 
contracts impacted by multiple qualifying disasters in the same year 
are eligible for the disaster relief as long as a total of 25 percent 
or more of their enrollees reside in Individual Assistance areas. CMS 
rolls up the enrollment for each contract at the state/county level; 
when more than one enrollment period applies (that is, because the 
contract was affected by more than one disaster), an average of the 
enrollments from each of corresponding enrollment periods where the 
contract was affected is used to calculate the total percent of a 
contract's enrollees in a FEMA-designated Individual Assistance area 
during extreme and uncontrollable circumstances. This is described in 
detail in the Medicare Part C & D Star Ratings Technical Notes 
Attachment Q: Identification of Contracts Affected by Disasters 
(https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/PerformanceData, page 143 of 2020 Star Ratings 
Technical Notes).
    Comment: We received a number of comments about the impact of 
COVID-19 on Star Ratings, for example asking whether and how CMS would 
adjust for the impact of COVID-19 for 2021 Star Ratings and beyond.
    Response: The public health emergency incident start date for 
COVID-19 was in 2020, so adjustments under the extreme and 
uncontrollable events policy at Sec. Sec.  422.166(i) and 423.186(i) 
will apply to the 2022 Star Ratings. The March 31st COVID-19 IFC 
addressed the immediate impact of the pandemic on the Part C and D Star 
Ratings program and made additional modifications for the 2022 Star 
Ratings, in recognition that the COVID-19 pandemic may impact 
performance on the Star Ratings measures during the 2020 measurement 
period. CMS will continue to monitor the impact of COVID-19 on the 
healthcare system and Part C and D plans. The September 2nd COVID-19 
IFC modifies the calculation of the 2022 Part C and D Star Ratings to 
address the application of the extreme and uncontrollable circumstances 
policy. We direct readers to our summary of those two interim final 
rules with comment in section IV.D.1 of this final rule.
    Comment: Several commenters requested that CMS expand the current 
extreme and uncontrollable circumstance policy for single year 
disasters, for example to include HHS-declared public health 
emergencies, Fire Management Assistance Grant (FMAG) declarations, 
governor declarations of a state of emergency, or state-level public 
health emergencies that extend beyond a national emergency period. A 
few stated if a contract gets the same Star Rating in both years, CMS 
should take the higher of the 2 years' measure scores in order to 
ensure that plans and beneficiaries are truly held harmless in the 
event of a disaster. Several commenters suggested modifications to how 
the improvement measures are handled when there are disasters. For 
example, we received suggestions to hold contracts harmless in 
improvement when there are disasters.
    Response: The changes suggested by commenters for expanding the 
adjustments for single year disasters are significant in scope and of 
the type that would require analysis and consideration by CMS before 
proposing changes to the current regulations. As we noted in the April 
2019 final rule (84 FR 15773), we use the Star Rating for the measure-
level comparison because the measure stars are used to calculate the 
overall Star Rating and the measure-level cut points can change each 
year. We use the corresponding measure scores for improvement 
calculations in order to maintain consistency in the years being 
compared. We only revert to the previous year's measure Star Rating if 
it is higher (Sec. Sec.  422.166(i)(2)(iv), 422.166(i)(3)(iv), 
422.166(i)(4)(v), 422.166(i)(6)(i), 423.186(i)(2)(iv), and 
423.186(i)(4)(i)).
Summary of Regulatory Changes
    After consideration of the comments received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing the addition of Sec. Sec.  422.166(i)(8) and 423.186(i)(6) 
as proposed. These changes are applicable to the 2022 measurement year 
and the 2024 Star Ratings. We do not believe additional

[[Page 5929]]

revisions to the rules for multiple year-affected contracts described 
at Sec. Sec.  422.166(i)(2)(v), (i)(3)(v), (i)(4)(vi), and (i)(6)(iv) 
and 423.186(i)(2)(v) and (i)(4)(iv) are necessary to address the 
impacts of the PHE for the COVID-19 pandemic in light of the September 
2nd COVID-19 IFC.
6. Quality Bonus Payment Rules (Sec. Sec.  422.162(b)(4) and 
422.166(d)(2)(vi))
    We proposed several amendments to Sec. Sec.  422.162(b)(4) and 
422.166(d)(2)(vi) to codify our current policies for using the Star 
Ratings to calculate quality bonus payment percentage increases (QBPs) 
and determine beneficiary rebates for MA organizations.
    The Affordable Care Act amended sections 1853(n) and 1853(o) of the 
Act to require CMS to make QBPs to MA organizations that achieve at 
least 4 stars in a 5-star Quality Rating system. The Affordable Care 
Act also amended section 1854(b)(1)(C) of the Act to change the share 
of savings available to MA organizations and that they must provide to 
enrollees as the beneficiary rebate, mandating that the level of rebate 
is tied to the level of an MA organization's QBP rating. As a result, 
beginning in 2012, quality as measured by the 5-star Quality Rating 
System directly affected the monthly payment amount MA organizations 
receive from CMS. At the time the QBPs were implemented, CMS codified 
at Sec.  422.260 an administrative review process available to MA 
organizations for payment determinations based on the quality bonuses. 
Historically, every November CMS has released the preliminary QBP 
ratings for MA contracts to review their ratings and to submit an 
appeal request under Sec.  422.260(c) if they believe there is a 
calculation error or incorrect data are used.
    In the April 2018 final rule, we codified at Sec.  422.160(b)(2) 
that the ratings calculated and assigned under this subpart are used to 
provide quality ratings on a 5-star rating system used in determining 
QBPs and rebate retention allowances. Historically, the QBP rating 
rules have been announced through the Advance Notice and Rate 
Announcement since section 1853(b) of the Act authorizes an advance 
notice and rate announcement to solicit comment for proposed changes 
and announce changes to the MA payment methodology. The QBPs are used 
as part of setting the MA benchmarks and capitation rates for counties 
(and thus, MA service areas) each year. As we have codified in 
regulation the methodology for the Star Ratings over the last couple of 
years, we proposed in the February 2020 proposed rule to clarify the 
rules around assigning QBP ratings, codify the rules around assigning 
QBP ratings for new contracts under existing parent organizations, and 
amend the definition of new MA plan that is codified at Sec.  422.252 
by clarifying how we apply the definition. Our proposal was to codify 
current policy (for how we have historically assigned QBP ratings) as 
generally adopted and implemented through the section 1853(b) process, 
without substantive changes.
    Historically, for contracts that receive a numeric Star Rating, the 
final QBP rating released in April for the following contract year 
would be the contract's highest rating as defined at Sec.  422.162(a) 
(that is, overall or summary rating). Section 422.260(a) states that 
the QBP determinations are made based on the overall rating for MA-PDs 
and the Part C summary rating for MA-only contracts. We proposed to add 
language at Sec.  422.162(b)(4) stating that for contracts that receive 
a numeric Star Rating, the final QBP rating is released in April of 
each year for the following contract year and that the QBP rating is 
the contract's highest rating, as that term is defined at Sec.  
422.162(a). We also proposed to clarify in the regulation text that the 
QBP rating is the contract's highest rating from the Star Ratings 
published by CMS in October of the calendar year that is 2 years before 
the contract year to which the QBP rating applies. For example, the 
2020 QBPs were released in April 2019 and based on the Star Ratings 
published in October 2018. For MA contracts that offer Part D, the QBP 
rating would be the numeric overall Star Rating. For MA contracts that 
do not offer Part D (MA-only, MSA, and some PFFS contracts), the QBP 
rating would be the numeric Part C summary rating. We also proposed 
adding language at Sec.  422.162(b)(4)(ii) clarifying that the contract 
QBP rating is applied to each plan benefit package under the contract.
    We explained in the February 2020 proposed rule that if a contract 
does not have sufficient data to calculate and assign Star Ratings for 
a given year because it is a new MA plan or low enrollment contract, 
Sec.  422.166(d)(2)(v) provides the rules for assigning a QBP rating. 
That regulation references the definitions at Sec.  422.252. We 
proposed to amend the definition at Sec.  422.252 for new MA plans by 
clarifying how we apply the definition. We address that proposal in 
section IV.D.2 of this rule.
    We also proposed to add rules at Sec.  422.166(d)(2)(vi) for 
contracts that do not have sufficient data to calculate and assign 
ratings and do not meet the definition of either low enrollment 
contracts or new MA plans at Sec.  422.252. Our proposal was to codify 
the policy that has been in place since the 2012 Rate Announcement: Any 
new contract under an existing parent organization that has had MA 
contract(s) with CMS in the previous 3 years receives an enrollment-
weighted average of the Star Ratings earned by the parent 
organization's existing MA contracts. We also addressed that policy in 
a proposed rule for CY 2012 that appeared in the Federal Register on 
November 22, 2010 (``Medicare Program; Proposed Changes to the Medicare 
Advantage and the Medicare Prescription Drug Benefit Programs for 
Contract Year 2012 and Other Proposed Changes'') (75 FR 71190, 71219) 
and the related final rule that appeared in the Federal Register on 
April 15, 2011 (76 FR 21432, 21486 through 21490). We explained in the 
February 2020 proposed rule that we intended for this policy to 
continue uninterrupted so that the calculation of QBPs remains stable 
and transparent to stakeholders. Codifying the policy explicitly, as 
well as how it is applied, would serve this purpose.
    We proposed to add at Sec.  422.166(d)(2)(vi)(A) that any new 
contract under an existing parent organization that has other MA 
contracts with numeric Star Ratings in November (when the preliminary 
QBP ratings are calculated for the contract year that begins 14 months 
later) would be assigned the enrollment-weighted average of the highest 
Star Rating of all other MA contracts under the parent organization 
that will be active as of April the following year. The Star Ratings 
used in this calculation would be the whole or half Star Ratings that 
are publicly displayed. For the 2021 QBPs, for any new contracts under 
an existing parent organization, we explained how the policy would be 
applied as follows:
    (i) We identify the parent organization of the new contract in 
November 2019.
    (ii) We identify the MA contracts held by that parent organization 
in November 2019, when the preliminary 2021 QBP ratings are posted for 
review. For preliminary QBP ratings, we use the numeric Star Ratings 
for those MA contracts that were held by the parent organization in 
November 2019 that we anticipated to still be in existence and held by 
that parent organization in April 2020.
    (iii) Using the enrollment in those other MA contracts as of 
November 2019, we calculated the enrollment-weighted average of the 
highest Star Rating(s) of those MA contracts.
    (iv) In April 2020, we update the enrollment-weighted average 
rating based on any changes to the parent

[[Page 5930]]

organization of existing contracts, using the November 2019 enrollment 
in the contracts. The enrollment-weighted average rating includes the 
ratings of any contract(s) that the parent organization has acquired 
since November 2019. This enrollment-weighted average is used as the 
2021 QBP rating for the new MA contract under the parent organization 
for payment in 2021. We release these QBP ratings in April of the year 
before the payment year (for 2021 QBPs, in April of 2020).
    Because our proposal was to codify existing and current policy 
without change, we followed these steps to identify the QBP ratings for 
new contracts of existing MA parent organizations for 2021 QBPs.
    We proposed to add at Sec.  422.166(d)(2)(vi)(B) that if a new 
contract is under a parent organization that does not have any other MA 
contracts with numeric Star Ratings in November, CMS would look at the 
MA Star Ratings for the previous 3 years. The QBP rating would be the 
enrollment-weighted average of the MA contracts' highest-level Star 
Ratings from the most recent year that had been rated for that parent 
organization. We explained using an example: If in November 2019 there 
were no other MA contracts under the parent organization with numeric 
2020 Star Ratings, we would go back first to the 2019 Star Ratings and 
then the 2018 Star Ratings. Under our existing policy, and thus under 
the proposal, if there were MA contract(s) in the parent organization 
with Star Ratings in any of the previous 3 years, the QBP rating was 
the enrollment-weighted average of the MA contracts' highest Star 
Ratings from the most recent year rated. Under our existing policy, and 
thus under the proposal, the Star Ratings used in this calculation 
would be the rounded Star Ratings (whole or half star) that are 
publicly displayed on www.medicare.gov.
    We explained in the February 2020 proposed rule how the policy 
works by using another illustration for the 2021 QBPs. For a new 
contract(s) under a parent organization that did not have any MA 
contracts in November 2019:
    (i) We identify the MA contracts held by that parent organization 
in November 2018. If the parent organization had other MA contracts in 
November 2018, we use the numeric Star Ratings issued in October 2018 
for those MA contracts that were held by the parent organization in 
November 2018.
    (ii) Using the enrollment in those other MA contracts as of 
November 2018, we calculate the enrollment-weighted average of the 
highest Star Rating(s) of those MA contracts.
    (iii) This enrollment-weighted average is used as the 2021 QBP 
rating for the new MA contract for that parent organization, for 
payment in 2021 and is released to the MA organization for the new 
contract in April of 2020.
    Because our proposal was to codify existing and current policy 
without change, we followed these steps for the 2021 QBPs where 
applicable. And for any new contract(s) under a parent organization 
that did not have any MA contracts in November 2018 and 2019, we 
provided an illustration (again for the 2021 QBPs) as follows:
    (i) We identified the MA contracts held by that parent organization 
in November 2017. If the parent organization had other MA contracts in 
November 2017, we used the numeric Star Ratings for those MA contracts 
that were held by the parent organization in November 2017.
    (ii) Using the enrollment in those other MA contracts as of 
November 2017, we calculated the enrollment-weighted average of the 
highest Star Rating(s) of those MA contracts.
    (iii) This is used as the 2021 QBP rating for the new MA contract 
for payment in 2021 and is released to the MA organization for the new 
contract in April 2020.
    We explicitly explained how if there were no MA contract(s) in the 
parent organization with numeric Star Ratings in the previous 3 years, 
the contract is rated as a new MA plan in accordance with Sec.  422.258 
(for QBP purposes) and Sec.  422.166(d)(2)(v) (for other purposes). Our 
proposal was to codify existing and current policy without change, and 
we followed these steps for the 2021 QBPs where applicable. Under this 
final rule, we will follow the same steps for the 2022 QBPs.
    We proposed the rules for calculating the enrollment-weighted 
average and addressing changes in parent organizations in new 
paragraphs (d)(2)(iv)(C) through (E) at Sec.  422.166. We proposed to 
add at Sec.  422.166(d)(2)(vi)(C) that the enrollment used in the 
enrollment-weighted calculations is the November enrollment in the year 
the Star Ratings are released. The enrollment data are currently posted 
publicly at: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/index.html.
    We also proposed at Sec.  422.166(d)(2)(vi)(D) that the QBP ratings 
would be updated for any changes in a contract's parent organization 
prior to the release of the final QBP ratings in April of each year. We 
explained that under our proposal, the same rules described at Sec.  
422.166(d)(2)(vi)(A), (B), and (C) would be applied to the new contract 
using the new parent organization information. We provided an example, 
again using the 2021 QBPs: In April 2020 when the final QBP ratings 
were released, the enrollment-weighted average rating would include the 
ratings of any MA contract(s) that the parent organization had acquired 
since November 2019. Thus, if a parent organization buys an existing 
contract it would be included in the enrollment-weighted average. We 
also proposed at Sec.  422.166(d)(2)(vi)(E) to codify our current 
practice that once the QBP ratings are finalized in April of each year 
for the following contract year, no additional parent organization 
changes are possible for QBP purposes.
    In this section of this rule, we summarize the comments we received 
and provide our responses and final decisions.
    Comment: Several commenters expressed support for codifying the QBP 
rating policies in regulation and provided support for the existing 
policies.
    Response: CMS appreciates the support.
    Comment: A commenter expressed concern that the QBP rating is based 
on too many measures and should be based on a small set of measures 
related to patient experience and outcomes at the geographic level.
    Response: The regulation at Sec.  422.260(b), revised in the April 
2018 final rule, provides that the QBP determination methodology is the 
quality ratings system specified in subpart 166 of part 422 for 
assigning quality ratings to provide comparative information about MA 
plans and evaluating whether MA organizations qualify for a QBP. The 
methodology for the quality ratings system was codified for the 2019 
measurement year and 2021 Star Ratings in the April 2018 final rule. 
Further, that amendment to Sec.  422.260(b) was merely codification of 
a longstanding policy, discussed in the CY 2012 proposed rule (75 FR 
71219, 71221) and the CY 2012 final rule (76 FR 21486 through 21490). 
We did not propose to change that rule and do not believe it is 
necessary or appropriate at this time.
    In the April 2018 final rule, we stated that the Star Rating system 
provides information in a summary fashion that is a true reflection of 
the plan's quality and encompasses multiple dimensions of high quality 
care and is based on a delicate balance of measuring numerous aspects 
of quality and the need for a

[[Page 5931]]

small data set that minimizes reporting burden on the industry (83 FR 
16520). Most commenters supported the principles underlying the Star 
Ratings program as described in the April 2018 final rule and made 
various suggestions for additional measure concepts to include. We do 
not believe that a change to the ratings used for QBP purposes is 
appropriate at this time and, even if we did, we believe that such a 
significant change from current practice as suggested in the comment 
should be subject to additional analysis and the opportunity for public 
comment via the rulemaking process. Our current Part C and D Star 
Ratings contractor, RAND Corporation, is currently soliciting input 
from their Technical Expert Panel on suggested potential changes to the 
mix and number of measures included in the Star Ratings program for 
consideration in the future. For more information about the Technical 
Expert Panels, please see https://www.rand.org/health-care/projects/star-ratings-analyses.html.
    Comment: A couple of commenters suggested that all new contracts be 
treated as qualifying contracts and received the 3.5 percentage 
increase in the benchmark, regardless of whether the parent 
organization has other MA contracts. A commenter focused on this being 
fairer to new entrants, while another commenter focused on the 
statutory provision at 1857(c)(4) of the Social Security Act that 
guards against contracts leaving and then immediately re-entering the 
MA program.
    Response: Historically, we have followed the rules to assign QBP 
ratings for a new contract under an existing parent organization that 
were first adopted in the 2012 Advance Notice and Rate Announcement and 
the April 2011 final rule that codified the definition of a new MA 
plan. New contracts under existing parent organizations have 
traditionally received the weighted average of the ratings of the 
contracts under the parent organization to minimize the incentive to 
create new contracts to qualify for a QBP. If the overall performance 
of an organization is poor, that organization otherwise would have 
incentives to game the system to be treated as a qualifying plan for 
QBP purposes for 3 years. This would ignore information that CMS has 
about the overall performance of the contracts under the parent 
organization given at least some of the administrative systems are 
shared across contracts within a parent organization. If there were no 
MA contract(s) in the parent organization with numeric Star Ratings in 
the previous 3 years, the contract is rated as a new MA plan in 
accordance with Sec.  422.258 since CMS does not have recent experience 
with the organization.
    New contracts under existing parent organizations do not 
necessarily qualify for a QBP; thus, this policy is not unfair to new 
entrants. Additionally, new entrants where the parent organization does 
not have recent experience as an MA contract are treated as qualifying 
plans for 3 years until they have enough data to assess their 
performance. For the 2021 QBP ratings, 47 percent of the new contracts 
under existing parent organizations received 3.5 stars or less; thus, 
these new contracts did not qualify for QBPs. We understand that 
1857(c)(4) guards against contracts leaving and immediately entering 
the MA program, but we believe it is still important to guard against 
existing contracts opening up new contracts primarily to be treated as 
qualifying contracts for QBP purposes.
Summary of Regulatory Changes
    After consideration of the comments and for the reasons set forth 
in the proposed rule and our responses to the related comments 
summarized earlier in this final rule, we are finalizing the 
methodology to calculate the QBP ratings as proposed at Sec. Sec.  
422.162(b)(4) and 422.166(d)(2)(vi) with a slight revision of the text 
to further clarify that the enrollment figures used in the enrollment-
weighted QBP rating calculations are the November enrollment in the 
year the Star Ratings are released. Our proposal was to codify existing 
and current policy without change, and under this final rule, we will 
follow the same steps as prior years for calculating the 2022 QBPs.

E. Permitting a Second, ``Preferred,'' Specialty Tier in Part D 
(Sec. Sec.  423.104, 423.560, and 423.578)

1. Overview and Summary
    Section 1860D-2(b)(2) of the Act, which establishes the parameters 
of the Part D program's Defined Standard benefit, allows for 
alternative benefit designs that are actuarially equivalent to the 
Defined Standard benefit, including the use of tiered formularies. 
Although not required, Part D sponsors are permitted to include a 
specialty tier in their plan designs. Use of a specialty tier provides 
the opportunity for Part D sponsors to manage high-cost drugs apart 
from tiers that have less expensive drugs. Our policy for the specialty 
tier has aimed to strike the appropriate balance between plan 
flexibility and Part D enrollee access to drugs, consistent with our 
statutory authority.
    Section 1860D-4(g)(2) of the Act requires Part D sponsors to have 
an exceptions process under which a beneficiary who is enrolled in a 
Part D plan offering a prescription drug benefit for Part D drugs 
through the use of a tiered formulary may request an exception to the 
plan's tiered cost-sharing structure. The statute provides that under 
the exception, a non-preferred drug could be covered under the terms 
applicable for preferred drugs if certain conditions are met. The 
statute grants CMS authority to establish guidelines under which Part D 
enrollees may request exceptions to tiered cost-sharing structures and 
under which a determination with respect to such a request is made. 
Under Sec.  423.578(a), we require each Part D sponsor that manages its 
benefit through the use of a tiered formulary to establish and maintain 
reasonable and complete exceptions procedures subject to our approval. 
The Part D sponsor must grant an exception when it determines that the 
requested non-preferred drug for treatment of the enrollee's condition 
is medically necessary, consistent with the physician's or other 
prescriber's statement that the preferred drug: (i) Would not be as 
effective for the enrollee as the requested drug; (ii) would have 
adverse effects for the enrollee; or (iii) both.
    However, if Part D sponsors were to permit tiering exceptions to 
allow Part D enrollees to obtain drugs on specialty tiers at a lower 
cost sharing applicable to non-specialty tiers, they would also likely 
increase Part D premiums as well as cost sharing for non-specialty 
tiers. In other words, the ability to get lower cost sharing on 
specialty-tier Part D drugs through tiering exceptions means that costs 
would likely go up elsewhere--such as by increasing the cost sharing on 
generic drug tiers--in order to keep the benefit design actuarially 
equivalent to the Defined Standard. Consequently, in permitting Part D 
sponsors to maintain a specialty tier, we also implemented a regulation 
(most recently Sec.  423.578(a)(6)(iii)) that permits (but does not 
require) Part D sponsors to exempt Part D drugs placed on the specialty 
tier from their tiering exceptions processes.
    Accordingly, to restrict the specialty tier to only the highest-
cost Part D drugs, beginning in 2007,44 45 we

[[Page 5932]]

developed a minimum dollar-per-month threshold amount to determine 
which Part D drugs are eligible, based on relative high cost, for 
inclusion on the specialty tier.\46\ Additionally, to prevent 
discriminatory formulary structures, in particular to protect Part D 
enrollees with certain disease types that are treated only by 
specialty-tier eligible drugs, our guidance \47\ has set the maximum 
allowable cost sharing for specialty-tier Part D drugs between 25 and 
33 percent coinsurance (25/33 percent).
---------------------------------------------------------------------------

    \44\ For 2007, we established the specialty-tier cost threshold 
at a negotiated price of $500 per month. Please see Medicare 
Modernization Act 2007 Final Guidelines--Formularies. https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/downloads/cy07formularyguidance.pdf.
    \45\ The specialty-tier cost threshold was increased to $600 per 
month in 2008, and remained at $600 per month from contract years 
2008 through 2016. See https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2017.pdf and https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2017.pdf.
    \46\ See, for instance, Draft 2020 Call Letter, pages 178-179 
(available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2020Part2.pdf), and 
Final 2020 Call Letter, page 208 (available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf).
    \47\ See section 30.2.4 of Chapter 6 of the Medicare 
Prescription Drug Benefit Manual, available at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Part-D-Benefits-Manual-Chapter-6.pdf and page 21 of the 
2020 Bid Submission User Manual, Chapter 7: Plan Benefit Package Rx 
Drugs Section. The Bid Submission User Manual for 2020 is available 
at the following pathway after logging into the Health Plan 
Management System (HPMS): Plan Bids > Bid Submission > Contract Year 
2020 > View Documentation > Bid Submission User Manual.
---------------------------------------------------------------------------

    We have not previously permitted Part D sponsors to structure their 
plans with more than one specialty tier. Pointing to factors such as 
the introduction of biosimilar biological products to the market \48\ 
and recent higher pricing of some generic drugs relative to brand drug 
costs, some stakeholders requested that we reconsider this policy. They 
posited, for instance, that creating an additional specialty tier could 
improve the ability of Part D sponsors to negotiate with pharmaceutical 
manufacturers to help lower the prices of high-cost Part D drugs. 
Moreover, in its June 2016 Report to Congress (available at http://www.medpac.gov/docs/default-source/reports/june-2016-report-to-the-congress-medicare-and-the-health-care-delivery-system.pdf), the 
Medicare Payment Advisory Commission (MedPAC) suggested that allowing 
plans to maintain two specialty tiers with differential cost sharing 
could potentially encourage the use of lower-cost biosimilar \49\ 
biological products and encourage competition among existing specialty 
Part D drugs. More recently, some commenters on our Draft 2020 Call 
Letter (available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2020Part2.pdf) took the 
opportunity to advocate for a second specialty tier.
---------------------------------------------------------------------------

    \48\ See the April 2018 final rule for more background on 
biosimilar biological products (83 FR 16610).
    \49\ Unless our policy specifically distinguishes biosimilar 
biological products from interchangeable biological products, we use 
the term ``biosimilar biological product(s)'' in this preamble to 
reference biosimilar or interchangeable (when such products become 
available) biological products.
---------------------------------------------------------------------------

    Improving Part D enrollee access to needed drugs and lowering drug 
costs are central goals for CMS. Accordingly, in the hopes of providing 
flexibility that will promote these goals, we proposed to allow (but 
not require) Part D sponsors to establish up to two specialty tiers and 
design an exceptions process that exempts Part D drugs on these tiers 
from tiering exceptions to non-specialty tiers. Under this policy, Part 
D sponsors would have the flexibility to determine which Part D drugs 
are placed on either specialty tier, subject to the specialty-tier cost 
threshold that would be established according to the methodology we 
proposed and the requirements of our formulary review and approval 
process under Sec.  423.120(b)(2). To maintain Part D enrollee 
protections, we proposed to codify a maximum allowable cost sharing 
that would apply to a single specialty tier, or, if a Part D sponsor 
has a plan with two specialty tiers, to the higher cost-sharing, 
specialty tier. Further, we proposed to require that if a Part D 
sponsor has a plan with two specialty tiers, one must be a 
``preferred'' tier that offers lower cost sharing than the higher cost-
sharing, specialty tier.
    We note that we did not propose any revisions to Sec.  
423.578(c)(3)(ii), which requires Part D sponsors to provide coverage 
for a Part D drug for which a tiering exception was approved at the 
cost sharing that applies to the preferred alternative. The exemption 
from tiering exceptions for specialty-tier Part D drugs, at Sec.  
423.578(a)(6)(iii), would apply only to tiering exceptions to non-
specialty tiers (meaning, when the tiering exception request is for the 
specialty-tier Part D drug to be covered at a cost-sharing level that 
applies to a non-specialty tier). Under our proposal, we would require 
Part D sponsors to permit tiering exception requests for drugs on the 
higher cost-sharing, specialty tier to the lower cost-sharing, 
specialty tier.
    To improve transparency, we proposed to codify current 
methodologies for cost sharing and calculations relative to the 
specialty tier, with some modifications. First, we proposed to codify a 
maximum allowable cost sharing permitted for the specialty tiers of 
between 25 percent and 33 percent, inclusive (that is, 25 percent <= 
maximum allowable cost sharing <= 33 percent), depending on whether the 
plan includes a deductible, as described further in section IV.E.4. of 
this final rule.
    We also proposed to determine the specialty-tier cost threshold--
meaning whether the drug has costs high enough to qualify for 
specialty-tier placement--based on a 30-day equivalent supply. 
Additionally, we proposed to base the determination of the specialty-
tier cost threshold on the ingredient cost reported on the PDE. This 
would be a change from our current policy, which uses the negotiated 
price reflected on the PDE. Under our proposal, the specialty-tier cost 
threshold would apply to both specialty tiers.
    To respond to comments on our Draft 2020 Call Letter requesting 
that the specialty-tier cost threshold be increased regularly, we also 
proposed to maintain a specialty-tier cost threshold that is set at a 
level that, in general, reflects Part D drugs with monthly ingredient 
costs that are in the top 1 percent of all monthly ingredient costs, as 
described further in section IV.E.6. of this final rule. We proposed to 
adjust the threshold, in an increment of not less than ten percent, 
rounded to the nearest $10, when an annual analysis of PDEs shows that 
recalibration of the specialty-tier cost threshold is necessary to 
continue to reflect only Part D drugs with the top 1 percent of monthly 
ingredient costs. We proposed to annually: (1) Determine whether the 
adjustment would be triggered, and (2) announce the specialty-tier cost 
threshold.
2. A Second, ``Preferred,'' Specialty Tier
    Placement on the specialty tier can play an important role in 
maintaining lower cost sharing on non-specialty tiers. The non-
specialty, non-preferred brand/drug tiers frequently have cost sharing 
equal to as much as 50 percent coinsurance. This means that Part D 
enrollees would pay considerably more after application of coinsurance 
for a high-cost drug if it appeared on a non-specialty, non-preferred 
brand/drug tier with, for instance, 50 percent cost sharing as opposed 
to placement on the specialty tier, which has been subject to lower 
cost-sharing requirements. For this reason, we reject the 
recommendation of some commenters on our Draft 2020 Call Letter that we 
eliminate the specialty tier altogether.
    To the opposite effect, as discussed in section IV.E.1 of this 
final rule, other

[[Page 5933]]

stakeholders, including MedPAC, have recommended that we permit Part D 
sponsors to maintain a second specialty tier. Stakeholders favoring 
this approach have posited that this change would: (1) Improve the 
ability of Part D sponsors and pharmacy benefit managers (PBMs) to 
negotiate better rebates \50\ with manufacturers by enabling them to 
establish a preferred specialty tier that distinguishes between high-
cost drugs and effectively encourages the use of preferred specialty-
tier Part D drugs; (2) reduce costs for Part D enrollees, not only 
through direct cost-sharing savings associated with a lower cost-
sharing, ``preferred'' specialty tier, but also indirectly, through the 
lowered premiums for all Part D enrollees that could result from better 
rebates on specialty-tier Part D drugs; and (3) reduce our costs 
directly through lower drug costs because lower cost sharing would 
delay a Part D enrollee's entry into the catastrophic phase of the 
benefit in which the government is responsible for 80 percent of the 
costs.
---------------------------------------------------------------------------

    \50\ In this section of this final rule, by ``rebates,'' we are 
broadly referring to either retrospective or point-of-sale (POS) 
rebates or discounts.
---------------------------------------------------------------------------

    Consistent with our ongoing efforts to implement new strategies 
that can help lower drug prices and increase competition, we proposed 
to permit Part D sponsors to have up to two specialty tiers by 
permitting a new preferred specialty tier. However, driven by ongoing 
concerns over actuarial equivalence and discriminatory benefit designs, 
in order to strike the appropriate balance between plan flexibility and 
Part D enrollee access, we also needed to carefully weigh the following 
factors: (1) Tiering exceptions between the two specialty tiers or to 
other, non-specialty tiers; (2) the maximum allowable cost sharing for 
each specialty tier; and (3) tier composition (that is, the selection 
of Part D drugs for each specialty tier). The regulatory text to allow 
up to two specialty tiers (which reflects our consideration of these 
factors) and other related proposals are discussed in the following 
sections of this preamble.
    We received 82 public comments concerning our proposal to permit 
Part D sponsors to maintain up to two specialty tiers. Although there 
was some overlap in stakeholder categories, 81 comments were from 
groups representing Part D sponsors, beneficiary advocates, 
manufacturers, providers, pharmacists and pharmacies, wholesale 
distributors, policy institutes, and non-partisan Congressional 
agencies. The remaining comment was from an individual beneficiary. A 
summary of the comments and our responses follow.
    Comment: Many commenters supported CMS's proposal.
    Response: We thank the commenters for their support.
    Comment: Some commenters advocated that CMS should abolish 
specialty tiers altogether, finding them to be outdated and 
discriminatory to the Part D enrollees whose conditions require they 
take Part D drugs placed on the specialty tiers. Similarly, these 
commenters suggested that specialty tiers are unique to prescription 
drug benefits with no equivalent in the medical benefit and run counter 
to the purpose of insurance altogether by effectively serving as what 
the commenter termed ``reverse insurance,'' reasoning that the sickest 
patients who need specialty-tier eligible drugs subsidize the benefit 
to keep premiums and cost sharing on non-specialty tiers lower for the 
rest of the benefit.
    Response: We thank the commenters for this perspective. However, 
the use of specialty tiers in the commercial market predates the Part D 
program by several years, and there is widespread use of two specialty 
tiers in employer-based plans, with some plans using two or more 
specialty tiers since at least 2014.51 52 53 54 55 56 57 
Additionally, Part D enrollee cost sharing for the specialty tier(s) in 
Part D, with a maximum allowable cost sharing of 25/33 percent 
coinsurance is equal to, or, in the case of the preferred, specialty 
tier that has cost sharing less than the 25/33 percent maximum, better 
than cost sharing under the Defined Standard benefit. Because cost 
sharing under the Defined Standard benefit is provided for by statute, 
neither cost sharing under the Defined Standard benefit nor specialty-
tier cost sharing, which is better than the Defined Standard benefit, 
is discriminatory. Moreover, a hallmark of Medicare Part D is that it 
relies on market forces to provide prescription drug benefits to Part D 
enrollees, and, as a public benefit that is administered by the private 
insurance market, it is incumbent upon us to keep abreast of industry 
standards for the provision of this benefit while also balancing Part D 
enrollee access to prescription drugs. While the use of a specialty 
tier may be counterintuitive, it is a tool widely used in the industry 
to address a highly volatile market for high-cost Part D drugs. 
Although there are distinctions between commercial plans and the 
Medicare Part D program, we believe this particular option is worth 
pursuing, not only because of the possibility that benefits could 
ensue, but most centrally because we do not anticipate that permitting 
a second, preferred specialty tier would lead to additional harms for 
Part D enrollees given our proposed Part D enrollee protections, such 
as retention of the 25/33 percent maximum allowable cost sharing.
---------------------------------------------------------------------------

    \51\ The following link provides access to the Kaiser Family 
Foundation's archives of the annual Employer Health Benefits Survey. 
https://www.kff.org/health-costs/report/employer-health-benefits-annual-survey-archives/.
    \52\ Kaiser Family Foundation 2014 Employer Health Benefits 
Annual Survey, Pages 164 and 166, http://files.kff.org/attachment/2014-employer-health-benefits-survey-full-report.
    \53\ Kaiser Family Foundation 2015 Employer Health Benefits 
Annual Survey, Pages 160-162, http://files.kff.org/attachment/report-2015-employer-health-benefits-survey.
    \54\ Kaiser Family Foundation 2016 Employer Health Benefits 
Annual Survey, Pages 172-174, http://files.kff.org/attachment/Report-Employer-Health-Benefits-2016-Annual-Survey.
    \55\ Kaiser Family Foundation 2017 Employer Health Benefits 
Annual Survey, Page 156, http://files.kff.org/attachment/Report-Employer-Health-Benefits-Annual-Survey-2017.
    \56\ Kaiser Family Foundation 2018 Employer Health Benefits 
Annual Survey, Page 161, http://files.kff.org/attachment/Report-Employer-Health-Benefits-Annual-Survey-2018.
    \57\ Kaiser Family Foundation 2019 Employer Health Benefits 
Annual Survey, Page 161, http://files.kff.org/attachment/Report-Employer-Health-Benefits-Annual-Survey-2019.
---------------------------------------------------------------------------

    We also disagree with the assertion that the specialty tier(s) 
serve as a perverse, ``reverse insurance'' whereby the sickest patients 
who need specialty-tier eligible drugs subsidize the benefit to keep 
premiums and cost sharing on non-specialty tiers lower for the rest of 
the benefit. We believe this reasoning is flawed because the specialty 
tier is aligned with the Defined Standard benefit, and the Part D plan 
bid requirements also necessitate that the benefit structure below the 
specialty tier also be actuarially equivalent to the Defined Standard 
benefit. Therefore, the use of specialty-tier eligible drugs has no 
differential impact on lowering the premiums and cost sharing on non-
specialty tiers for the rest of the benefit.
    Lastly, we believe that providing Part D sponsors the ability to 
make business decisions regarding the distribution of insurance risk, 
as permitted by the statute and while retaining central Part D enrollee 
protections, reflects the goals of the Part D program, which aim to 
provide flexibilities, when possible, that could enable Part D sponsors 
to offer robust formularies with lower costs.
    Comment: Some commenters expressed concern that, although CMS 
proposed to permit Part D sponsors to maintain up to two specialty 
tiers, CMS did not propose corresponding regulatory text to this 
effect. Some commenters urged CMS to clarify that a second specialty 
tier is voluntary, and other commenters urged CMS to clarify

[[Page 5934]]

that a second specialty tier would be in addition to the total number 
of allowed drug tiers, rather than in place of an existing tier.
    Response: We proposed to add a new paragraph at Sec.  
423.104(d)(2)(iv)(D) to specify that a Part D plan may maintain up to 
two specialty tiers; additionally, as discussed in section IV.E.3 of 
this final rule, we also proposed to amend Sec.  423.578(a)(6)(iii) to 
reflect the possibility of a second specialty tier. Maintaining one or 
two specialty tier(s) is voluntary. Similarly, we also clarify that a 
second specialty tier would be in addition to, not in lieu of, the six 
existing tiers for actuarially equivalent benefit designs.
    Comment: Some commenters suggested that this proposal would limit 
access to specialty-tier Part D drugs, complicate an already 
complicated benefit structure/process for Part D enrollees, and/or 
would involve additional, burdensome utilization management for 
prescribers. Some commenters urged CMS to do a demonstration or pilot 
before finalizing the proposals to permit a second specialty tier, 
while others urged CMS to monitor the uptake of the use of a second 
specialty tier.
    Response: We do not anticipate adverse effects to Part D enrollees' 
access to specialty-tier Part D drugs by allowing Part D sponsors to 
structure their benefits with a second, ``preferred'' specialty tier, 
as we have proposed, either in terms of formulary access or Part D 
enrollee cost sharing. This is due in large part to the other Part D 
enrollee protections we proposed in conjunction with our proposal to 
permit Part D sponsors to maintain a second specialty tier (notably, 
tiering exceptions between the two specialty tiers and maximum 
allowable cost sharing, as discussed in sections IV.E.3., and IV.E.4., 
respectively, of this final rule). As we do not anticipate that 
permitting a second, preferred specialty tier would lead to harm for 
any Part D enrollees, it seems reasonable to provide the requested 
flexibility, as proposed, to Part D sponsors. We are mindful of the 
need to minimize complexity and make our rules as transparent as 
possible. However, we believe that the risk of confusion will be 
outweighed by the potential for Part D sponsors to provide their 
enrollees with improved access to specialty-tier Part D drugs because 
improved competition for preferred specialty tier formulary placement 
results in better negotiations for Part D sponsors, which could result 
in lower cost sharing for Part D enrollees.
    Many specialty-tier Part D drugs already require utilization 
management, including prior authorization and/or step therapy to access 
the drug, and then monitoring the enrollee once therapy has been 
initiated. Utilization management requirements are subject to the 
requirements of our annual formulary review and approval process under 
Sec.  423.120(b)(2). (We detailed the components of our annual 
formulary review and approval process in our May 2019 final rule (84 FR 
23835).) As part of this review and approval process, we perform 
multiple reviews related to the clinical appropriateness of both tier 
composition and utilization management strategies. For additional 
information, please also see section 30.2.7 of Chapter 6 of the 
Medicare Prescription Drug Benefit Manual, available at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Part-D-Benefits-Manual-Chapter-6.pdf.) Additionally, the same specialty-tier cost threshold would 
apply to both specialty tiers. In other words, there is no difference 
in eligibility for specialty-tier placement between the two specialty 
tiers, and therefore, specialty-tier eligible Part D drugs would be 
divided between the two specialty tiers. Consequently, we do not 
anticipate that allowing a second specialty tier would introduce 
significant utilization management beyond what is already required or 
increase the number of drugs placed on a specialty tier.
    In finalizing our proposals to permit Part D sponsors to maintain 
up to two specialty tiers, we intend to monitor the uptake of the use 
of a second specialty tier. We are unclear about, generally, what the 
commenters believe we would research in a demonstration or pilot, and 
do not believe one is necessary given the Part D enrollee protections 
we are finalizing as part of this final rule.
    Comment: Some commenters suggested that CMS should not finalize the 
proposals regarding permitting Part D to maintain up to two specialty 
tiers for 2021 and that CMS should clarify that the bids for coverage 
year 2021 will be based on existing rules. Some commenters mentioned 
that CMS needs to issue new guidance regarding the Plan Bid Package 
(PBP) Beta Software, which currently does not provide the functionality 
to file a preferred specialty tier, and that to maintain compliance, 
CMS needs to provide the specific filing requirements for the second 
tier. Some commenters suggested that with these changes, CMS must 
continue to improve written and online materials to provide clear, 
unbiased, user-friendly language and graphics, and engage in public 
campaigns to inform and educate Part D enrollees and their caregivers 
about benefit designs and cost sharing obligations. Some commenters 
suggested that if CMS finalizes our proposals to permit Part D sponsors 
to maintain up to two specialty tiers, that CMS will need to 
``recodify'' guidance in the ``Coverage Determination Manual.'' Some 
commenters suggested that CMS should institute a generic/biosimilar 
utilization Star ratings measure focused on specialty-tier drugs.
    Response: The proposals regarding permitting Part D sponsors to 
maintain up to two specialty tiers that are being finalized in this 
rulemaking will be in effect for coverage year 2022. Additionally, we 
intend to issue program instructions regarding the filing of two 
specialty tiers in the Contract Year (CY) 2022 Part D Bidding 
Instructions. In the May 22, 2020 HPMS memo titled, ``Updated Contract 
Year (CY) 2021 Final Part D Bidding Instructions,'' we instructed that 
bids for coverage year 2021 will be based on existing rules for the 
specialty tier. We continue to regularly review our policies regarding 
marketing and other communication materials and expect Part D sponsors 
to follow the requirements that are being finalized elsewhere in this 
final rule. Although we assume the commenters referring to the 
``Coverage Determination Manual'' meant our Parts C&D Enrollee 
Grievances, Organization/Coverage Determinations, and Appeals Guidance, 
available at https://www.cms.gov/Medicare/Appeals-and-Grievances/MMCAG/Downloads/Parts-C-and-D-Enrollee-Grievances-Organization-Coverage-Determinations-and-Appeals-Guidance.pdf, we are not clear on what the 
commenters believe needs to be ``re''-codified, and welcome further 
input on this matter. In our Announcement of Calendar Year (CY) 2021 
Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment 
Policies (available at https://www.cms.gov/files/document/2021-announcement.pdf), we discussed the potential to develop measures to 
assess generic and biosimilar utilization in the Medicare Part D 
program, and we continue to review feedback for a potential future 
measure.
    We are finalizing without modification our proposals to add a new 
paragraph at Sec.  423.104(d)(2)(iv)(D) to specify that a Part D plan 
may maintain up to two specialty tiers. The proposals regarding 
permitting Part D sponsors to maintain up to two specialty tiers that 
are being finalized in this rulemaking will apply for coverage year 
2022.
    To retain the policies in effect before coverage year 2022, we are 
amending Sec.  423.578(a)(6)(iii) by adding paragraph

[[Page 5935]]

(A) to cross reference the definition of specialty tier which will be 
in effect before coverage year 2022, and paragraph (B) to cross 
reference placement of the definition of specialty tier at Sec.  
423.104(d)(2)(iv) which will apply beginning coverage year 2022. 
Additionally, paragraph (A) will remove the phrase ``and biological 
products,'' and paragraph (B) will (1) reflect the possibility of a 
second specialty tier, and (2) clarify that Part D sponsors may design 
their exception processes so that Part D drugs on the specialty tier(s) 
are not eligible for a tiering exception to non-specialty tiers.
3. Two Specialty Tiers and Tiering Exceptions
    As discussed in section IV.E.1. of this final rule, section 1860D-
4(g)(2) of the Act specifies that a beneficiary enrolled in a Part D 
plan offering a prescription drug benefit for Part D drugs through the 
use of a tiered formulary may request an exception to the Part D 
sponsor's tiered cost-sharing structure. Additionally, Part D sponsors 
are required under this section of the statute to create an exceptions 
process to handle such requests, consistent with guidelines we 
established (see section 40.5.1 of Parts C & D Enrollee Grievances, 
Organization/Coverage Determinations, and Appeals Guidance, available 
at https://www.cms.gov/Medicare/Appeals-and-Grievances/MMCAG/Downloads/Parts-C-and-D-Enrollee-Grievances-Organization-Coverage-Determinations-and-Appeals-Guidance.pdf). However, section 1860D-4(g)(2) of the Act 
does not require tiering exceptions in every case, and rather, 
indicates that tiering exceptions might not be covered in every 
instance, by recognizing that non-preferred Part D drugs ``could'' be 
covered at the cost sharing applicable to preferred Part D drugs.
    As discussed in section IV.E.1. of this final rule, the requirement 
that Part D plans be actuarially equivalent to the Defined Standard 
benefit means that if Part D sponsors were required to permit Part D 
enrollees to obtain Part D drugs on specialty tiers at non-specialty-
tier cost sharing, Part D sponsors might need to increase premiums, 
cost sharing for non-specialty tiers, or both. To avoid such increased 
costs, in the Medicare Program; Medicare Prescription Drug Benefit 
Final Rule (hereinafter referred to as the January 2005 Part D final 
rule, 70 FR 4193), we finalized Sec.  423.578(a)(7), which provided 
that Part D sponsors with a tier for very high cost and unique items, 
such as genomic and biotech products (in other words, a specialty 
tier), could exempt such drugs from its tiering exception process (70 
FR 4353). In our April 2018 final rule, we revised and redesignated 
Sec.  423.578(a)(7) as Sec.  423.578(a)(6)(iii) to specify that if a 
Part D sponsor maintains a specialty tier, the Part D sponsor may 
design its exception process so that Part D drugs and biological 
products on the specialty tier are not eligible for tiering exceptions. 
While the current policy does not require that Part D sponsors use a 
specialty tier, or exempt the drugs on such tier from tiering 
exceptions, nearly all do use a specialty tier and also exempt the 
drugs on such tier from tiering exceptions.
    Section 1860D-4(g)(2) of the Act stipulates that under a tiering 
exception, a non-preferred Part D drug could be covered under the terms 
applicable for preferred Part D drugs if the prescriber determines that 
the preferred Part D drug for treatment of the same condition would not 
be as effective for the Part D enrollee, would have adverse effects for 
the Part D enrollee, or both. Thus, the statutory basis for approval of 
tiering exceptions requests is the presence of (a) clinically 
appropriate, therapeutically alternative Part D drug(s) on a lower 
cost-sharing tier of the plan's formulary, and a statement from the 
prescriber indicating that the alternative drug(s) would not be as 
effective for that enrollee or would cause adverse effects for the 
enrollee, or both. Therefore, even if a Part D sponsor permitted 
tiering exceptions for Part D drugs on the specialty tier to non-
specialty tiers, tiering exceptions requests would not be approvable if 
the plan's formulary did not include any clinically appropriate, 
therapeutically alternative Part D drugs on a lower cost-sharing tier. 
For example, suppose that a biological product, ``Biologic A,'' and 
another biological product that is indicated for the same condition, 
``Biologic B,'' are both on the specialty tier with no clinically 
appropriate, therapeutically alternative Part D drugs on a lower cost-
sharing tier. If the Part D enrollee's prescriber were to write a 
prescription for Biologic A, and the prescriber were to request a 
tiering exception, because Biologic B, the clinically appropriate 
therapeutic alternative, is on the same tier as Biologic A, and not a 
lower cost-sharing tier, the tiering exception request would be denied. 
For further explanation of tiering exceptions requirements, please see 
Sec.  423.578(a)(6).
    Permitting Part D sponsors to exempt Part D drugs on a higher cost-
sharing, specialty tier from any tiering exceptions, even to a lower 
cost-sharing, preferred specialty tier, could improve Part D sponsors' 
ability to negotiate better rebates. Nevertheless, unlike our 
justification for allowing Part D plans to exempt a specialty tier from 
tiering exceptions to lower-cost, non-specialty tiers, granting tiering 
exceptions from the higher cost-sharing, specialty tier to the 
preferred specialty tier is less likely to lead to increased premiums 
or cost sharing to meet actuarial requirements (than granting tiering 
exceptions from a specialty tier to a non-specialty tier) because we 
would apply the same specialty-tier cost threshold to both specialty 
tiers. Our current belief is that improved negotiation alone is not 
sufficient to justify permitting Part D sponsors to exempt drugs on the 
higher cost-sharing, specialty tier from requests for tiering 
exceptions to the preferred, specialty-tier cost sharing. We note that 
we did not propose to require Part D sponsors to permit tiering 
exceptions from either specialty tier to lower, non-specialty tiers, 
and our policy would not change current regulations at Sec.  
423.578(c)(3)(ii) that require Part D sponsors to cover drugs for which 
a tiering exception was approved at the cost-sharing level that applies 
to the preferred alternative(s). This means that Part D sponsors would 
be required to grant tiering exceptions for Part D drugs from the 
higher cost-sharing, specialty tier to the preferred specialty tier if 
tiering exceptions requirements are met (for instance, when a Part D 
enrollee cannot take an applicable therapeutic alternative on the 
preferred specialty tier). Specifically, we proposed to amend Sec.  
423.578(a)(6)(iii) (1) to reflect the possibility of two specialty 
tiers and (2) by adding at the end the phrase ``to non-specialty 
tiers'' to clarify that a Part D sponsor may design its tiering 
exception process so that Part D drugs on the specialty tier(s) are not 
eligible for tiering exceptions to non-specialty tiers. Consequently, 
the existing policy at Sec.  423.578(c)(3)(ii) would require Part D 
sponsors to permit tiering exceptions between their two specialty tiers 
to provide coverage for the approved Part D drug on the higher cost-
sharing, specialty tier that applies to preferred alternative Part D 
drugs on the lower cost-sharing, preferred specialty tier. While we 
would not require Part D sponsors to permit tiering exceptions to non-
specialty tiers for Part D drugs on a specialty tier, nothing precludes 
a Part D sponsor from doing so, insofar as their plan benefit design 
remains actuarially equivalent to the Defined Standard benefit.
    Alternatively, we considered permitting Part D sponsors to exempt 
drugs on either specialty tier from all tiering exceptions, even 
between the two specialty tiers, as is provided under

[[Page 5936]]

the existing regulations at Sec.  423.578(a)(6)(iii). We do not believe 
maintaining the current exemption would be discriminatory in light of 
our proposal, discussed in section IV.E.4 of this final rule, to set 
the same maximum allowable cost sharing (that is, 25/33 percent) 
currently applied for a single specialty to-the higher cost-sharing, 
specialty tier and to also require the preferred specialty tier to have 
cost sharing below that of the higher cost-sharing, specialty tier. 
With the proposed maximum allowable cost sharing, Part D enrollees 
would pay no more for a drug on either specialty tier than is the case 
under our current policy. And, as noted previously, maintaining the 
current exemption from all tiering exceptions for specialty-tier Part D 
drugs could allow Part D sponsors to negotiate better rebates. On the 
other hand, our proposal to require Part D sponsors with two specialty 
tiers to permit tiering exceptions from the higher cost-sharing, 
specialty tier to the lower-cost sharing, preferred specialty tier 
would provide an important Part D enrollee protection when there is a 
therapeutic alternative on the lower cost-sharing, preferred specialty 
tier that the Part D enrollee is unable to take. Accordingly, we 
invited comment on the benefits or drawbacks of maintaining the current 
policy under Sec.  423.578(a)(6)(iii) that, if we were to finalize our 
proposal to permit Part D sponsors to have up to two specialty tiers, 
would apply to permit Part D sponsors to exempt drugs on a specialty 
tier from the tiering exceptions process altogether.
    We note that, as part of our proposed change at Sec.  
423.578(a)(6)(iii), we also proposed a technical change to remove the 
phrase ``and biological products.'' While the specialty tier usually 
includes biological products, in the context of the Part D program, 
biological products already are included in the definition of a Part D 
drug at Sec.  423.100. Therefore, the phrase ``Part D drugs and 
biological products'' is redundant and potentially misleading. 
Consequently, we proposed to remove the phrase ``and biological 
products.''
    To summarize, we proposed to amend Sec.  423.578(a)(6)(iii) to: (1) 
Reflect the possibility of a second specialty tier, (2) clarify that 
Part D sponsors may design their exception processes so that Part D 
drugs on the specialty tier(s) are not eligible for a tiering exception 
to non-specialty tiers, and (3) remove the phrase ``and biological 
products.'' Additionally, we proposed to maintain the existing policy 
at Sec.  423.578(c)(3)(ii), thereby requiring Part D sponsors to permit 
tiering exceptions between their two specialty tiers to provide 
coverage for the approved Part D drug on the higher cost-sharing, 
specialty tier that applies to preferred alternative Part D drugs on 
the lower cost-sharing, preferred specialty tier. Additionally, 
although contingent on finalizing our proposal to permit Part D 
sponsors to maintain up to two specialty tiers, we solicited comment on 
maintaining the existing policy at Sec.  423.578(a)(6)(iii), thereby 
permitting Part D sponsors to exempt drugs on either specialty tier 
from the tiering exceptions process altogether.
    We received 35 public comments concerning our proposal to require 
Part D sponsors to permit tiering exceptions between their two 
specialty tiers to provide coverage (for the approved Part D drug on 
the higher cost-sharing, specialty tier) at the cost-sharing level that 
applies to the preferred alternative Part D drug on the lower cost-
sharing, preferred specialty tier, and 32 public comments concerning 
our proposal that Part D sponsors can extend to both specialty tiers 
their current ability to design their exceptions processes to exempt 
Part D drugs on the specialty tier from tiering exceptions to non-
specialty tiers (while requiring tiering exceptions between the two 
specialty tiers). We received 9 public comments concerning the 
alternative on which we solicited comment to permit Part D sponsors to 
design their exceptions processes to exempt drugs on either specialty 
tier from the tiering exceptions process altogether.
    We received no comments on our proposal to amend Sec.  
423.578(a)(6)(iii) by removing the phrase ``and biological products'' 
and therefore are finalizing this provision without modification.
    Although there was some overlap in stakeholder categories, all of 
the comments were from groups representing Part D sponsors, beneficiary 
advocates, manufacturers, providers, pharmacists and pharmacies, 
wholesale distributors, policy institutes, and non-partisan 
Congressional agencies. A summary of the comments and our responses 
follow.
    Comment: Many commenters supported CMS's proposals. However, some 
commenters opposed CMS's proposal that Part D sponsors be permitted to 
design their exceptions processes to exempt Part D drugs on the 
specialty tiers(s) from tiering exceptions to non-specialty tiers 
(while requiring tiering exceptions between the two specialty tiers) 
and also opposed the alternative on which CMS solicited comment to 
permit Part D sponsors to design their exceptions processes to exempt 
drugs on either specialty tier from the tiering exceptions process 
altogether. Some of these commenters, in advocating that CMS require 
tiering exceptions from the specialty tiers to the non-specialty tiers, 
found any exemption of the specialty tiers from tiering exceptions to 
be both discriminatory and a violation of Part D enrollees' statutory 
rights. Some commenters believed that CMS's proposals and the 
alternative on which CMS solicited comment prohibited Part D sponsors 
from offering tiering exceptions.
    Response: We thank the commenters who supported our proposals for 
their support. We disagree that permitting Part D sponsors to design 
their exceptions processes to exempt Part D drugs on the specialty 
tier(s) from tiering exceptions to the non-specialty tiers is 
discriminatory or a violation of Part D enrollees' statutory rights.
    Since the beginning of the Part D program, as reflected in our 
January 2005 Part D final rule, it has been our policy to permit Part D 
plans to exempt drugs on the specialty tier from tiering exceptions. We 
did not propose to change this exemption, but rather to adapt it to the 
possibility of a plan's having two specialty tiers. Historically, the 
specialty tier has aligned with the Defined Standard benefit, which 
does not have tiers, and therefore no tiering exceptions. The alignment 
with the Defined Standard benefit meant that an enrollee's cost sharing 
for a specialty tier drug would not exceed what would otherwise apply 
under the Defined Standard benefit, and that tiering exceptions 
similarly would not be available. We disagree with commenters that 
exempting the specialty tier(s) from tiering exceptions to non-
specialty tiers is discriminatory precisely because of its alignment 
with the Defined Standard benefit, which, as previously noted, has no 
tiers, and therefore no tiering exceptions. Moreover, by the same 
rationale, we do not believe that permitting Part D sponsors to design 
their exceptions processes to exempt Part D drugs on the specialty 
tier(s) from tiering exceptions to non-specialty tiers violates a Part 
D enrollee's rights. As noted earlier, we believe section 1860D-4(g)(2) 
of the Act does not require tiering exceptions in every case. The 
addition of a second, preferred specialty tier does not change this 
analysis, particularly in light of the parameters we are finalizing 
(described elsewhere in this rule) that cap specialty tier cost sharing 
at the level that remains aligned with the Defined Standard benefit.
    In response to comments regarding whether Part D sponsors should be 
required to permit tiering exceptions

[[Page 5937]]

request from the higher-cost specialty tier to the lower-cost specialty 
tier, we are finalizing our proposal, and not adopting the alternative 
we considered. We continue to believe that a Part D drug's placement on 
a specialty tier can play an important role in maintaining lower cost 
sharing on non-specialty tiers, and we must balance the ability to get 
lower cost sharing on specialty-tier Part D drugs through tiering 
exceptions with the requirement that plans be actuarially equivalent to 
the Defined Standard benefit. Consequently, while we are not changing 
our policy that permits Part D sponsors to exempt drugs from tiering 
exceptions between the specialty and non-specialty tiers, as was 
originally envisioned by Sec.  423.578(a)(6)(iii), we believe that 
requiring Part D sponsors to design their tiering exceptions processes 
to permit tiering exceptions between the two specialty tiers, as 
provided at Sec.  423.578(c)(3)(ii), strikes the appropriate balance.
    Finally, we wish to clarify that Part D sponsors are not required 
to have a specialty tier at all, and under the provisions we are 
finalizing, can choose one, two, or no specialty tier(s). Similarly, 
Part D sponsors are not required to permit tiering exceptions from a 
specialty tier to a non-specialty tier. However, Part D sponsors also 
are permitted to design their tiering exceptions processes in such a 
way as to permit these tiering exceptions from a specialty tier to a 
non-specialty tier if they wish, so long as the plan's benefit design 
remains actuarially equivalent to the Defined Standard benefit.
    We are finalizing without modification our proposals to amend Sec.  
423.578(a)(6)(iii) to: (1) Reflect the possibility of a second 
specialty tier, and (2) clarify that Part D sponsors may design their 
exception processes so that Part D drugs on the specialty tier(s) are 
not eligible for a tiering exception to non-specialty tiers. 
Additionally, the existing policy at Sec.  423.578(c)(3)(ii) applies as 
to the two specialty tiers, meaning that Part D sponsors must permit 
tiering exceptions between their two specialty tiers to provide 
coverage for the approved Part D drug on the higher cost-sharing, 
specialty tier at the cost sharing that applies to preferred 
alternative Part D drugs on the lower cost-sharing, preferred specialty 
tier. Additionally, we intend to monitor the uptake of the use of a 
second specialty tier, and may revisit our decision to require plans to 
allow tiering exceptions between the two specialty tiers in future 
rulemaking.
    Comment: Some commenters suggested that specialty tiers and tiering 
exceptions have no clinical basis. They reasoned that, because of this, 
CMS should define several terms (such as ``specialty drug.'' and 
``specialty pharmacy'') and provide additional clinical guidance for 
Part D sponsors when implementing a second specialty tier. Other 
commenters added that CMS should delay implementation of CMS's 
proposals to permit two specialty tiers in order to undertake further 
rulemaking to refine CMS's proposal with additional details regarding 
clinically based Part D enrollee protections.
    Response: We acknowledge that we have based a Part D drug's 
eligibility for placement on the specialty tier on whether such Part D 
drug meets the dollar-per-month amount of the specialty-tier cost 
threshold. However, our application of the tiering exceptions policy 
has been, and remains, rooted in a clinical basis. To illustrate, while 
the specialty tier in Part D is limited to the highest-cost Part D 
drugs, these drugs are often relatively more structurally complicated, 
and apply to complex conditions, including, but not limited to, cancer, 
Hepatitis C, HIV/AIDS, Multiple Sclerosis, and Rheumatoid Arthritis. 
Section 1860D-4(g)(2) of the Act specifies that under a tiering 
exception, a non-preferred drug could be covered under the terms 
applicable for preferred drugs if the prescriber determines that the 
preferred drug (for treatment of the same condition) would not be as 
effective for the individual, would have adverse effects for the 
individual, or both. Therefore, tiering exceptions always have a 
clinical basis, and requiring tiering exceptions between the two 
specialty tiers reinforces the clinical deliberations Part D sponsors 
must undertake when considering formulary inclusion and tier 
composition with regard to specialty-tier Part D drugs. Because the 
pharmacy practice landscape is changing so rapidly, and because the 
considerations are so varied, we continue to believe that any attempt 
by us to define ``specialty drug'' or ``specialty pharmacy'' is not 
warranted at this time. Nonetheless, throughout this final rule, we 
have opted to use the term ``specialty-tier drug'' instead of 
``specialty drug'' in order to clarify that our discussion is limited 
to drugs which meet specialty-tier cost threshold and are therefore 
eligible for inclusion on a specialty tier in Part D.
    Comment: Some commenters stated that the tiering exceptions process 
is confusing for Part D enrollees, and suggested that CMS should 
eliminate tiering exceptions altogether. Other commenters provided that 
permitting tiering exceptions between the specialty tiers but not to 
non-specialty tiers would be confusing to Part D enrollees. Some of 
these commenters suggested that CMS should allow tiering exceptions 
from the specialty to the non-specialty tiers, while others suggested 
that CMS should require tiering exceptions from the specialty to the 
non-specialty tiers.
    Response: We are mindful of the need to minimize complexity and 
make our rules as transparent as possible. We appreciate the 
commenters' perspectives and welcome further detail on both the 
difficulties that Part D enrollees encounter during the exceptions and 
appeals process as well as any changes to our marketing and 
communications materials that could better address these difficulties.
    However, we believe that any additional complexity arising from 
permitting a second specialty tier will be outweighed by the potential 
to improve enrollee access to specialty-tier Part D drugs. We did not 
propose to change our policy that permits Part D sponsors to exempt a 
specialty tier from tier exceptions to a non-specialty tier. Section 
1860D-4(g)(2) of the Act provides that Part D enrollees may request 
exceptions from tiered cost-sharing structures. For this reason, we 
decline to either eliminate tiering exceptions altogether or require 
Part D sponsors to permit tiering exceptions from the specialty tiers 
to the non-specialty tiers. Regarding the request that we should allow 
tiering exceptions from the specialty to the non-specialty tiers, we 
note that this is already permitted under Sec.  423.578(a)(6)(iii), and 
Part D sponsors will continue to have this option under the finalized 
version of this regulation.
    Comment: Some commenters suggested that Part D enrollees who have 
undergone step therapy, failed other therapies, won a coverage 
determination or appeal, or a combination of the above, should have 
non-specialty, preferred cost sharing.
    Response: While we appreciate the commenters' perspectives, we did 
not propose, and decline to adopt, these changes. For further 
explanation of tiering exceptions requirements and the associated cost 
sharing, please see Sec.  423.578(a)(6) and section 40.5.1 of the Parts 
C & D Enrollee Grievances, Organization/Coverage Determinations, and 
Appeals Guidance (available at https://www.cms.gov/Medicare/and-Grievances/MMCAG/Downloads/Parts-C-and-D-Enrollee-Grievances-Organization-Coverage-Determinations-and-Appeals-Guidance.pdf).
    Additionally, section 40.5.2 of the Parts C & D Enrollee 
Grievances,

[[Page 5938]]

Organization/Coverage Determinations, and Appeals Guidance discusses 
the parameters for cost sharing under formulary exceptions. Unlike 
under the tiering exceptions regulations, the regulations do not 
specify what level of cost sharing applies when an exception is 
approved under the formulary exceptions process. Rather, the 
regulations at Sec.  423.578(b)(2)(iii) require that the plan's 
formulary exceptions process must address the cost-sharing scheme that 
will be applied when coverage is provided for a non-formulary drug.
    Comment: Some commenters suggested CMS could use CMS's annual 
formulary review and approval process to prevent discriminatory plan 
benefit designs, although some commenters asserted CMS has not been 
transparent about how it conducts the discrimination review. Some 
commenters suggested that CMS should exempt the specialty tiers from 
the discrimination review altogether, and some suggested that CMS's 
formulary review and approval process should evaluate both tiers as a 
whole instead of each tier independently. Finally, some commenters 
asserted that additional discrimination reviews on higher specialty 
tier will lead to more exception requests and thus additional 
administrative burden for plan sponsors.
    Response: As we discussed in our final rule, titled ``Modernizing 
Part D and Medicare Advantage To Lower Drug Prices and Reduce Out-of-
Pocket Expenses,'' published in the Federal Register on May 23, 2019 
(hereinafter referred to as our May 2019 final rule, 84 FR 23835), our 
annual formulary review and approval process is designed to ensure that 
Part D formularies do not substantially discourage enrollment by 
certain beneficiaries and that the formularies include adequate 
representation of all necessary Part D drug categories or classes for 
the Medicare population. In other words, our annual formulary review 
and approval process is designed to prevent discriminatory plan benefit 
designs. As part of that review and approval process, we assess all 
tiers both individually and together for the formulary as a whole, and 
that approach will continue with respect to plans that choose to 
establish two specialty tiers. Please see our May 2019 rule for 
additional detail on the components of the annual formulary review and 
approval process (84 FR 23835). Finally, although we do not understand 
the commenters' assertion that additional discrimination reviews on the 
higher cost-sharing, specialty tier will lead to more exception 
requests and thus additional administrative burden, we welcome 
additional detail on this issue for consideration in future rulemaking.
    Comment: Some commenters suggested that CMS should review all 
tiering exceptions requests after implementation. Some commenters 
requested that CMS enforce the existing exceptions and appeals 
processes.
    Response: We monitor and enforce the requirements of our coverage 
determinations and appeals processes, including tiering exceptions, 
through the Complaints Tracking Module (CTM), regional CMS account 
managers, Part D reporting requirements, and program audits. (See 
https://www.cms.gov/files/document/cy2020part-d-reporting-requirements.pdf for more detail about reporting requirements.) 
Additionally, in recent years, we have undertaken efforts to improve 
our exceptions and appeals processes, including improving clarity of 
the exceptions timeframes for Part D drugs. (See our final rule, titled 
``Medicare and Medicaid Programs; Policy and Technical Changes to the 
Medicare Advantage, Medicare Prescription Drug Benefit, Programs of 
All-Inclusive Care for the Elderly (PACE), Medicaid Fee-For-Service, 
and Medicaid Managed Care Programs for years 2020 and 2021,'' published 
in the Federal Register on April 16, 2019, hereinafter referred to as 
our April 2019 rule, 84 FR 15777.) We appreciate the commenters' 
perspectives and welcome further detail on both the difficulties that 
Part D enrollees encounter during the exceptions and appeals processes 
as well as any changes to our marketing and communications materials 
that could better address these difficulties.
    We are finalizing without modification our proposals to amend Sec.  
423.578(a)(6)(iii) to: (1) Reflect the possibility of a second 
specialty tier, (2) clarify that Part D sponsors may design their 
exception processes so that Part D drugs on the specialty tier(s) are 
not eligible for a tiering exception to non-specialty tiers, and (3) 
remove the phrase ``and biological products.'' Additionally, we will 
maintain the existing policy at Sec.  423.578(c)(3)(ii), thereby 
requiring Part D sponsors to permit tiering exceptions between their 
two specialty tiers to provide coverage for the approved Part D drug on 
the higher cost-sharing, specialty tier that applies to preferred 
alternative Part D drugs on the lower cost-sharing, preferred specialty 
tier.
4. Two Specialty Tiers and Maximum Allowable Cost Sharing
    At the start of the Part D program, although we provided Part D 
sponsors the option to exempt specialty tiers from the tiering 
exceptions process, we remained concerned that exempting the specialty 
tier from tiering exceptions could potentially be discriminatory for 
Part D enrollees with certain diseases only treated by specialty tier-
eligible drugs, and thus in conflict with the statutory directive under 
section 1860D-11(e)(2)(D) of the Act that we disapprove any ``design of 
the plan and its benefits (including any formulary and tiered-formulary 
structure) that are likely to substantially discourage enrollment by 
certain part D eligible individuals under the plan.'' Using this 
authority, we aligned the cost-sharing limit for Part D drugs on the 
specialty tier with the Defined Standard benefit at section 1860D-
2(b)(2)(A) of the Act. Consequently, we established a ``25/33 percent'' 
maximum allowable cost sharing for the specialty tier, meaning that we 
would approve cost sharing for the specialty tier of no more than 25 
percent coinsurance after the standard deductible and before the 
initial coverage limit (ICL), or up to 33 percent coinsurance for plans 
with decreased or no deductible under alternative prescription drug 
coverage designs and before the ICL (that is, 25 percent <= maximum 
allowable cost sharing <= 33 percent). In other words, under 
actuarially equivalent alternative prescription drug coverage designs, 
we allow the maximum allowable cost sharing for the specialty tier to 
be between 25 and 33 percent coinsurance, inclusive, if the Part D plan 
has a decreased deductible, such that the maximum allowable cost 
sharing equates to 25 percent coinsurance plus the standard deductible. 
We derived the maximum allowable cost sharing of 33 percent coinsurance 
for plans with no deductible under alternative prescription drug 
coverage by adding the allowable deductible to the 25 percent maximum 
allowable cost sharing between the deductible and initial coverage 
limit (ICL) and dividing the resultant value by the ICL. The following 
calculations illustrate how we derived the maximum allowable cost 
sharing for the specialty tier.
    a. Derivation of 33 percent maximum allowable cost sharing for 
plans with no deductible.
    In 2006, under the Defined Standard benefit, the maximum deductible 
was $250, and the ICL was $2,250. The maximum allowable cost sharing 
between the deductible and the ICL was, as it is today, 25 percent 
coinsurance. (This example uses contract year 2006 numbers for 
simplicity, but the concepts presented still apply to current 
guidance.)

[[Page 5939]]

    $2,250 ICL-$250 deductible = $2,000 difference x 0.25 = $500 
maximum allowable cost sharing after the deductible and before the ICL 
for specialty-tier Part D drugs in plans with the standard deductible.
    $500 maximum (previous calculation) + $250 deductible = $750 
maximum for plans with no deductible.
    Therefore, the maximum allowable coinsurance before the ICL for 
specialty-tier Part D drugs in plans with no deductible is $750 divided 
by the $2,250 ICL [ap] 0.33, or 33 percent coinsurance.
    b. Derivation of maximum allowable cost sharing for plans with 
deductible between $0 and the maximum deductible.
    Plans with deductibles between $0 and $250 are permitted to have 
maximum allowable cost sharing for specialty-tier Part D drugs between 
the deductible and the ICL of between $500 and $750 (that is, 
coinsurance between 25 and 33 percent, inclusive) provided that such 
cost sharing added to the deductible is $750.
    For example, using contract year 2006 numbers, if the deductible 
was $100, the maximum coinsurance that the plan could charge for 
specialty-tier Part D drugs between the deductible and the ICL would 
have been approximately 30 percent:
    $750-$100 deductible = $650 maximum allowable cost sharing (that 
is, $650 + $100 = $750).

$2,250 ICL-$100 deductible = $2,150 difference
$650 divided by $2,150 [ap] 0.30, or 30 percent

    Therefore, the maximum allowable coinsurance between the $100 
deductible and the $2,250 ICL [ap] 0.30, or 30 percent coinsurance. 
(This 30 percent represents mathematical rounding from the actual 
calculated value.)
    Because section 1860D-2(b)(2) of the Act requires that plan benefit 
designs be actuarially equivalent to the Defined Standard benefit, the 
cost sharing for high-cost drugs would likely increase without the use 
of a specialty tier. This is because often the specialty tier has lower 
cost sharing than the non-specialty, non-preferred brand/drug tiers, 
which frequently have cost sharing as much as 50 percent coinsurance. 
Additionally, many specialty tier-eligible Part D drugs, particularly 
biological products, often do not have alternatives on lower-cost 
tiers. Our proposal to codify a maximum allowable cost sharing for the 
specialty tier equal to the cost sharing for the Defined Standard 
benefit plus the cost of any deductible would ensure Part D enrollees 
still pay no more than the Defined Standard cost sharing for high-cost 
drugs placed on a specialty tier.
    Although we proposed to allow Part D sponsors to have up to two 
specialty tiers, we note that the currently available tier-model 
structures already allow Part D sponsors to negotiate rebates and 
distinguish their preferred, high-cost Part D drugs by placing them on 
the preferred brand tier as opposed to the specialty tier, and placing 
less preferred agents on the specialty tier. Such distinction could 
potentially drive the same rebates as two specialty tiers; however, 
Part D sponsors have told us they are reluctant to take such an 
approach because of the availability of tiering exceptions for the non-
specialty tiers, which could increase costs in lower, non-specialty 
tiers in order to achieve actuarial equivalence. We believe this 
concern is addressed by our proposal (discussed in section IV.E.3. of 
this final rule) to permit Part D sponsors to exempt Part D drugs on 
either or both specialty tiers from tiering exceptions to non-specialty 
tiers.
    Additionally, while we are sensitive to and trying to be responsive 
to the volatility of the specialty-tier drug market by proposing to 
allow Part D sponsors to have up to two specialty tiers, we remain 
concerned about whether our proposal will actually achieve the 
potential benefits to the Part D program and Part D enrollees asserted 
by stakeholders in support of two specialty tiers. As discussed in 
section IV.E.2 of this final rule, those stakeholders posit that 
permitting two specialty tiers will reduce Part D enrollee cost sharing 
for specialty Part D drugs. However, this would be true only for Part D 
drugs on the lower cost-sharing, preferred specialty tier, and only if 
the lower cost-sharing, preferred, specialty-tier cost sharing were set 
lower than 25/33 percent.
    When requesting a second specialty tier, some Part D sponsors and 
PBMs have told us they would need to charge more than 25/33 percent for 
the higher cost-sharing, specialty tier. However, if we were to permit 
Part D sponsors to charge more than 25/33 percent for the higher cost-
sharing, specialty tier, the cost sharing for drugs in the higher cost-
sharing, specialty tier would likely be higher than if there were only 
one specialty tier. We appreciate that permitting Part D sponsors to 
increase cost sharing over current limits might lead to negotiations 
for better rebates, which could result in savings to Part D enrollees 
offered through, for instance, lower costs on some Part D drugs in the 
preferred specialty tier or lower premiums. However, in the absence of 
evidence to the contrary, it appears to us that if we were to permit 
Part D sponsors to charge higher percentages than is currently the 
case, Part D enrollees who need Part D drugs on the higher cost-
sharing, specialty tier will pay more, and possibly significantly more, 
than they currently do for those drugs given that specialty tiers, by 
definition, consist of high-cost drugs. In other words, we remain 
concerned about Part D enrollee protections and do not want improved 
rebates on some Part D drugs to come at the expense of those Part D 
enrollees who could already be paying, as proposed, as much as a 33 
percent coinsurance on the highest-costing drugs. Moreover, because 
Part D enrollees who use high-cost Part D drugs progress quickly 
through the benefit, some Part D enrollees' entry into the catastrophic 
phase of the benefit may be advanced faster if the higher cost-sharing, 
specialty tier were to have a maximum allowable cost sharing that is 
higher than 25/33 percent. Therefore, it is unclear to us, in the 
aggregate, how much a second specialty tier would save the government 
if the second specialty tier was allowed to have a higher cost sharing 
than the current 25/33 percent.
    In addition, while a second specialty tier might improve Part D 
sponsors' ability to negotiate better rebates, we also have concerns 
regarding discriminatory plan designs with a second, higher cost-
sharing, specialty tier with cost sharing higher than the 25/33 percent 
that is currently permitted. If we were to allow a maximum allowable 
cost sharing for the higher cost-sharing, specialty tier above the 25/
33 percent that is currently permitted, some Part D enrollees whose 
Part D drugs are placed on the higher cost-sharing, specialty tier 
could see their out-of-pocket (OOP) costs increase above the Defined 
Standard cost-sharing amount. We are concerned that the 
disproportionate impact on Part D enrollees who take Part D drugs on 
the higher cost-sharing, specialty tier runs a greater risk of 
discriminatory plan design. Additionally, while it is generally 
allowable for plans to use tier placement to steer Part D enrollees 
toward preferred agents, we would have to develop additional formulary 
checks to prevent discrimination against those Part D enrollees who 
require Part D drugs on the higher cost-sharing, specialty tier, and 
those additional formulary checks would limit the ability of plans to 
negotiate for tier placement between the two specialty tiers.
    We proposed to set a maximum allowable cost sharing for a single 
specialty tier or, in the case of a plan

[[Page 5940]]

with two specialty tiers, the higher cost-sharing, specialty tier as 
follows: (1) For plans with the full deductible provided for in the 
Defined Standard benefit, 25 percent coinsurance; (2) for plans with no 
deductible, 33 percent coinsurance; and (3) for plans with a deductible 
that is greater than $0 and less than the deductible provided for in 
the Defined Standard benefit, a coinsurance percentage that is 
determined by subtracting the plan's deductible from 33 percent of the 
initial coverage limit (ICL) under section 1860D-2(b)(3) of the Act, 
dividing that difference by the difference between the ICL and the 
plan's deductible, and rounding to the nearest 1 percent. Shown 
mathematically, that is:

((ICL x 0.33)-deductible)/(ICL-deductible)

    We proposed to require that a plan's second specialty tier, if any, 
must have a maximum allowable cost sharing that is less than the 
maximum allowable cost sharing of the higher cost-sharing, specialty 
tier. For example, if a Part D sponsor establishes a cost sharing of 25 
percent on its higher cost-sharing, specialty tier, the Part D sponsor 
would need to set the cost sharing for the preferred specialty tier at 
any amount lower than 25 percent. Similarly, if a Part D sponsor 
establishes a cost sharing of 33 percent on its higher specialty tier 
(permitted if the plan has no deductible, as discussed earlier in this 
section of this final rule), the Part D sponsor would need to set the 
cost sharing for the preferred specialty tier at any amount lower than 
33 percent. To encourage flexibility, and with the belief that we might 
not be able to anticipate every variation Part D sponsors might plan, 
we did not propose to require a minimum difference between the cost-
sharing levels of the higher cost-sharing, specialty tier and a lower 
cost-sharing, preferred specialty tier that would apply to Part D 
sponsors choosing to provide two specialty tiers. As we have generally 
seen, for example, in relation to our policy recommending a threshold 
of $20 for the generic tier and ``less than $20'' for the preferred 
generic tier,\58\ we believe it would be unlikely that Part D sponsors 
would take the trouble to create two different tiers and then establish 
an inconsequential differential. With that, we would, of course, 
reexamine this policy if we find after finalizing this provision that 
not requiring a minimum difference between the cost-sharing levels of 
the two specialty tiers has created problems. Additionally, we 
solicited comment as to whether to set a numeric or other differential 
in cost sharing between a specialty tier and any preferred specialty 
tier, including suggestions on requiring a minimum difference between 
the cost-sharing levels of the two specialty tiers that can provide 
maximum flexibility and anticipate varied approaches that Part D 
sponsors might take. Lastly, nothing in our proposal would prohibit 
Part D sponsors from offering less than the maximum allowable cost 
sharing on either tier as long as the preferred specialty tier has 
lower cost sharing than the higher cost-sharing, specialty tier.
---------------------------------------------------------------------------

    \58\ See page 212 of the Final 2020 Call Letter, available at 
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf.
---------------------------------------------------------------------------

    As mentioned in section IV.E.3 of this final rule, we have ongoing 
concerns that offering a lower cost-sharing, preferred specialty tier 
below the current 25/33 percent maximum could, in theory, lead to 
increased costs in lower, non-specialty tiers in order to achieve 
actuarial equivalence. However, because these increases in costs would 
be spread across the overall plan design, we believe the overall impact 
on Part D enrollees, would be less than the increase on individual Part 
D enrollee cost sharing were we to permit a maximum allowable cost 
sharing for the specialty tier above what is currently permitted (25/33 
percent). Although we are concerned about offsetting increases to 
lower, non-specialty tiers, the 25/33 percent maximum allowable cost 
sharing is based upon the Defined Standard benefit cost sharing and 
therefore would provide an important Part D enrollee protection to 
prevent discriminatory benefit structures. Consequently, we believe 
this approach strikes the appropriate balance between Part D sponsor 
flexibility and Part D enrollee access.
    In summary, we proposed to add a new paragraph at Sec.  
423.104(d)(2)(iv)(D) to specify that a Part D sponsor may maintain up 
to two specialty tiers. Further, we proposed to set a maximum allowable 
cost sharing for a single specialty tier, or, in the case of a plan 
with two specialty tiers, the higher cost-sharing, specialty tier by 
adding paragraphs (d)(2)(iv)(D)(1), (2), and (3) which provide: (1) 25 
percent coinsurance for plans with the full deductible provided under 
the Defined Standard benefit; (2) 33 percent coinsurance for plans with 
no deductible; and (3) for plans with a deductible that is greater than 
$0 and less than the deductible provided under the Defined Standard 
benefit, a coinsurance percentage that is between 25 and 33 percent, 
determined by subtracting the plan's deductible from 33 percent of the 
initial coverage limit (ICL), dividing this difference by the 
difference between the ICL and the plan's deductible, then rounding to 
the nearest 1 percent.
    We solicited comment on this approach. We were also interested in 
and solicited comments on plan benefit designs with two specialty tiers 
if we were to permit the higher cost-sharing, specialty tier to have a 
higher coinsurance than what we have proposed. Specifically, we were 
interested in comments that discuss whether permitting a coinsurance 
higher than 25/33 percent would be discriminatory.
    Additionally, we note that the deductible applies to all tiers, and 
is not limited to, nor borne solely by, Part D enrollees taking Part D 
drugs on the specialty tier. Therefore, it is unclear that we should 
continue to differentiate the specialty tier from the other tiers on 
the basis of the deductible. Accordingly, we also considered adopting a 
maximum allowable cost sharing of 25 percent for any specialty tier, 
regardless of whether the plan has a deductible. We solicited comment 
on alternative approaches of using a maximum allowable cost sharing of 
25 percent coinsurance regardless of whether there is a deductible.
    To summarize, we proposed to add a new paragraph at Sec.  
423.104(d)(2)(iv)(D) to: (1) Specify that a Part D plan may maintain up 
to two specialty tiers; and (2) set a maximum allowable cost sharing of 
25/33 percent for a single specialty tier, or, in the case of a plan 
with two specialty tiers, the higher cost-sharing, specialty tier. We 
also proposed to permit Part D sponsors to set the cost sharing for the 
preferred specialty tier at any amount lower than that of the higher 
cost-sharing, specialty tier. Additionally, we solicited comment on 
actuarial equivalence and the potential for discriminatory effects plan 
designs with two specialty tiers if we were to permit: (1) The higher 
cost-sharing, specialty tier to have a higher coinsurance than the 25/
33 percent maximum allowable cost sharing we have proposed; or (2) a 
maximum allowable cost sharing of 25 percent without regard to 
deductible. Finally, we also solicited comment as to whether to set a 
numeric or other differential in cost sharing between a specialty tier 
and any preferred specialty tier.
    We received 22 public comments concerning our proposal to set a 
maximum allowable cost sharing of 25/33 percent for a single specialty 
tier, or, in the case of a plan with two specialty tiers, the higher 
cost-sharing, specialty tier. We received 23 public comments

[[Page 5941]]

concerning the alternative on which we solicited comment to permit the 
higher cost-sharing, specialty tier to have a higher coinsurance than 
the 25/33 percent maximum allowable cost sharing we have proposed. We 
received 10 public comments concerning the alternative on which we 
solicited comment to permit a maximum allowable cost sharing of 25 
percent without regard to deductible. We received 18 public comments 
concerning our proposal to permit Part D sponsors to set the cost 
sharing for the preferred specialty tier at any amount lower than that 
of the higher cost-sharing, specialty tier; and 18 public comments 
concerning the alternative on which we solicited comment as to whether 
to set a numeric or other differential in cost sharing between a 
specialty tier and any preferred specialty tier.
    Although there was some overlap in stakeholder categories, all of 
the comments were from groups representing Part D sponsors, beneficiary 
advocates, manufacturers, providers, pharmacists and pharmacies, 
wholesale distributors, policy institutes, and non-partisan 
Congressional agencies. A summary of the comments and our responses 
follow.
    Comment: Most commenters supported CMS's proposals to set a maximum 
allowable cost sharing of 25/33 percent for a single specialty tier, 
or, in the case of a plan with two specialty tiers, the higher cost-
sharing, specialty tier. A commenter asserted that under current 
policy, coinsurance for specialty tiers can be as high as 50 percent.
    Response: We thank the commenters for their support. We are not 
clear on the commenters' assertion that coinsurance for the specialty 
tiers can be as high as 50 percent; it has been our longstanding 
policy--which we are codifying in this rule--that Part D sponsors may 
not charge more than 25/33 percent coinsurance, depending on the plan's 
deductible. We thank the commenter, and if the commenter has evidence 
to the contrary, we welcome further input on this matter.
    Comment: Some commenters opposed CMS's proposal and supported the 
alternative on which CMS solicited comment to permit the higher cost-
sharing, specialty tier to have a higher coinsurance than the 25/33 
percent maximum allowable cost sharing CMS proposed. Some commenters 
suggested that CMS should keep the existing maximum allowable cost 
sharing for the lower cost-sharing, preferred specialty tier at 25/33 
percent and establish the maximum allowable cost sharing for the higher 
cost-sharing, specialty tier with a range between 30 and 40 percent, 
inclusive, depending on the deductible. Other commenters suggested 
something of a hybrid approach between our proposal and the previous 
approach in which CMS would permit Part D sponsors to set the cost 
sharing for (1) the lower cost-sharing, preferred specialty tier at any 
amount lower than that of the other specialty tier and (2) the higher 
cost-sharing, specialty tier higher than the 25/33 percent maximum 
allowable cost sharing as long as the cost sharing between the two 
tiers averages, or is actuarially equivalent to, 25/33 percent. These 
latter commenters further suggested that CMS could set a maximum 
allowable cost sharing for the higher cost-sharing, specialty tier at 
50 percent; however, they did not specify whether this 50 percent would 
be applied with regard to the deductible.
    Response: We are not persuaded by commenters recommending that we 
permit Part D sponsors offering two specialty tiers to have coinsurance 
for the higher-cost sharing specialty tier that exceeds the 25/33 
percent maximum we proposed. We continue to have significant concerns 
that allowing specialty-tier cost sharing to exceed 25/33 percent, 
especially when an enrollee may not be able to receive a tiering 
exception, could result in discriminatory plan designs, particularly 
for enrollees who take high-cost drugs that meet the specialty-tier 
cost threshold we are finalizing in this final rule. We remain 
concerned that, given the high cost of drugs that meet such specialty-
tier cost threshold, increased cost-sharing could leave more Part D 
enrollees unable to afford what could be life-saving drugs. Moreover, 
as noted in section IV.E.2 of this final rule, our specialty-tier cost 
sharing maximum has historically been based on the Defined Standard 
benefit as a Part D enrollee protection, and the maximum allowable cost 
sharing of 25/33 percent that we proposed is dependent upon the plan's 
deductible. Commenters recommending higher cost sharing for the higher 
cost-sharing specialty tier offered no analysis or approach that would 
allow us to determine how the higher cost-sharing level would align 
with the Defined Standard benefit. For this reason, we similarly 
believe it is inappropriate to finalize a hybrid approach as some 
commenters suggested, as we would need more information and analysis 
before we could determine how such a hybrid approach would be 
structured. We can consider such a policy for future rulemaking, if 
warranted. We welcome further input from stakeholders, and we thank the 
commenters.
    Comment: Most commenters preferred that the maximum allowable cost 
sharing for the specialty tiers continue to be expressed as a range, 
with a specific value for each plan that is dependent upon the plan's 
deductible. However, some commenters supported the alternative on which 
CMS solicited comment to permit a maximum allowable cost sharing of 25 
percent without regard to deductible. A commenter agreed with this, in 
principle, but suggested that CMS should permit a maximum allowable 
cost sharing of 33 percent without regard to the deductible, and, some 
commenters suggested that plans should be permitted to establish the 
cost sharing for the specialty tier(s) at coinsurance greater than 25 
percent if there is no deductible.
    Response: Although we also solicited comment on alternative 
approaches of using a maximum allowable cost sharing of 25 percent 
coinsurance regardless of whether there is a deductible, we did not 
receive any examples of this. We thank the commenters who expressed 
support or opposition to this alternative, but we were not persuaded to 
adopt a maximum allowable cost sharing of 25 percent for any specialty 
tier, regardless of whether the plan has a deductible. None of the 
comments persuaded us that the current policy, which we proposed to 
codify and are now adopting, is insufficient.
    We note that under the current and proposed policies, Part D plans 
are permitted to establish the cost sharing for the specialty tier 
greater than 25 percent, up to and including 33 percent, if there is no 
deductible. As detailed earlier in this section of this final rule, we 
are concerned that, unlike our current maximum allowable cost sharing 
of 25/33 percent, establishing a maximum allowable cost sharing of 33 
percent without regard to the deductible could be discriminatory.
    Comment: Some commenters suggested that CMS should contemplate 
other changes to the non-preferred brand/drug tiers to address high 
Part D enrollee cost sharing. For example, some commenters suggested 
that a preliminary analysis indicates that, for plan benefit designs 
with coinsurance for the non-preferred brand/drug tiers, 75 percent of 
Part D enrollees receiving drugs on this tier pay more than, and some 
significantly more than, the corresponding amount for such tier when 
the plan uses copayments (for example, $100 for contract year 2021). 
These commenters suggested that CMS

[[Page 5942]]

should monitor this, particularly if enacting any changes to the 
specialty tiers.
    Response: We thank the commenters for their comments, and welcome 
additional detail on this to consider it for future rulemaking.
    Comment: Some commenters supported CMS's proposal to permit Part D 
sponsors to set the cost sharing for the preferred specialty tier at 
any amount lower than that of the higher cost-sharing, specialty tier, 
encouraging CMS to allow plans to innovate in this area. However, other 
commenters preferred the alternative on which CMS solicited comment to 
set a numeric or other differential in cost sharing between a specialty 
tier and any preferred specialty tier. Some commenters suggested that 
CMS establish a difference of 5 or 8 percent in cost sharing between 
the two specialty tiers; some commenters suggested that CMS establish 
the maximum allowable cost sharing for the lower cost-sharing, 
specialty tier at 15, 17, or 20 percent while maintaining the maximum 
allowable cost sharing of 25/33 percent for the higher cost-sharing, 
specialty tier. Some commenters encouraged CMS to give Part D sponsors 
the option set the cost sharing for their specialty tier(s) lower than 
the maximum allowable cost sharing CMS has specified.
    Finally, a commenter suggested that CMS should provide by 
regulation that CMS will annually specify a minimum percentage 
differential that CMS determines will be likely to substantially incent 
utilization of the products on the preferred specialty tier over 
utilization of the products on the higher cost-sharing, specialty tier, 
and that minimum differential would be subtracted from the coinsurance 
for the plan's higher cost-sharing, specialty tier (in other words, 
between 25 and 33 percent, inclusive, depending on the plan's 
deductible) to result in the maximum allowable cost sharing for the 
lower cost-sharing, preferred specialty tier.
    Response: While we appreciate the specific suggestions provided by 
commenters, we decline to adopt these suggestions. None of the 
commenters suggesting specific differentials provided any analysis to 
support those thresholds or reasonable extrapolation from the Defined 
Standard benefit (for example, the 25/33 percent).
    Finally, while we are intrigued by the commenters' suggestion that 
we specify a minimum percentage differential that we determine will be 
likely to substantially incent utilization of the products on the 
preferred specialty tier versus those on the higher cost-sharing, 
specialty tier, we decline to adopt this approach. Because a Part D 
sponsor's decision to place a Part D drug on one tier versus another is 
multifactorial, it is unclear how we could determine a percentage that 
is ``likely to substantially incent utilization'' of the products on 
the preferred specialty tier versus those on the higher cost-sharing, 
specialty tier. However, we welcome additional information on this 
suggestion, and we thank the commenter.
    After considering the comments, we are finalizing without 
modification our proposals to: (1) Add new paragraphs Sec.  
423.104(d)(2)(iv)(D)(1) through (3) to establish a maximum allowable 
cost sharing of 25/33 percent for a single specialty tier, or, for 
plans with two specialty tiers, the higher cost-sharing, specialty tier 
and (2) permit Part D sponsors to set the cost sharing for the 
preferred specialty tier at any amount lower than that of the other 
specialty tier.
5. Two Specialty Tiers and Tier Composition
    A few commenters on the Draft 2020 Call Letter suggested that we 
should create a lower cost specialty tier for generic drugs and 
biosimilar biological products, and that such a tier should be limited 
to only such products. We declined to propose such a policy for this 
rule. First, we wish to provide maximum flexibility to Part D sponsors 
that might find, for instance, that a brand-name Part D drug costs less 
with a rebate than a generic equivalent or corresponding biosimilar 
biological product. Moreover, generic drugs and biosimilar biological 
products that meet the specialty-tier cost threshold may not always be 
the lowest-priced product. Second, nothing in our proposal would 
prohibit Part D sponsors from setting up such parameters should they 
choose (provided they meet all other requirements, including the 
proposed maximum allowable cost sharing). Therefore, in order to 
provide more flexibility for plans to generate potential savings 
through benefit design and manufacturer negotiations, we did not 
propose to prescribe which Part D drugs may go on either specialty 
tier. However, such placement will be subject to the requirements of 
our formulary review and approval process under Sec.  423.120(b)(2). 
Additionally, consistent with our current policy, we will continue to 
evaluate formulary change requests involving biosimilar biological 
products on the specialty tiers on a case-by-case basis to ensure they 
continue to meet the requirements of our formulary review and approval 
process. (See Sec.  423.120(b)(5).)
    We solicited comment on whether Part D sponsors should restrict the 
lower cost-sharing, preferred specialty tier to only generic drugs and 
biosimilar biological products while also placing them along with any 
other Part D drugs meeting the specialty-tier cost threshold on the 
higher cost-sharing, specialty tier. In other words, either brand or 
generic drugs and biosimilar biological products would be placed on the 
higher cost-sharing, specialty tier, but only generic drugs and 
biosimilar biological products would be placed on the preferred 
specialty tier. We stated that we were particularly interested in 
comments that discuss what impact such a policy would have on non-
specialty tiers.
    We received 30 public comments concerning our proposal to give Part 
D sponsors the flexibility to determine which Part D drugs are placed 
on either specialty tier, subject to the thresholds we proposed and the 
requirements of the CMS formulary review and approval process under 
Sec.  423.120(b)(2); and 30 public comments concerning the alternative 
on which we solicited comment to require Part D sponsors to restrict 
the preferred specialty tier to only generic drugs and biosimilar 
biological products, while permitting Part D sponsors to have generic 
drugs, biosimilar biological products, and reference/originator drugs 
and biological products on the higher cost-sharing, specialty tier.
    Although there was some overlap in stakeholder categories, all of 
the comments were from groups representing Part D sponsors, beneficiary 
advocates, manufacturers, providers, pharmacists and pharmacies, 
wholesale distributors, think tanks, and non-partisan Congressional 
agencies. A summary of the comments and our responses follow.
    Comment: Most commenters supported CMS's proposal to give Part D 
sponsors the flexibility to determine which Part D drugs are placed on 
either specialty tier, subject to the thresholds CMS proposed and the 
requirements of the CMS formulary review and approval process under 
Sec.  423.120(b)(2) and opposed the alternative on which CMS solicited 
comment to require Part D sponsors to restrict the preferred specialty 
tier to only generic drugs and biosimilar biological products, while 
permitting Part D sponsors to have generic drugs, biosimilar biological 
products, and reference/originator drugs and biological products on the 
higher cost-sharing, specialty tier.

[[Page 5943]]

    Response: We thank the commenters for their support.
    Comment: Several commenters opposed CMS's proposal. Some commenters 
asserted that CMS should require Part D sponsors to use their second 
specialty tier to encourage greater use of less-expensive biosimilar 
biological products and greater price competition for specialty-tier 
drugs, but did not provide suggestions on how to do so. Some commenters 
suggested that current formulary and tiering practices discourage 
utilization of generic specialty-tier drugs. Some commenters asserted 
that CMS should only allow brand products on the higher cost-sharing, 
specialty tier, and some commenters asserted that generic drugs and 
biosimilar biological products should be exempt from specialty tier 
placement altogether. Some commenters suggested permitting generic 
drugs and biosimilar biological products on the higher cost-sharing, 
non-specialty tier and/or the same tier as brand specialty-tier drugs 
and biological products would discourage the use of generic drugs and 
biosimilar biological products and hamper the research and development 
pipeline of such products. Conversely, some commenters asserted that 
current market incentives for generic drugs and biosimilar biological 
products are sufficient.
    Response: We continue to strive to encourage the use of generic 
drugs and biosimilar biological products. However, we believe that our 
proposal to give Part D sponsors the flexibility to determine which 
Part D drugs are placed on either specialty tier, subject to the 
thresholds we are proposing and the requirements of the CMS formulary 
review and approval process under Sec.  423.120(b)(2) is appropriate 
because restricting which types of products may be included on a 
particular specialty tier may result in fewer generic and biosimilar 
products being included on the formulary. Part D plans can frequently 
negotiate lower net prices for brand drugs than generic drugs and 
biosimilar biological products, and if we were to require preferred 
placement of a product that has the potential to be more expensive, 
Part D sponsors may elect not to include the generic drug or biosimilar 
biological product on their formulary at all. (We note that there 
currently are no interchangeable biological products on the market.)
    Comment: Some commenters asserted that tier placement should have a 
clinical basis. Additionally, some commenters asked CMS to ensure that 
utilization management and prior authorization are not inappropriately 
imposed to prefer brand products over generic drugs and biosimilar 
biological products.
    Response: We detailed the components of our annual formulary review 
and approval process in our May 2019 final rule (84 FR 23835). As part 
of this review and approval process, we perform multiple reviews 
related to the clinical appropriateness of both tier composition and 
utilization management strategies. For additional information, please 
also see section 30.2.7 of Chapter 6 of the Medicare Prescription Drug 
Benefit Manual, available at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Part-D-Benefits-Manual-Chapter-6.pdf.
    Comment: Some commenters, in expressing their opposition to CMS's 
proposal to permit Part D sponsors to maintain up to two specialty 
tiers: (1) Agreed with CMS's assertion that the currently available 
tier-model structures (which already allow Part D sponsors to negotiate 
rebates and distinguish their preferred, high-cost Part D drugs by 
placing them on the preferred brand tier as opposed to the specialty 
tier, and placing less preferred agents on the specialty tier) could 
potentially drive the same rebates as two specialty tiers; (2) 
suggested that Part D sponsors could place preferred, high-cost Part D 
drugs on the specialty tier and place less preferred agents on the non-
preferred brand/drug tiers; and (3) suggested that, before implementing 
further changes to the specialty tiers, CMS needs to provide more 
detail on why the use of either of the aforementioned options (that is, 
(1) placing preferred, high-cost Part D drugs on the preferred brand 
tier while placing less preferred agents on the specialty tier, or, (2) 
placing preferred, high-cost Part D drugs on the specialty tier while 
placing less preferred agents on the non-preferred brand/drug tiers) is 
insufficient to achieve our stated policy goals for permitting Part D 
sponsors to maintain up two specialty tiers.
    Response: While these options certainly are available, we do not 
foresee harm in finalizing our proposal to permit Part D sponsors to 
maintain up to two specialty tiers under the parameters we have 
established in this final rule while monitoring the uptake and outcomes 
associated with the use of a second specialty tier as Part D sponsors 
implement it. Conversely, as specialty-tier drugs play an increasingly 
important role in the prescription drug marketplace, limiting Part D 
sponsors to either of the aforementioned options could adversely impact 
the Medicare Part D marketplace. Currently, only 8 percent of Part D 
plans offer preferred brand tiers with coinsurance.
    Limiting Part D sponsors to the option of placing preferred 
specialty-tier drugs on the preferred brand tier could lead to more 
plans adopting coinsurance for the preferred brand tier, which could 
significantly decrease competition among plans in the Part D 
marketplace as plan benefit designs become less varied and more like 
the Defined Standard benefit. Conversely, if Part D sponsors were 
limited to placing non-preferred, specialty-tier eligible drugs on the 
non-preferred brand/drug tiers, Part D enrollees whose specialty-tier 
eligible drugs are on this tier could face cost sharing of up to 50 
percent coinsurance, which, given the high cost of specialty-tier 
eligible drugs, is substantially more than they would pay if the drug 
were on a specialty tier, with the maximum allowable cost sharing of 
25/33 percent that we are finalizing in this final rule.
    Comment: Some commenters believed that CMS's combined proposals 
(which would (1) permit Part D sponsors to maintain up to two specialty 
tiers and (2) give Part D sponsors the flexibility to determine which 
Part D drugs are placed on either specialty tier, subject to the 
thresholds CMS proposed and the requirements of the CMS formulary 
review and approval process under Sec.  423.120(b)(2)) are inextricably 
linked to problems concerning the role rebates play within Part D and, 
due to the high cost of specialty-tier drugs, will exacerbate the 
effect these problems have on costs incurred by Part D enrollees and 
the government.
    Response: Because we are setting a maximum cost sharing for the 
higher cost-sharing, specialty tier at 25/33 percent, we do not believe 
that any Part D enrollee or the government will be worse off than 
today. Nonetheless, we intend to monitor the uptake of and outcomes 
associated with the use of a second specialty tier. Finally, we decline 
to adopt the recommendation that we require the preferred tier to 
reflect clinically appropriate therapeutic alternatives with the lower 
list price. Section 1860D-11(i) of the Act, otherwise known as the non-
interference clause, prohibits us from (1) interfering with the 
negotiations between drug manufacturers and pharmacies and Part D 
sponsors, and (2) requiring a particular formulary or instituting a 
price structure for the reimbursement of covered Part D drugs. For 
additional information regarding noninterference, please see our rule 
titled, ``Medicare Program; Contract Year 2015 Policy and Technical 
Changes to the Medicare Advantage and

[[Page 5944]]

the Medicare Prescription Drug Benefit Programs'' (79 FR 29843) at 79 
FR 29844, and 79 FR 29874-5.
    Comment: Some commenters asserted that transitioning between 
biosimilar biological products, reference biological products, or both 
can jeopardize patient safety due to immunogenicity.
    Response: We would refer commenters to the FDA regarding the safety 
and efficacy of biological products, including biosimilar biological 
products.
    After considering the comments, we are finalizing without 
modification our proposal to give Part D sponsors the flexibility to 
determine which Part D drugs are placed on either specialty tier, 
subject to the cost threshold we are finalizing and the requirements of 
the CMS formulary review and approval process under Sec.  
423.120(b)(2).
6. Establishing and Increasing the Specialty-Tier Cost Threshold
    To effectuate the specialty tier, it was necessary to determine 
which Part D drugs could be placed on a specialty tier. Consequently, 
we developed a minimum dollar-per-month threshold amount to determine 
which Part D drugs are eligible, based on relative high cost, for 
inclusion on the specialty tier. We have sought comment on both this 
methodology used to establish the specialty-tier cost threshold and the 
resultant value of the specialty-tier cost threshold when publishing 
the annual Draft Call Letter. Most recently, commenters on the Draft 
2020 Call Letter were largely supportive of having a methodology in 
place to annually evaluate and adjust the specialty-tier cost 
threshold, as appropriate. While some commenters wanted to maintain the 
current level (and others wanted to eliminate the specialty tier or 
reduce its cost sharing), there was broad support to regularly increase 
the specialty-tier cost threshold. Some comments requested annual 
increases, while others wanted us to tie increases to the specialty-
tier cost threshold to drug inflation, or benefit parameters. As we 
detail later in this discussion, we proposed to codify, with some 
modifications, the same outlier PDE analysis we have historically used. 
Our proposed annual methodology would account for rising drug costs, as 
well as any potential changes in utilization. By identifying the top 1 
percent of 30-day equivalent PDEs, our proposal aims to create a 
specialty-tier cost threshold that is representative of outlier claims 
for the highest-cost drugs. By using PDEs, the proposed analysis would 
also reflect the fact that the numbers of Part D enrollees filling 
prescriptions for high-cost drugs as a percentage of all drug claims 
may vary from year to year. Given the general support for regular 
increases in the specialty-tier cost threshold, we proposed to make 
adjustments to the specialty-tier cost threshold based on a specific 
methodology, as discussed later in this section.
    Beginning in 2007, we established the specialty-tier cost threshold 
at $500 per month \59\ based on identifying outlier claims (that is, 
the top 1 percent of claims having the highest negotiated prices as 
reported on the PDE, adjusted, as described in this section of this 
final rule, for 30-day equivalent supplies) and increased the threshold 
to $600 beginning in contract year 2008. The specialty-tier cost 
threshold remained at $600 per month from contract years 2008 through 
2016.60 61 In the 2016 analysis for contract year 2017 
(using contract year 2015 PDE data), the number of claims for 30 day-
equivalent supplies with negotiated prices meeting the existing $600 
per-month cost threshold exceeded 1 percent. This, coupled with the 
significant increase in the cost of Part D drugs since the last 
adjustment (in 2008), supported an increase in the specialty-tier cost 
threshold for contract year 2017. To adjust the specialty-tier cost 
threshold, we applied the annual percentage increase used in the Part D 
benefit parameter updates (that is, 11.75 percent for contract year 
2017) to the $600 threshold. This increase in the specialty-tier cost 
threshold (that is, $70.50), rounded to the nearest $10 increment (that 
is, $70), was sufficient to reestablish the 1 percent outlier threshold 
for PDEs having negotiated prices for 30-day equivalent supplies 
greater than the threshold. Since contract year 2017, the specialty-
tier cost threshold has been $670 per month.
---------------------------------------------------------------------------

    \59\ https://www.cms.gov/Medicare/Prescription-Drug-Coverage/
PrescriptionDrugCovContra/downloads/CY07FormularyGuidance.pdf.
    \60\ https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2017.pdf.
    \61\ https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2017.pdf.
---------------------------------------------------------------------------

    In our April 2018 final rule, we defined specialty tier in 
regulation at Sec.  423.560 to mean a formulary cost-sharing tier 
dedicated to very high-cost Part D drugs and biological products that 
exceed a cost threshold established by the Secretary (83 FR 16509). To 
improve transparency, we proposed to codify current methodologies for 
calculations relative to the specialty tier, with some changes. As 
noted in sections IV.E.3 and IV.E.4. of this final rule, it was 
necessary to establish the composition of a specialty tier in order to 
effectuate specialty tier exceptions and anti-discrimination policies. 
Under Sec.  423.560, only very high-cost drugs and biological products 
that meet or exceed a cost threshold established by the Secretary may 
be placed on a plan's specialty tier (for example, a negotiated price 
of or exceeding $670 per month for coverage year 2020). Current 
guidance at section 30.2.4 of Chapter 6 of the Medicare Prescription 
Drug Benefit Manual describes these high-cost drugs and biological 
products as those having Part D sponsor-negotiated prices that exceed a 
dollar-per-month amount we established in the annual Call Letter, which 
has noted the historical use of a threshold under which approximately 
99 percent of monthly PDEs adjusted for 30-day equivalent supplies have 
been below the specialty-tier cost threshold.
    In setting the specialty-tier cost threshold, we have historically 
analyzed PDE data for the plan year that ended 12 months before the 
applicable plan year (for example, we used contract year 2017 PDE data 
to determine the cost threshold for contract year 2019). First, we have 
calculated the number of 30-day equivalent supplies reported on each 
PDE. We have considered a 30-day equivalent supply to be any days' 
supply, as reported on each PDE, of less than or equal to 34 days. 
Thus, a PDE with a 34-days' supply has been considered one 30-day 
equivalent supply. (This reflects the fact that a full supply of 
medication for a Part D enrollee could equal less than a month's 
supply, or reflect manufacturer packaging. For instance, we did not 
want to triple the cost of a 10-day course of antibiotics to determine 
the 30-day equivalent supply because that would overstate the Part D 
enrollee's cost for the full prescription). If the days' supply on the 
PDE is greater than 34, the 30-day equivalent supply is equal to the 
PDE's days' supply divided by 30. Thus, for example, a PDE with a 90-
day supply has been considered as three 30-day equivalent supplies. 
Similarly, a PDE with a drug that has been dispensed in a package 
containing a 45-days' supply has been considered as 1.5 30-day 
equivalent supplies. This includes long-acting drugs, including, but 
not limited to long-acting injections. For example, a single injection 
that is considered to be a 90-days' supply has been considered as three 
30-day equivalent supplies.
    After determining the number of 30-day equivalent supplies for each 
PDE, we have calculated the 30-day equivalent negotiated price for the 
PDE by dividing the PDE's negotiated price

[[Page 5945]]

by the number of 30-day equivalent supplies reflected on the PDE. Thus, 
for example, if the PDE is for a 90-days' supply and has a negotiated 
price of $810, that PDE contains three 30-day equivalent supplies, and 
the 30-day equivalent negotiated price is $270.
    Next, taking into consideration the 30-day equivalent negotiated 
prices for all Part D drugs for which PDE data are available, we have 
identified the PDEs with 30-day equivalent negotiated prices that 
reflect the top 1 percent of 30 day-equivalent negotiated prices, and 
have maintained the specialty-tier cost threshold at an amount that 
corresponds to the lowest 30-day equivalent negotiated price that is 
within the top 1 percent of all 30-day equivalent negotiated prices.
    We note that this process may result in dose specificity of 
eligibility for placement on the specialty tier, such that one strength 
of a Part D drug may be eligible but another strength may not. For 
example, suppose that Part D drug X is available as tablets in 
strengths of 10mg, 20mg, and 30mg taken once daily with 30-day 
equivalent negotiated prices of $300, $600, and $900, respectively. The 
30mg tablets, because their 30-day equivalent negotiated price exceeds 
the specialty-tier cost threshold, are eligible for placement on the 
specialty tier, but the 10mg and 20mg tablets are not, because their 
30-day equivalent negotiated prices do not exceed the specialty-tier 
cost threshold.
    We believe our existing policy to set the specialty-tier cost 
threshold such that only the top 1 percent of 30-day equivalent 
negotiated prices would exceed it is consistent with the purpose of the 
specialty tier--that is, that only the highest-cost Part D drugs are 
eligible for placement on the specialty tier. For this reason, we 
proposed to codify a similar process to adjust and rank PDE data as the 
basis for determining the specialty-tier cost threshold, as described 
in this section of this final rule. Specifically, instead of 30-day 
equivalent negotiated prices, we proposed to determine the 30-day 
equivalent ingredient cost to set the specialty tier-cost threshold in 
the same manner as we have historically done, as described previously 
in this section.
    In addition, to maintain stability in the specialty-tier cost 
threshold, we proposed to set the specialty-tier cost threshold for 
contract year 2021 to reflect the top 1 percent of 30-day equivalent 
ingredient costs, at an amount that corresponds to the lowest 30-day 
equivalent ingredient cost that is within the top 1 percent of all 30-
day equivalent ingredient costs. We also proposed to undertake an 
analysis of 30-day equivalent ingredient costs annually, and to 
increase the specialty-tier cost threshold for a plan year only if we 
determine that no less than a ten percent increase in the specialty-
tier cost threshold, before rounding to the nearest $10 increment, is 
needed to reestablish the specialty-tier cost threshold that reflects 
the top 1 percent of 30-day equivalent ingredient costs.
    As a hypothetical example, suppose that, in 2020, when analyzing 
contract year 2019 PDE data for contract year 2021, we find that more 
than 1 percent of PDEs have 30-day equivalent ingredient costs that 
exceed the contract year 2020 specialty-tier cost threshold of $670. 
Further, suppose that we find that 1 percent of the PDEs have 30-day 
equivalent ingredient costs that exceed $685. This $15 difference 
represents a 2.24 percent increase over the $670 specialty-tier cost 
threshold. Under our proposed methodology, we would not increase the 
specialty-tier cost threshold for contract year 2021.
    However, if we suppose that, instead of $685, we find that 1 
percent of the PDEs have 30-day equivalent ingredient costs that exceed 
$753, then in this scenario, the $83 change represents a 12.39 percent 
increase over the $670 specialty-tier cost threshold. Under our 
proposed methodology, because this would be a change of more than 10 
percent, we would set the specialty-tier cost threshold for contract 
year 2021 at $750 which is the nearest $10 increment to $753.
    We solicited comment on this proposal. Because rounding down, as in 
the previous example, would technically cause the new specialty-tier 
cost threshold to account for very slightly more than 1 percent of 30 
day-equivalent ingredient costs, we also considered the alternative 
that we would always round up to the next $10 increment. Using the 
previous example, we would have set the threshold for contract year 
2021 at $760 instead of $750. This alternative would: (a) Better ensure 
that the new specialty-tier cost threshold actually reflects the top 1 
percent of claims adjusted for 30-day equivalent supplies, and (b) 
provide more stability to the specialty-tier cost threshold, that is to 
say, it will theoretically not need to be changed as frequently, 
because rounding down will always result in a specialty-tier cost 
threshold that would include more than the top 1 percent of 30-day 
equivalent ingredient costs. We do not expect that this alternative 
would significantly impact the number of Part D drugs that would meet 
our proposed specialty-tier cost threshold. We solicited comment on 
this alternative approach to rounding and stated that we could finalize 
an amended version of our proposed language at Sec.  423.104(d)(2)(B) 
to reflect such alternative. We proposed to annually determine whether 
the adjustment would be triggered using the proposed methodology, and 
if it is, we would apply the proposed methodology to determine the new 
specialty-tier cost threshold, which we would announce via an HPMS 
memorandum or a comparable guidance document. Finally, we proposed for 
contract year 2021 that we would apply our proposed methodology to the 
contract year 2020 specialty-tier cost threshold of $670, and if a 
change to the methodology based on comments received on this final rule 
would result in a change to that threshold, we stated that we will 
announce the new specialty-tier cost threshold in this final rule.
    We have concerns regarding the use of negotiated prices of drugs, 
as the term is currently defined in Sec.  423.100, in the determination 
of the specialty-tier cost threshold, because the negotiated prices 
include all pharmacy payment adjustments except those contingent 
amounts that cannot reasonably be determined at the point of sale. For 
this reason, negotiated prices typically do not reflect any 
performance-based pharmacy price concessions that lower the price a 
Part D sponsor ultimately pays for a drug. Negotiated prices in the PDE 
record are composed of ingredient cost, administration fee (when 
applicable), dispensing fee, and sales tax (when applicable). 
Administration fees, dispensing fees, and sales tax are highly 
variable. Therefore, because the ingredient cost has fewer variables 
than the negotiated price, the ingredient cost represents the most 
transparent, least complex, and most predictable of all the components 
of negotiated price upon which to base the determination of the 
specialty-tier cost threshold. Consequently, as noted previously, we 
proposed to use the ingredient costs associated with 30-day equivalent 
supplies when we determine the specialty-tier cost threshold according 
to the methodology proposed earlier in this preamble. We do not expect 
that this change would significantly affect the number of Part D drugs 
meeting the specialty-tier cost threshold because the ingredient cost 
generally accounts for most of the negotiated price; however, this 
change to use the ingredient cost ensures that we are using the most 
predictable of all the components of the negotiated price upon which to 
base the specialty-tier cost threshold.
    Using the methodology in this final rule and contract year 2019 PDE 
data that we have to date, the specialty-tier

[[Page 5946]]

cost threshold for contract year 2021 would be $780 as a 30-day 
equivalent ingredient cost. To determine this threshold, we analyzed 
2.2 billion PDEs, and determined the lowest 30-day equivalent 
ingredient cost that is within the top 1 percent of all 30-day 
equivalent ingredient costs to be $780, which did not require rounding. 
Therefore, we would increase the specialty-tier cost threshold to $780 
(as a 30-day equivalent ingredient cost) for contract year 2021 from 
the previous $670 (as a 30-day equivalent negotiated price). While this 
change will impact the specific dollar-threshold amount for specialty-
tier eligibility, the specialty-tier cost threshold still accounts for 
the top 1 percent of all claims, as adjusted for 30-day equivalent 
supplies. Due to the increased costs of prescription drugs since the 
previous $670 specialty-tier cost threshold was set several years ago, 
the top 1 percent of all claims, as adjusted for 30-day equivalent 
supplies, cost more, on average. Moreover, we estimate that the change 
from using negotiated price to using ingredient cost only will result 
in fewer than 20 drugs not meeting the $780 30-day equivalent 
ingredient cost specialty-tier cost threshold that would have if we 
continued to use the 30-day equivalent negotiated price.
    Additionally, consistent with current guidance in section 30.2.4 in 
Chapter 6 of the Medicare Prescription Drug Benefit Manual, we consider 
claims history in reviewing the placement of Part D drugs on Part D 
sponsors' specialty tiers. Consequently, we proposed to codify current 
guidance that a Part D drug will be eligible for placement on a 
specialty tier if the majority of a Part D sponsor's claims for that 
Part D drug, when adjusted for 30-day equivalent supplies, exceed the 
specialty-tier cost threshold. However, for Part D drugs newly approved 
by the FDA for which Part D sponsors would have little or no claims 
data because such drugs have only recently become available on the 
market, we proposed to permit Part D sponsors to estimate the 30-day 
equivalent ingredient cost portion of their negotiated prices based on 
the maximum dose specified in the FDA-approved labeling and taking into 
account dose optimization, when applicable for products that are 
available in multiple strengths. If, based on their estimated 30-day 
equivalent ingredient cost, the newly FDA-approved Part D drug is 
anticipated to exceed the specialty-tier cost threshold most of the 
time (that is, more than 50 percent of the time), we would allow Part D 
sponsors to place such drug on a specialty tier. Finally, such 
placement would be subject to our review and approval as part of our 
annual formulary review and approval process.
    We proposed to add paragraphs (d)(2)(iv)(A), (B), and (C) to Sec.  
423.104 and to cross reference this section in our revised definition 
of specialty tiers, which we proposed to move to Sec.  423.104, as 
described later in this section. Specifically, we proposed in paragraph 
(d)(2)(iv)(A) to described in paragraphs (d)(2)(iv)(A)(1) through (4) 
the manner by which we set the specialty-tier cost threshold, and 
further, to describe in paragraph (d)(2)(iv)(A)(5) a Part D drug's 
eligibility for placement on the specialty tier. In paragraph 
(d)(2)(iv)(A)(1) we proposed to specify that we use PDE data, and 
further, use the ingredient cost reflected on the PDE to determine the 
ingredient costs in dollars for 30-day equivalent supplies of drugs. In 
paragraph (d)(2)(iv)(A)(2) we proposed to specify how we determine 30-
day equivalent supplies from PDE data, such that if the days' supply 
reported on a PDE is less than or equal to 34, the number of 30-day 
equivalent supplies equals one, and if the days' supply reported on a 
PDE is greater than 34, the number of 30-day equivalent supplies is 
equal to the number of days' supply reported on the PDE divided by 30. 
We proposed that paragraph (d)(2)(iv)(A)(3) would specify that we then 
determine the amount that equals the lowest 30-day equivalent 
ingredient cost that is within the top 1 percent of all 30-day 
equivalent ingredient costs reflected in the PDE data. We proposed that 
paragraph (d)(2)(iv)(A)(4) would specify that, except as provided in 
paragraph (B), the amount determined in paragraph (d)(2)(iv)(A)(3) is 
the specialty-tier cost threshold for the plan year. Further, we 
proposed that paragraph (d)(2)(iv)(A)(5) would specify that, except for 
newly FDA-approved Part D drugs only recently available on the market 
for which Part D sponsors would have little or no claims data, we will 
approve the placement of a Part D drug on a specialty tiers when that 
Part D sponsor's claims data from the plan year that ended 12 months 
prior to the applicable plan year demonstrate that greater than 50 
percent of the Part D sponsor's PDEs for a given Part D drug, when 
adjusted for 30-day equivalent supplies, have ingredient costs for 30-
day equivalent supplies that exceed the specialty-tier cost threshold.
    We proposed in paragraph (d)(2)(iv)(B) to describe the methodology 
we will use to increase the specialty-tier cost threshold. 
Specifically, we proposed to increase the specialty-tier cost threshold 
for a plan year only if the amount determined by paragraph 
(d)(2)(iv)(A)(3) for a plan year is at least ten percent above the 
specialty-tier cost threshold for the prior plan year. We proposed that 
if an increase is made, we would round the amount determined in 
proposed paragraph (d)(2)(iv)(A)(3) to the nearest $10. That amount 
would be the specialty-tier cost threshold for the applicable plan 
year.
    Finally, we proposed paragraph (d)(2)(iv)(C) to specify that the 
determination of the specialty-tier cost threshold for a plan year is 
based on PDE data from the plan year that ended 12 months prior to the 
beginning of the applicable plan year.
    As mentioned in this section of this final rule, to align the 
definition of specialty tier with our proposal to allow Part D sponsors 
to have up to two specialty tiers, we first proposed to move the 
definition of specialty tier from Sec.  423.560 to appear in Sec.  
423.104(d)(2)(iv) as part of a proposed new section on specialty tiers 
that also includes the methodology for determining the specialty-tier 
cost thresholds and maximum allowable cost sharing. (We also proposed 
to revise Sec.  423.560 and Sec.  423.578(a)(6)(iii) to cross reference 
the placement of that definition in Sec.  423.104(d)(2)(iv).) 
Additionally, we proposed to amend the definition of specialty tier to 
reflect our proposal to allow Part D sponsors to have up to two 
specialty tiers. With respect to the phrase ``and biological 
products,'' for the reasons discussed in the section IV.E.3 of this 
final rule, (specifically, that biological products are already are 
included in the definition of a Part D drug at Sec.  423.100), we also 
proposed a technical change to the definition of specialty tier to 
remove the phrase ``and biological products.'' Therefore, we proposed 
to define specialty tier at Sec.  423.104(d)(2)(iv) to mean a formulary 
cost-sharing tier dedicated to high-cost Part D drugs with ingredient 
costs for a 30-day equivalent supply (as described in Sec.  
423.104(d)(2)(iv)(A)(2)) that are greater than the specialty-tier cost 
threshold specified in Sec.  423.104(d)(2)(iv)(A).
    To summarize, we proposed to: (1) Amend the definition of specialty 
tier at Sec.  423.560 and move it to Sec.  423.104(d)(2)(iv); (2) amend 
Sec.  423.578(a)(6)(iii) to cross reference placement of the definition 
of specialty tier at Sec.  423.104(d)(2)(iv); (3) add new paragraph 
(d)(2)(iv)(A) which describes, in (d)(2)(iv)(A)(1) through (4), the 
methodology by which we set the specialty-tier cost threshold, and in 
(d)(2)(iv)(A)(5), a Part D drug's eligibility for placement on the 
specialty

[[Page 5947]]

tier; (4) add new paragraph (d)(2)(iv)(B), which describes the 
methodology we will use to increase the specialty-tier cost threshold; 
and (5) add new paragraph (d)(2)(iv)(C), which specifies that the 
determination of the specialty-tier cost threshold for a plan year is 
based on PDE data from the plan year that ended 12 months prior to the 
beginning of the applicable plan year. We solicited comment on 
specifying at the new Sec.  423.104(d)(2)(iv)(B) that we would round up 
to the nearest $10 increment.
    We received 8 public comments concerning our proposal to amend the 
definition of specialty tier at Sec.  423.560 and move it to Sec.  
423.104(d)(2)(iv); and 8 public comments concerning our proposal to 
amend Sec.  423.578(a)(6)(iii) to cross reference placement of the 
definition of specialty tier at Sec.  423.104(d)(2)(iv). We received 10 
public comments concerning our proposal to add new paragraph 
(d)(2)(iv)(A) which describes, in (d)(2)(iv)(A)(1) through (4), the 
methodology by which we set the specialty-tier cost threshold, and in 
(d)(2)(iv)(A)(5), a Part D drug's eligibility for placement on the 
specialty tier. We received 12 public comments concerning our proposal 
to add new paragraph (d)(2)(iv)(B), which describes the methodology we 
will use to increase the specialty-tier cost threshold; and 6 public 
comments concerning our proposal to add new paragraph (d)(2)(iv)(C), 
which specifies that the determination of the specialty-tier cost 
threshold for a plan year is based on PDE data from the plan year that 
ended 12 months prior to the beginning of the applicable plan year. We 
received 7 public comments concerning our proposal to increase the 
specialty-tier cost threshold to $780 (as a 30-day equivalent 
ingredient cost) for contract year 2021 from the previous $670 (as a 
30-day equivalent negotiated price).
    Although there was some overlap in stakeholder categories, all of 
the comments were from groups representing Part D sponsors, beneficiary 
advocates, manufacturers, providers, pharmacists and pharmacies, 
wholesale distributors, think tanks, and non-partisan Congressional 
agencies.
    A summary of the comments on amending, moving, and cross-
referencing the definition of specialty tier and data used to determine 
the specialty-tier cost threshold and our responses follow.
    Comment: Most commenters supported CMS's proposals. We did not 
receive any comments on the alternative on which we solicited comment 
to specify at the new Sec.  423.104(d)(2)(iv)(B) that we would round up 
to the nearest $10 increment. We received unanimous support of our 
proposals to (1) amend the definition of specialty tier at Sec.  
423.560 and move it to Sec.  423.104(d)(2)(iv); (2) amend Sec.  
423.578(a)(6)(iii) to cross reference placement of the definition of 
specialty tier at Sec.  423.104(d)(2)(iv); and (3) add new paragraph 
(d)(2)(iv)(C), which specifies that the determination of the specialty-
tier cost threshold for a plan year is based on PDE data from the plan 
year that ended 12 months prior to the beginning of the applicable plan 
year.
    Response: We thank the commenters for their support. We will not 
finalize the alternative on which we solicited comment to specify that 
we would round up to the nearest $10 increment at this time, but may 
consider it for future rulemaking. We will finalize without 
modification our proposal to add new paragraph (d)(2)(iv)(C), which 
specifies that the determination of the specialty-tier cost threshold 
for a plan year is based on PDE data from the plan year that ended 12 
months prior to the beginning of the applicable plan year. This 
provision will apply for coverage year 2022. We therefore are not 
finalizing our proposal to specify a specialty-tier cost threshold of 
$780 for 2021.
    To retain the policies in effect before coverage year 2022, we are 
amending the definition of specialty tier at Sec.  423.560 by adding 
paragraph (i) to clarify that the existing definition will apply before 
coverage year 2022, and paragraph (ii) to cross reference the 
definition which appears in Sec.  423.104(d)(2)(iv), which will apply 
beginning coverage year 2022. Additionally, as discussed in section 
IV.E.2. of this final rule, we are amending Sec.  423.578(a)(6)(iii) by 
adding paragraph (A) to cross reference the definition of specialty 
tier which will apply before coverage year 2022, and paragraph (B) to 
cross reference placement of the definition of specialty tier at Sec.  
423.104(d)(2)(iv) which will apply beginning coverage year 2022. 
Additionally, paragraph (A) will remove the phrase ``and biological 
products.'' Additionally, paragraph (B) will (1) reflect the 
possibility of a second specialty tier, and (2) clarify that Part D 
sponsors may design their exception processes so that Part D drugs on 
the specialty tier(s) are not eligible for a tiering exception to non-
specialty tiers.
    A summary of the comments on the methodology to determine the 
specialty-tier cost threshold and a Part D drug's eligibility for 
placement on the specialty tier and our responses follow.
    Comment: Some commenters supported CMS's methodology to establish 
the specialty-tier cost threshold, but were opposed to the maximum dose 
being used to determine the specialty-tier eligibility for newly-FDA-
approved drugs. Some commenters believed that: (1) The maximum dose 
should not be used to evaluate newly-approved drugs for specialty-tier 
eligibility; (2) for newly-FDA approved drugs, CMS should require Part 
D plans to estimate the 30-day equivalent ingredient cost for each drug 
product strength, package size, and formulation level, similar to how 
it is already done for already FDA-approved Part D drugs; and (3) CMS 
should also codify language at Sec.  423.104 regarding dose specificity 
and dose optimization for all drugs.
    Response: We thank the commenters for their perspective on the 
process for newly FDA-approved drugs. We agree that we need to provide 
more detail on what we meant in our preamble when we stated that we 
proposed to permit Part D sponsors to estimate the 30-day equivalent 
ingredient cost portion of newly-FDA-approved drugs ``based on the 
maximum dose specified in the FDA-approved labeling and taking into 
account dose optimization, when applicable for products that are 
available in multiple strengths.''
    We did not mean to suggest that only maximum doses would qualify 
for the specialty tier. Rather, we would expect Part D sponsors to 
estimate the 30-day equivalent ingredient cost of a drug, taking into 
account dose optimization--which, based on the maximum FDA-approved 
dose of a medication, consolidates the Part D enrollee's dose into the 
fewest number of dose units (for example, tablets)--and dose 
specificity--which is based on the price applied to the particular 
strength and dosage form of the drug.
    To illustrate that the process for determining a Part D drug's 
specialty-tier eligibility should take into account dose optimization 
and dose specificity for both already-FDA approved drugs (for which 
Part D sponsors would have claims history) and newly-FDA approved drugs 
(for which Part D sponsors would have little to no claims history), we 
clarify the example earlier in this section (section IV.E.6) of this 
final rule. We gave the example of ``Part D drug X'' that is available 
as tablets in strengths of 10mg, 20mg, and 30mg taken once daily with 
30-day equivalent negotiated prices of $300, $600, and $900, 
respectively. Regarding dose specificity, the 30mg tablets, because 
their 30-day equivalent negotiated price exceeds the specialty-tier 
cost threshold,

[[Page 5948]]

are eligible for placement on the specialty tier, but the 10mg and 20mg 
tablets are not, because their 30-day equivalent negotiated prices do 
not exceed the specialty-tier cost threshold.
    Regarding dose optimization, using the previous example, suppose 
``Part D drug X'' is administered once daily, and the maximum dose is 
30mg once daily. Suppose a Part D enrollee takes the maximum dose of 
30mg once daily. The Part D enrollee could accomplish that by taking 
three 10mg tablets, one and a half 20mg tablets, or one 30mg tablet. 
However, because the 30mg tablets yield the fewest number of dose units 
for the Part D enrollee to achieve the required dose, dispensing 30, 
30mg tablets for a 30-day supply is indicated to be ``dose optimized'' 
relative to the other options. Although prescriptions for 30 30mg 
tablets or 90 10mg tablets each cost $900, because the prescription for 
90 10mg tablets is not dose optimized, it (still) does not qualify for 
the specialty-tier cost threshold.
    Because our proposed language at (d)(2)(iv)(A)(6) applied to Part D 
drugs except those newly-approved by the FDA, in response to the 
comments, we wish to clarify the process for newly-FDA approved drugs. 
Therefore, we are also finalizing new paragraph (d)(2)(iv)(A)(6), which 
describes the eligibility for placement on the specialty tier of newly-
FDA-approved Part D drug such that we will approve placement of a 
newly-FDA-approved Part D drug on a specialty tier when that Part D 
sponsor estimates that ingredient cost portion of their negotiated 
price for a 30-day equivalent supply is anticipated to exceed the 
specialty-tier cost threshold more than 50 percent of the time, subject 
to our review and approval as part of our annual formulary review and 
approval process.
    While we appreciate the commenters' suggestion that we codify 
language at Sec.  423.104 concerning dose specificity and dose 
optimization, we do not believe that we could effectively do so, given 
the myriad drugs, conditions, different doses for such conditions, 
dosage forms, package sizes, etc., that factor into these 
determinations, which can sometimes be quite complicated. We do not 
want to inadvertently exclude nuanced, but clinically relevant dose 
optimization strategies. Consequently, we will consider potential 
language for future notice and comment rulemaking.
    Comment: Some commenters suggested that moving from negotiated 
price to ingredient cost may increase the number of drugs eligible for 
the specialty tier since negotiated prices may be lower than average 
wholesale price (AWP) and that CMS should ensure that the switch from 
negotiated price to ingredient cost tracks the medications captured by 
the current threshold. Some commenters suggested that if CMS finalizes 
this provision with 30-day equivalent negotiated price (instead of 30-
day equivalent ingredient cost), CMS needs to clarify which definition 
of negotiated price.
    Response: We estimate that the change from using negotiated price 
to using ingredient cost only would result in fewer than 20 drugs not 
meeting the $780 30-day equivalent ingredient cost specialty-tier cost 
threshold that would have met the threshold if we continued to use the 
30-day equivalent negotiated price. In other words, in our preliminary 
analysis, moving from negotiated price to ingredient cost decreased the 
number of drugs eligible for the specialty tier. However, we will 
continue to monitor the uptake and outcomes associated with these 
proposals. We are finalizing the provision to establish a Part D drug's 
eligibility for placement on the specialty tier using the ingredient 
cost.
    Comment: Some commenters requested clarity on why CMS is codifying 
the existing methodology while at the same time proposing a substantive 
change, and inquired why CMS does not simply propose the change. The 
commenters added that in proposing to move away from the negotiated 
price and use the ingredient cost that CMS has, in essence, removed the 
dispensing fee from the determination of a Part D drug's eligibility 
for specialty-tier placement, but that CMS has not specified if there 
is a specific issue with dispensing fees that would warrant removing 
them altogether from the calculation of the specialty tier cost 
threshold. These commenters then inquired if CMS had another definition 
for ingredient cost, and suggested that if so, CMS needs to spell this 
out.
    Response: We proposed to codify our longstanding policy with 
certain changes to improve the transparency and consistency of the 
specialty tier cost threshold.
    We have concerns regarding the use of negotiated prices of drugs, 
as the term is currently defined in Sec.  423.100, in the determination 
of the specialty-tier cost threshold, because the negotiated prices 
include all pharmacy payment adjustments except those contingent 
amounts that cannot reasonably be determined at the point of sale. For 
this reason, negotiated prices typically do not reflect any 
performance-based pharmacy price concessions that lower the price a 
Part D sponsor ultimately pays for a drug. Negotiated prices in the PDE 
record are composed of ingredient cost, administration fee (when 
applicable), dispensing fee, and sales tax (when applicable). 
Administration fees, dispensing fees, and sales tax are highly 
variable. Therefore, because the ingredient cost has fewer variables 
than the negotiated price, the ingredient cost represents the most 
transparent, least complex, and most predictable of all the components 
of negotiated price upon which to base the determination of the 
specialty-tier cost threshold. We do not expect that this change would 
significantly affect the number of Part D drugs meeting the specialty-
tier cost threshold because the ingredient cost generally accounts for 
most of the negotiated price.
    Use of the ingredient cost in lieu of the negotiated price for 
purposes of determining the specialty-tier cost threshold does not 
remove the dispensing fee from the negotiated price. Rather, as 
previously noted, we are merely using the most stable portion of the 
negotiated price to determine the specialty tier cost threshold. 
Finally, by ingredient cost, we mean the ingredient cost that is 
reported on the PDE.
    We are finalizing our proposal describing the methodology by which 
we set the specialty-tier cost threshold, and a Part D drug's 
eligibility for placement on the specialty tier with one modification. 
In response to comments, we are also finalizing new paragraph 
(d)(2)(iv)(A)(6), which describes the eligibility for placement on the 
specialty tier of newly-FDA-approved Part D drugs.
    A summary of the comments on the methodology to increase the 
specialty-tier cost threshold and our responses follow.
    Comment: Most commenters supported CMS's proposal describing the 
methodology CMS will use to increase the specialty-tier cost threshold.
    Response: We thank the commenters for their support.
    Comment: Some commenters opposed CMS's proposed 10 percent 
threshold for change for updating the specialty-tier cost threshold, 
and suggested that drugs that no longer meet the threshold should be 
removed from the specialty tier, regardless of the magnitude of the 
threshold's change. Some commenters were concerned about products not 
meeting the specialty-tier cost threshold from one year to the next, 
and consequently moving in and out of the specialty tier from one year 
to the next, which could cause Part D enrollee confusion. Some 
commenters noted a tension between tiering exceptions, use of the 
ingredient cost in lieu of the

[[Page 5949]]

negotiated price for purposes of determining the specialty-tier cost 
threshold, and increases to the specialty-tier cost threshold, noting 
that, as drugs no longer qualify for the specialty tier and are moved 
to a non-specialty, non-preferred brand/drug tier, Part D enrollees 
could potentially pay more for a preferred specialty tier drug than a 
non-specialty, non-preferred drug, even though the non-specialty, non-
preferred drug is the less expensive product. Additionally, some 
commenters suggested that CMS should clarify how our proposal to revise 
the specialty-tier cost threshold could impact the distribution of 
generic drugs and biosimilar biological products that are able to be 
placed on the specialty tier. Finally, some commenters suggested that 
CMS should address sudden increases, perhaps due to a sudden increase 
in the utilization of specialty-tier drugs.
    Response: We agree that the specialty tier should consist of only 
the highest-cost drugs. However, as the commenters noted, to decrease 
Part D enrollee confusion arising from year-to-year changes in the 
specialty-tier cost threshold, we must balance the limitation of the 
specialty tier to the highest-drugs with the need for stability in the 
specialty-tier cost threshold. Nonetheless, we wish to clarify that, 
even absent any increase in the specialty-tier cost threshold, if the 
price of a drug changes, and it no longer meets the specialty-tier cost 
threshold, it must be removed from the specialty tier at the beginning 
of the next plan year.
    While we acknowledge the commenters' concerns about the tension 
between tiering exceptions, the specialty-tier cost threshold, tier 
composition (that is, as Part D drugs no longer meet the specialty-tier 
cost threshold and are potentially placed on other, non-specialty 
tiers), and Part D enrollee cost sharing, this dynamic exists today and 
our policy would not change this. We also note that if Part D drugs, 
including generic drugs and biosimilar biological products, were no 
longer eligible for specialty-tier placement and subsequently placed on 
a non-specialty, non-preferred tier in the following plan year, an 
enrollee could then request a tiering exception for that drug.
    We also appreciate that the commenters' suggestion of sudden 
increases comes at a time of unprecedented uncertainty regarding the 
specialty tiers in light of COVID-19. However, we decline to adopt any 
new policies to address sudden price changes. Consistent with our 
guidance at section 30.3.3 of Chapter 6 of the Medicare Prescription 
Drug Benefit Manual and subject to the requirements of Sec.  
423.120(b)(5), we permit Part D sponsors to add drugs to and remove 
drugs from the formulary during the plan year.
    Comment: Some commenters suggested that CMS should increase the 
specialty-tier cost threshold by the Annual Percentage Increase (API) 
or medical inflation with a periodic rebalancing when the specialty-
tier cost threshold represents less than one percent of claims.
    Response: We thank the commenters, but we decline to adopt this 
recommendation because we proposed a methodology that would keep 
specialty tier drugs at the top 1 percent.
    We are finalizing without modification our proposed methodology to 
increase the specialty-tier cost threshold.
    A summary of the comments on increasing the specialty-tier cost 
threshold to $780 (as a 30-day equivalent ingredient cost) for contract 
year 2021 from the previous $670 (as a 30-day equivalent negotiated 
price) and our responses follow.
    Comment: Most commenters supported CMS's proposal to increase the 
specialty-tier cost threshold to $780 (as a 30-day equivalent 
ingredient cost) for contract year 2021 from the previous $670 (as a 
30-day equivalent negotiated price). A commenter asked what the cost 
threshold for higher cost-sharing, specialty tier would be, and if it 
will be set by the plan.
    Response: We thank the commenters for their support. We are not 
finalizing this proposal. The specialty-tier cost threshold will apply 
to both specialty tiers, and while Part D sponsors would not set the 
threshold, Part D sponsors may choose which specialty-tier drugs go on 
which tier, subject to our annual formulary review and approval 
process. However, as we noted in our May 22, 2020 HPMS memorandum 
entitled, ``Updated Contract Year (CY) 2021 Final Part D Bidding 
Instructions,'' for coverage year 2021, we will maintain the specialty-
tier cost threshold at $670, as a 30-day equivalent negotiated price. 
The methodology that is being finalized in this rulemaking will be in 
effect for coverage year 2022.
    Comment: Some commenters asked whether CMS considered the effect of 
our proposal to increase the specialty-tier cost threshold in 
combination with our proposal to permit Part D sponsors to maintain up 
to two specialty tiers, overall, asserting that CMS may be reducing the 
benefits that a second specialty tier could bring to plans and Part D 
enrollees because a brand drug may continue to qualify for the 
specialty tier(s) while its generic equivalent may not.
    Response: As discussed earlier in this section (section IV.E.6) of 
this final rule, we believe the specialty tier should consist of only 
the highest-cost drugs and therefore, that we should apply a 
methodology that takes into account rising drug costs and changes in 
utilization over time. There is a chance that a drug--including a 
generic drug--that no longer qualifies for placement on the specialty 
tier may be placed on a non-specialty, non-preferred brand/drug tier, 
which may have up to 50 percent coinsurance. We note however that this 
scenario exists today, where drugs are no longer eligible for specialty 
tier placement because they no longer meet the specialty-tier cost 
threshold, and Part D sponsors can choose to place them on formulary in 
a way that they deem best for their enrollees, provided they comply 
with the requirements of our formulary review and approval process 
under Sec.  423.120(b). The dynamics around formulary placement of 
brand and generic drugs and the elements that drive those decisions are 
central to the core structure and function of the Part D benefit. We 
therefore do not believe this proposal exacerbates this issue. We also 
acknowledge in section IX.E.5. of this final rule that conflicting 
forces might limit the potential savings/benefits of this proposal. 
Moreover, it is important to note that drugs on a non-specialty, non-
preferred brand/drug tier are subject to tiering exceptions.
    Under the requirements of Sec.  423.578(a)(6) and consistent with 
our guidance at section 40.5.1 of the Parts C & D Enrollee Grievances, 
Organization/Coverage Determinations, and Appeals Guidance, non-
preferred generic drugs are eligible for tiering exceptions to the 
lowest applicable cost sharing associated with alternatives that are 
either brand or generic drugs when the medical necessity criteria are 
met. This represents an important protection for Part D enrollees, 
particularly when paired with our benefit parameters that we establish 
on an annual basis. Under Sec.  423.104(d)(2)(iii), tiered cost sharing 
for non-defined standard benefit designs (meaning, actuarially 
equivalent standard, basic alternative, or enhanced alternative benefit 
designs) may not exceed levels (or cost sharing thresholds) that we 
annually determine to be discriminatory.
    We are not finalizing our proposal to increase the specialty-tier 
cost threshold to $780 (as a 30-day equivalent ingredient cost) for 
contract year 2021 from the previous $670 (as a 30-day

[[Page 5950]]

equivalent negotiated price). For CY 2021, we will maintain the 
specialty tier threshold at $670, as a 30-day equivalent negotiated 
price. However, as previously described, we are finalizing our proposed 
methodology to determine the specialty tier threshold each year, 
beginning with CY 2022.
    In summary, we are finalizing without modification our proposals 
to:
     Add a new paragraph at Sec.  423.104(d)(2)(iv)(D) to 
specify that a Part D plan may maintain up to two specialty tiers;
     Maintain the existing policy at Sec.  423.578(c)(3)(ii), 
thereby requiring Part D sponsors to permit tiering exceptions between 
their two specialty tiers to provide coverage for the approved Part D 
drug on the higher cost-sharing, specialty tier that applies to 
preferred alternative Part D drugs on the lower cost-sharing, preferred 
specialty tier;
     Add new paragraphs Sec.  423.104(d)(2)(iv)(D)(1) through 
(3) to establish a maximum allowable cost sharing of 25/33 percent for 
a single specialty tier, or, for plans with two specialty tiers, the 
higher cost-sharing, specialty tier;
     Permit Part D sponsors to set the cost sharing for the 
preferred specialty tier at any amount lower than that of the other 
specialty tier;
     Give Part D sponsors the flexibility to determine which 
Part D drugs are placed on either specialty tier, subject to the 
thresholds we are proposing and the requirements of the CMS formulary 
review and approval process under Sec.  423.120(b)(2);
     Amend Sec.  423.578(a)(6)(iii) to cross reference 
placement of the definition of specialty tier at Sec.  
423.104(d)(2)(iv);
     Add new paragraph (d)(2)(iv)(C), which specifies that the 
determination of the specialty-tier cost threshold for a plan year is 
based on PDE data from the plan year that ended 12 months prior to the 
beginning of the applicable plan year;
     Add new paragraph (d)(2)(iv)(A) which describes, in 
(d)(2)(iv)(A)(1) through (4), the methodology by which we set the 
specialty-tier cost threshold, and in (d)(2)(iv)(A)(5) a Part D drug's 
eligibility for placement on the specialty tier; and
     Add new paragraph (d)(2)(iv)(B), which describes the 
methodology we will use to increase the specialty-tier cost threshold.
    In response to comments, we are also finalizing new paragraph 
(d)(2)(iv)(A)(6), which describes the eligibility for placement on the 
specialty tier of newly-FDA-approved Part D drug.
    These final policies will apply for coverage year 2022, and we will 
announce the specialty-tier cost threshold for coverage year 2022 prior 
to the contract year 2022 bidding deadline.
    As discussed in section IV.E.2 and earlier in this section (section 
IV.E.6) of this final rule, to retain the policies in effect before 
coverage year 2022, we will:
     Amend the definition of specialty tier at Sec.  423.560 by 
adding paragraph (i) to clarify that the existing definition will apply 
before coverage year 2022, and paragraph (ii) to cross reference the 
definition which appears in Sec.  423.104(d)(2)(iv), which will apply 
beginning coverage year 2022; and
     Amend Sec.  423.578(a)(6)(iii) by adding paragraph (A) to 
cross reference the definition of specialty tier which will apply 
before coverage year 2022, and paragraph (B) to cross reference 
placement of the definition of specialty tier at Sec.  
423.104(d)(2)(iv), which will apply beginning coverage year 2022. 
Additionally, paragraph (A) will remove the phrase ``and biological 
products.'' Additionally, paragraph (B) will (1) reflect the 
possibility of a second specialty tier, and (2) clarify that Part D 
sponsors may design their exception processes so that Part D drugs on 
the specialty tier(s) are not eligible for a tiering exception to non-
specialty tiers.

F. Beneficiary Real Time Benefit Tool (RTBT) (Sec.  423.128)

1. Overview and Summary
    Section 101 of the MMA requires the adoption of Part D e-
prescribing (eRx) standards. Prescription Drug Plan (PDP) sponsors and 
Medicare Advantage (MA) organizations offering Medicare Advantage 
Prescription Drug Plans (MA-PD) are required to establish electronic 
prescription drug programs that comply with the e-prescribing standards 
that are adopted under this authority. Prescribers and dispensers who 
electronically transmit and receive prescription and certain other 
information for Part D-covered drugs prescribed for Medicare Part D-
eligible individuals, directly or through an intermediary, are required 
to comply with any applicable standards that are in effect.
    Section 119 of the Consolidated Appropriations Act requires that 
Part D plan sponsors implement a prescriber RTBT capable of integrating 
with clinicians' electronic prescribing and electronic health record 
systems for the real-time transmission of formulary, benefit, clinical 
alternative, cost sharing, and utilization management information 
specific to Part D plan enrollees. This requirement is to take effect 
once the Secretary names a prescriber RTBT standard, which has not yet 
occurred.
    For a further discussion of the statutory basis for this final rule 
and the statutory requirements at section 1860D-4(e) of the Act, please 
refer to section I. of the February 4, 2005, Medicare Program; E-
Prescribing and the Prescription Drug Program Proposed Rule (70 FR 
6256).
    In accordance with our regulations at Sec.  423.160(b)(1), (2), and 
(5), CMS' Part D eRx program requires that Part D sponsors support the 
use of the adopted standards when electronically conveying prescription 
and formulary and benefit information regarding Part D-covered drugs 
prescribed to Part D-eligible individuals between plans, prescribers, 
and dispensers.
    CMS utilized several rounds of rulemaking to update the Part D e-
prescribing program. Most recently, in the May 2019 final rule 
Modernizing Part D and Medicare Advantage to Lower Drug Prices and 
Reduce Out-of-Pocket Expenses Final Rule (84 FR 23832) (hereinafter 
referred to as the May 2019 final rule), we required that Part D plans 
support a prescriber electronic real-time benefit tool capable of 
integrating with at least one e-prescribing or electronic health record 
(EHR) system. The prescriber RTBT must provide its enrollees with 
complete, accurate, timely, and clinically appropriate patient-specific 
real-time formulary and benefit information (including enrollee cost 
sharing information formulary alternatives and utilization management 
requirements). This ``prescriber RTBT'' electronic transaction 
requirement will become effective January 1, 2021, and is expected to 
enhance medication adherence and lower overall drug costs by providing 
Part D prescribers information in real time when lower-cost alternative 
drugs are available.
    The SCRIPT and the NCPDP Formulary and Benefits standards have 
already become critical components of the Part D program, and CMS 
believes that the recently finalized prescriber RTBT requirement at 
Sec.  423.160(b)(7) will do the same by enhancing the electronic 
communication of prescription-related information between plans and 
prescribers under the Part D benefit program. In order to further 
enhance this communication, CMS has been monitoring the development of 
prescriber RTBT standards and will consider adoption of these standards 
in future rulemaking. While these requirements will empower 
prescribers, CMS also believes it is important to empower patients with

[[Page 5951]]

information like that which will be included in the prescriber RTBT and 
give them the ability to access this information either at their 
computer or using a mobile device.
    In the February 2020 proposed rule, CMS proposed to adopt at Sec.  
423.128(d)(1)(vi), (d)(4) and (d)(5) a requirement that Part D sponsors 
implement a beneficiary RTBT that would allow enrollees to view 
accurate, timely, and clinically appropriate patient-specific real-time 
formulary and benefit information, effective January 1, 2022, so as to 
allow both prescriber and patient to consider potential cost 
differences when choosing a medication that best meets the patient's 
medical and financial needs. CMS proposed to require that each system 
response value would need to present real-time values for the patient's 
cost-sharing information and clinically appropriate formulary 
alternatives, where appropriate. This requirement would include the 
formulary status of clinically appropriate formulary alternatives, 
including any utilization management requirements, such as step 
therapy, quantity limits, and prior authorization, applicable to each 
alternative medication. CMS also proposed to require that plans make 
this information available to enrollees via their customer service call 
center.
    CMS received the following comments related to our proposal, in 
general. Our responses follow.
    Comment: All commenters supported our proposal, citing the need to 
provide beneficiaries with actionable information about their 
prescription drug costs, so beneficiaries can make better informed 
decisions about treatment options.
    Response: CMS thanks commenters for their support. CMS agrees that 
providing beneficiaries with information about prescription drug costs 
is important and that the beneficiary RTBT will help provide this 
information to Part D enrollees.
    Comment: Some commenters requested that we delay the implementation 
date until January 1, 2023 to allow more time for testing the tool. 
Some of these commenters requested that we exercise enforcement 
discretion, should we choose not to delay the implementation date. 
Other commenters requested that we change the implementation date to 
January 1, 2021 so that beneficiaries can access the benefits of the 
tool more expeditiously.
    Response: CMS understands both the desire to ensure that the tool 
functions properly and that Part D enrollees have access to information 
about prescription drug costs. However, in order to help ensure that 
Part D sponsors have adequate time to implement the tool properly so 
that beneficiaries can access accurate information as seamlessly as 
possible, we have decided to delay the implementation date until 
January 1, 2023.
    Comment: A few commenters requested that CMS provide training tools 
on beneficiary RTBTs to help ensure that Part D enrollees are able to 
use the RTBTs properly. Other commenters requested that we provide the 
Part D sponsors with standard language to use on their beneficiary 
RTBTs to help ensure that Part D enrollees are able to understand the 
information.
    Response: CMS believes that helping ensure that Part D enrollees 
can use the beneficiary RTBTs and understand the information within 
them is of utmost importance. However, CMS wants to help ensure that 
plans have sufficient flexibility when implementing this requirement, 
since most Part D sponsors have computer applications or portals in 
place and are more attuned to the needs of their enrollees. In 
addition, the RTBTs may differ slightly by plan, so we believe that 
Part D sponsors are better equipped to ensure that their enrollees 
understand how to use the tool and the language within it.
    In order to help ensure that beneficiaries understand how to use 
this tool, CMS considered requiring that Part D sponsors provide 
training to their enrollees. However, we believe this would limit our 
strategy of maximal flexibility for Part D sponsors in implementing 
this new requirement. Part D sponsors are in the best position to gauge 
whether or not their enrollees would benefit from training about how to 
use beneficiary RTBTs. Furthermore, we expect these RTBTs to be similar 
to the computer applications or portals that most Part D sponsors 
already have in place, so we do not believe that Part D enrollees will 
require a training to use the new tool.
    Comment: Commenters requested that we require Part D sponsors to 
include additional information unrelated to beneficiary drug costs in 
the beneficiary RTBT, such as beneficiary eligibility status, the 
notification that beneficiaries have the right to an appeal, an 
explanation of the difference between out of pocket costs and premiums, 
and a message letting beneficiaries know that assistance programs are 
available to beneficiaries to help them pay their out of pocket costs.
    Response: Although CMS understands the importance of keeping 
beneficiaries informed about these important topics, we decline to 
adopt this suggestion. Beneficiaries can access this information from 
several sources, including upon enrollment in Medicare Part D, through 
the Medicare & You publication, and Medicare.gov. The purpose of the 
beneficiary RTBT is to better inform beneficiaries about alternative 
medications, rather than serve as a repository of information for Part 
D enrollees. As previously stated, CMS seeks to allow Part D sponsors 
flexibility in implementing this requirement. As a result, CMS is not 
requiring sponsors to include information that is not directly 
connected to the purpose of the RTBT. However, Part D sponsors can 
include additional information, if they deem it helpful to their 
enrollees.
2. Pricing Information for the Beneficiary RTBT
    As previously noted, CMS proposed to require that Part D sponsors 
include beneficiary-specific cost information in their beneficiary 
RTBTs. We proposed this requirement since we believe that sharing this 
information would yield greater medication adherence. In our proposed 
rule, we cited evidence suggesting that reducing medication cost yields 
benefits in increased patient medication adherence. Evidence supports 
that increased medication out-of-pocket costs was associated with 
adverse non-medication related outcomes such as additional medical 
costs, office visits, hospitalizations, and other adverse events.\62\ 
Given that patient cost is such a determinant of adherence, including 
the patient in such discussions should improve medication adherence. 
Further, research shows that when patients play an active role in their 
health care decisions the result is increased patient knowledge, 
satisfaction, adherence with treatment and improved outcomes.\63\ 
Although not all patients will choose to actively participate in 
treatment decisions, interactive discussions between patients and 
physicians are correlated with improved patient satisfaction with their 
health care provider.\64\
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    \62\ Impact of Type 2 Diabetes Medication Cost Sharing on 
Patient Outcomes and Health Plan Costs (2016), Julia Thornton 
Snider, Seth Seabury, et. Al.; The ``Cost'' of Medication 
NonAdherence: Consequences We Cannot Afford to Accept (2011), Marie 
A. Chisholm-Burns and Christina A. Spivey; Medication Non-adherence 
is Associated with Increased Medical Health Care Costs (2007), 
Sunanda Kane and Fadiya Shaya.
    \63\ See https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1855272/.
    \64\ See https://www.ncbi.nlm.nih.gov/pubmed/11021677/.
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    We believe that bringing all of these benefits to Part D enrollees 
is especially important, in light of the fact that the

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Medicare population is becoming increasingly comfortable with 
technology. According to a 2017 Pew Research Center study, some groups 
of seniors report ``owning and using various technologies at rates 
similar to adults under the age of 65'' \65\ and also characterized 
``82% of 65- to 69-year-olds as internet users,'' and found that 40 
percent of seniors now own smartphones, ``more than double the share 
that did so in 2013.'' As more seniors use computers and smart phones 
in their daily lives, it is likely that they will use electronic means 
to research information about their prescription medications. CMS 
believes that the Part D program must move to accommodate those 
enrollees by enhancing the way that digital technologies are currently 
used.
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    \65\ Report is accessible at https://www.pewinternet.org/2017/05/17/technology-use-among-seniors/.
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    We also stated that we would consider it a best practice for 
beneficiary RTBTs to include cost-sharing amounts for medications if 
purchased at a pharmacy selected by the beneficiary, provided the 
pharmacy is in the plan's network. Sponsors would also be allowed to 
provide cost data for alternative pharmacies in the plan's network. 
However, due to concerns with enrollees being steered to different 
pharmacies, we did not propose to require that beneficiary RTBTs 
include pharmacy-specific cost sharing information.
    In order to support maximum transparency, CMS also encouraged plans 
to show each drug's negotiated price (as defined in Sec.  423.100) in 
the beneficiary RTBTs in addition to the requirement to reflect the 
beneficiary's out-of-pocket cost information at the beneficiary's 
currently chosen pharmacy. Alternatively, if the beneficiary RTBT does 
not show the negotiated price, we would encourage plans to provide 
additional cost data comparing the beneficiary and plan cost 
comparisons for each drug and its alternatives. For example, if Drug A 
has beneficiary cost sharing of $10 and the plan pays $100, and Drug B 
also has a beneficiary cost sharing of $10 but the plan only pays $90, 
the beneficiary RTBT would reflect a difference of $0 for cost sharing 
and -$10 in comparative plan cost for Drug B. Providing data such as 
negotiated price or comparative plan costs would provide beneficiaries 
with a better understanding of the price differences between 
alternative drugs and could help provide beneficiaries with information 
on potential clinically appropriate alternatives that could steer a 
discussion with their clinician and provide the biggest savings to the 
beneficiary and potentially lower Part D costs overall.
    Although we encouraged the inclusion of the negotiated price and 
other comparative information in the beneficiary RTBT, we did not 
propose to require the inclusion of such information. We did not 
propose to require this because we do not have research that shows 
learning the payer's rate will affect beneficiary choice if there is no 
effect on their payment amount. However, we solicited comment on this 
issue.
    CMS appreciates the feedback we received on our proposals. In the 
sections that follow, which are arranged by topic area, we summarize 
the comments we received on each proposal and provide our responses. In 
the following pages, we summarize the comments received about the 
pricing data to be included in the beneficiary RTBT.
    Comment: Some commenters requested that CMS require the inclusion 
of the negotiated and net prices of medications, which is the cost of 
the medication after all rebates and fees are subtracted. Other 
commenters requested that we refrain from even encouraging the 
inclusion of the negotiated price, as we did in our proposed rule.
    Response: CMS understands that it may be helpful for some 
beneficiaries to see additional pricing information, including the 
negotiated and net prices. However, as stated in our November 2020 
Transparency in Coverage final rule (85 FR 72158), which implements 
requirements for group health plans and health insurance issuers in the 
individual and group market to share participant cost sharing 
information and the negotiated price with the participant in the form 
of machine readable files and paper (upon request by the participant), 
CMS should aim to strike a balance between illuminating some of the 
factors that drive drug costs and not overwhelming consumers with 
information that is not directly relevant to their cost-sharing 
liability. In the case of the beneficiary RTBT, we believe this balance 
is best struck through alignment with the information in the prescriber 
RTBT, which does not require inclusion of the negotiated or net prices. 
Having the same information in both tools will not only help facilitate 
conversations between enrollees and their providers about different 
medications for the enrollee, but will give the prescriber the 
opportunity to explain the information in the beneficiary RTBT to 
enrollees. Providing enrollees information about the negotiated drug 
prices could easily overwhelm consumers with information, since the 
pricing information is updated in real time using test claims 
transmitted to the pharmacy in order to adequately gauge what the drug 
price is at the time the request is made.
    By contrast, in our November 2020 final rule, the requirement for 
group health plans and private issuers is to compile information for 
consumers in a file outside of the prescriber RTBT. As a result, group 
health plans and private issuers are only required to provide this 
information once--through a machine-readable file or via paper. 
However, if we were to require Part D sponsors to provide the 
negotiated and net prices in the beneficiary RTBT, Part D sponsors 
would be required to transmit two different claims in order to 
facilitate these tools--one for the prescriber RTBT and one for the 
beneficiary RTBT. We believe that the benefit these enrollees derive 
from seeing the net and negotiated prices is outweighed by the burden 
for plans to calculate this cost and program it into the beneficiary 
RTBT.
    Further, since most plans have similar beneficiary RTBTs in place, 
we believe that plans are in the best position to gauge what 
information is useful to their enrollees. We intend for our regulatory 
requirements to be a starting point for the beneficiary RTBTs and that 
plans will have the ability to add in additional information, if they 
believe it will helpful for their enrollees. The sole purpose of our 
regulatory requirements is to provide the minimum amount of information 
that must be included in the beneficiary RTBT, and we do not believe 
that including the net or negotiated prices is absolutely necessary in 
the beneficiary RTBTs. This approach differs from the approach in our 
November 2020 final rule, since Part D plans already have similar tools 
in place, whereas the group health plans and issuers in the private and 
group market do not.
    Comment: Some commenters requested that CMS require Part D plans to 
include pharmacy and provider-specific data, so that beneficiaries can 
find the lowest possible price for their medications.
    Response: CMS understands the importance of ensuring that 
beneficiaries have the appropriate tools to find the lowest price 
medications. However, CMS seeks to balance this desire with the desire 
to ensure that beneficiaries are not improperly steered away from their 
pharmacies and providers of choice. Since plans have

[[Page 5953]]

the most experience in working with enrollees, we seek to give plans 
flexibility in implementing the beneficiary RTBT. As a result, we will 
not prohibit plans from displaying pharmacy and provider-specific 
pricing. However, we will not require plans to show this information. 
Therefore, we decline to accept the suggestion that we mandate that 
plans include this information. Instead we are finalizing our proposal 
to require only that Part D sponsors include the enrollee cost sharing 
amount, rather than the negotiated or net price.
3. Beneficiary RTBT Formulary Data
    In order to fully empower enrollees to select the most appropriate 
medications, we proposed to require Part D sponsors to review formulary 
medications to determine which alternatives exist and whether those 
alternatives may save their enrollees money through reduced cost 
sharing. The sponsors would then import that information into the 
beneficiary RTBT.
    However, since we understand that most enrollees may not have the 
clinical background required to accurately discern the clinical 
appropriateness of all alternatives, we proposed a narrow exception to 
this requirement, to include for example certain antibiotics which are 
``drugs of last resort'' that are typically reserved for instances in 
which the patient is found to have certain drug-resistant infections, 
or instances in which side-effects are such that a given prescription 
would not typically be selected in the absence of countervailing risks 
that would justify risking such side-effects, or instances in which 
there would be interactions with other drugs already used by the 
beneficiary that would contra-indicate prescribing a given drug. In 
these and other clinically appropriate instances, we stated that it may 
be appropriate to omit certain drugs from what is presented to the user 
of a beneficiary RTBT. Thus, in order to address these and other 
clinically appropriate scenarios, we proposed that Part D sponsors 
would be permitted to have their Pharmacy and Therapeutics (P & T) 
committees evaluate whether certain medications should be excluded from 
the beneficiary RTBT. In order to help ensure that this exception is 
narrowly construed, we proposed to allow P & T committees to exclude 
medications from the beneficiary RTBT only in the following situations 
or instances: (1) The only formulary alternatives would have 
significant negative side effects for most enrollees and the drug would 
not typically be a practitioner's first choice for treating a given 
condition due to those side effects, (2) for cases where medications 
are considered to be ``drugs of last resort,'' (3) instances in which 
there would be interactions with other drugs already used by the 
beneficiary that would contra-indicate prescribing a given drug, or (4) 
other clinically-appropriate instances.
    We clarified that the data that we proposed to require be provided 
in the beneficiary RTBT must be patient-specific, clinically 
appropriate, timely, accurate, and devoid of commercial purposes that 
would adversely impact the intended functionality of promoting cost-
effective beneficiary and prescriber selections of drugs. In the 
following pages, we summarize the comments and provide our responses 
and final decisions surrounding formulary data to be included in the 
beneficiary RTBT.
    Comment: A number of commenters recommended that CMS remove the 
requirement for any formulary alternatives to be included on the 
beneficiary RTBT. These commenters expressed concern that listing these 
alternatives for Part D enrollees would lead to confusion among their 
enrollees, since beneficiaries would not be able to appropriately 
discern whether the medications are appropriate for them. Another 
commenter suggested that CMS require Part D sponsors to include 
alternatives that are not on plan formularies, in addition to the 
formulary alternatives, so that enrollees have a greater array of 
options.
    Response: Part D sponsors are required to include medications on 
their formulary that provide beneficiaries with a broad range of 
medically appropriate drugs across an appropriate breadth of categories 
and classes that cover all disease states, and meet other 
classifications. CMS reviews these formularies annually to help ensure 
compliance. As a result, we believe that the medications listed on the 
Part D formularies should provide sufficient options for Part D 
enrollees without requiring alternative options for enrollees outside 
of the Part D formularies.
    Although CMS shares commenters' concerns surrounding beneficiary 
confusion, we believe that limiting beneficiaries' choices to 
medications within their plan's formulary will help alleviate this 
concern. CMS believes that allowing beneficiaries the opportunity to 
choose from different medication alternatives within the plan's 
formulary strikes the right balance between ensuring that beneficiaries 
have adequate options for medications while not overwhelming 
beneficiaries with too many choices that may not be available to them. 
Although some enrollees may find these options overwhelming, we believe 
that the benefit of giving beneficiaries different medication options 
outweighs the risk that some beneficiaries may be overwhelmed by all 
the medication choices.
    Comment: The majority of commenters disagreed with our proposal to 
allow plans to exclude formulary alternatives in clinically appropriate 
instances, citing the possibility that plans could use this exclusion 
as an opportunity to steer patients away from the most clinically 
appropriate medications, give rise to undue confusion in cases where 
the provider determines that an excluded drug is actually appropriate, 
or cause plans to erroneously omit certain medications from the RTBT. 
However, some commenters supported this exclusion, since they believed 
that Part D sponsors could benefit from the additional flexibility.
    Response: After considering the information provided by the 
commenters, we are persuaded that the potential for misuse and 
confusion emanating from this exclusion outweighs the benefit of 
additional plan flexibility. CMS continues to believe that Part D 
sponsors should be granted flexibility when implementing the 
beneficiary RTBT. However, the harm that could be caused by the 
potential exclusion of appropriate medications outweighs the limited 
benefit of granting Part D sponsors this additional flexibility in this 
case. Therefore, we are removing this exclusion and finalizing our 
proposed requirement to include all formulary alternatives in the 
beneficiary RTBT.
4. Rewards and Incentives for Beneficiary RTBT
    In order to encourage enrollees to use the beneficiary RTBT, we 
proposed to allow plans to offer rewards and incentives (RI) to their 
enrollees who use the tool. We proposed to define use, for purposes of 
permitted RI, to mean logging onto either the portal or application or 
calling the plan's call center to ask for this information, without 
regard to whether the enrollee engages in a discussion with his or her 
prescriber or obtains or switches to any medication in response to such 
use. In other words, we proposed that plans that choose to offer RI 
must offer it to all plan enrollees who use the tool or seek to access 
this information via phone and must not make RI contingent upon the 
medical diagnosis or the type of medication a beneficiary is taking, or 
upon the enrollee switching medications.

[[Page 5954]]

    We proposed to prohibit any enrollee remuneration under the guise 
of RI, which includes waivers of copayments and deductible amounts and 
transfers of items or services for free. We also proposed to prohibit 
plans from offering any cash or monetary donations, under the guise of 
RI. However, we did propose to allow for the use of gift cards, as long 
as they are not cash equivalents and do not encourage enrollees to 
further patronize the plan or any of the plan's corporate affiliates. 
For purposes of this proposal, CMS proposed that gift cards that can be 
used like cash, for example, a VISA or Amazon gift card, to be a ``cash 
equivalent.'' Cash equivalents also may include, for example, 
instruments convertible to cash or widely accepted on the same basis as 
cash, such as checks and debit cards. This means that gas cards or 
restaurant gift cards would be permitted. However, a gift card that can 
be used for goods or services purchased from the plan would be 
prohibited, since that could incentivize enrollment in plans that could 
provide gift cards that enrollees could use at pharmacies or retail 
stores owned by their plan, rather than at a third-party establishment 
owned by a different company.
    We also proposed that the RI be of nominal value, which Office of 
Inspector General (OIG) guidance specifies as no more than $15 per 
login or $75 in the aggregate annually, in accordance with OIG 
guidance.\66\ We also proposed that the member can receive a RI for no 
more than one login per month. We also proposed that this expense would 
have to be included as an administrative expense in the bids of Part D 
sponsors, rather than it being considered a drug cost. We solicited 
comments on these limitations and on how we can ensure that these RIs 
will not be indirectly provided or funded by pharmaceutical 
manufacturers. We also solicited comments on safeguards to mitigate 
risks of fraud and abuse with respect to these incentives.
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    \66\ Office of Inspector General Policy Statement Regarding 
Gifts of Nominal Value To Medicare and Medicaid Beneficiaries, 
Office of Inspector General (2016).
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    MA-PDs are already permitted to offer rewards and incentives for 
Part C benefits under our regulation at Sec.  422.134, which permits 
plans to offer health-driven rewards and incentives that are designed 
to encourage enrollees to participate in activities that focus on 
promoting improved health, preventing injuries and illness, and 
promoting efficient use of health care resources. We propose to adopt 
Part C's ban at Sec.  422.134(b) on discrimination for Part D RI that 
plans offer to encourage the use of the beneficiary RTBT. We therefore 
proposed to require that if a Part D plan sponsor offers RI, it must be 
available to all of the plan's enrollees that log into the plan's 
portal or call the plan's call center, without discrimination based on 
a prohibited basis; under applicable law, prohibited bases of 
discrimination include the enrollee's proficiency in English, race, 
color, national origin, sex, age, disability, chronic disease, health 
status, or other basis prohibited by law.
    We proposed to add this provision to our regulations at Sec.  
423.128 by amending paragraph (d) to add paragraphs (4) and (5). 
Paragraph (4) would address the beneficiary RTBT and paragraph (5) 
would address the rewards and incentives for use of the beneficiary 
RTBT.
    Because of the safeguards included in the aforementioned proposals, 
including requiring that the rewards and incentives be non-cash 
equivalents, we believe the RI presents a low risk of fraud and abuse 
and is unlikely to compromise the integrity of the program.
    We received the following comments related to our proposal, and our 
responses follow:
    Comment: The majority of commenters supported the use of rewards 
and incentives for this provision. However, some of these commenters 
requested that CMS allow use of Amazon gift cards for the beneficiary 
RTBT, since they are a popular incentive for beneficiaries. The 
commenters disagreed with our classification of Amazon gift cards as 
cash equivalents, since they can only be used when shopping on 
Amazon.com or in Whole Foods.
    Response: CMS continues to believe that Amazon gift cards fall 
under the definition of cash equivalents. In their final rule entitled 
``Medicare and State Health Care Programs: Fraud and Abuse; Revisions 
to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary 
Penalty Rules Regarding Beneficiary Inducements,'' published on 
December 7, 2016, (81 FR 88393), the OIG states that items that can be 
used like cash (such as a general purpose debit card) constitute cash 
equivalents. In addition, we seek to help ensure consistency across CMS 
rulemaking, and CMS has previously defined cash equivalents to include 
Amazon gift cards. Please see final rule entitled ``Medicare Program; 
Medicare Shared Savings Program; Accountable Care Organizations--
Pathways to Success and Extreme and Uncontrollable Circumstances 
Policies for Performance Year 2017'' published on December 31, 2019.
    Although we understand the desire to use incentives that enrich the 
lives of beneficiaries, CMS must balance this desire against the 
increased fraud and abuse risk that exists when cash equivalents, such 
as a general purpose debit card or Amazon gift card are offered. As a 
result, we prohibit the use of Amazon gift cards as an RI under the 
beneficiary RTBT.
    However, we seek to empower Part D sponsors to ensure that 
beneficiaries are motivated to use the RTBT, especially given the 
aforementioned potential benefits of the RTBT, including medication 
adherence and improved patient satisfaction. As a result, we are not 
finalizing our proposed requirement that the rewards and incentives be 
nominal in value and thus be limited to $15/login and $75/year. Rather, 
we defer to the judgment of Part D sponsors as to what they consider to 
be a reasonable amount to offer their enrollees. As previously 
mentioned, we seek to grant flexibility to Part D sponsors as they are 
in the best position to judge the needs of their enrollees.
    CMS understands that this standard differs from what is considered 
appropriate under the Part C rewards and incentives program. The goal 
of the Part C rewards and incentives program is to promote healthy 
behaviors. By contrast, the goal of the rewards and incentives program 
for the beneficiary RTBT is to promote use of the tool, which are 
intended to lead to the aforementioned potential benefits of the RTBT, 
including medication adherence and decreasing overall drug costs. 
Because these goals differ and the value of use of the tool cannot be 
easily quantified, the Part C limit on rewards and incentives, which 
requires that the value of the reward and incentive not exceed the 
value of the activity itself, is not appropriate in this context of the 
Part D beneficiary RTBT. As a result, CMS is finalizing the limit for 
the rewards and incentives to be the amount Part D sponsors believe to 
be reasonable, rather than the Part C limit on rewards and incentives 
or a nominal amount. The other aspects of the RTBT rewards and 
incentives program are being finalized as proposed.
    After considering the comments we received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing our proposed provisions at Sec. Sec.  423.128(d)(4) and (5) 
with several modifications. First, we are adding a January 1, 2023 
applicability date to the regulation text at paragraph (d)(4) to 
reflect that this

[[Page 5955]]

provision will not apply until that date. Second, because we are 
requiring that plans include all formulary medication alternatives, 
rather than only the alternatives that are clinically appropriate, we 
are modifying the language at Sec.  423.128(d)(4)(ii) to require all 
formulary medication alternatives to be included. Since we will be 
allowing plans to determine what they believe to be reasonable in 
determining the dollar value of the rewards and incentives, we are 
modifying the language at 423.128(d)(5)(i) to replace the word 
``nominal'' with ``reasonable'' to clarify that the new limit for the 
value of the rewards and incentives is what plans consider to be a 
reasonable value, rather than an amount that OIG has interpreted to be 
nominal. Because plans will be determining what they deem to be 
reasonable, rather than an amount that OIG has interpreted to be 
nominal, we are removing the limitation at Sec.  423.128(d)(5)(ii) on 
offering rewards and incentives for only one login per month.

G. Establishing Pharmacy Performance Measure Reporting Requirements 
(Sec.  423.514)

    Section 1860D-12(b)(3)(D) of the Act provides broad authority for 
the Secretary to add terms to the contracts CMS enters into with Part D 
sponsors, including terms that require the sponsor to provide the 
Secretary with information as the Secretary may find necessary and 
appropriate. Pursuant to our statutory authority, we codified these 
information collection requirements for Part D sponsors in regulation 
at Sec.  423.514. We proposed to amend the regulatory language at Sec.  
423.514(a) to establish a requirement for Part D sponsors to disclose 
to CMS the pharmacy performance measures they use to evaluate pharmacy 
performance, as established in their network pharmacy agreements.
    Collecting pharmacy performance measures used to determine whether 
a financial reward or penalty is incurred by a pharmacy after the 
point-of-sale (POS) will enable CMS at a minimum to better understand 
how the measures are applied, whether uniformly or specific to pharmacy 
type. This effort may also explain if there is a pharmacy performance 
problem, as pharmacy price concessions (financial penalties incurred) 
after the POS have continued to grow annually. Knowledge of the 
industry's pharmacy performance measures would also provide 
transparency to the process and likely confirm or dispel the idea that 
many of the measures may not provide appropriate metrics across all 
types of pharmacies. Once collected, we stated that CMS would publish 
the list of pharmacy performance measures reported to increase public 
transparency.
    We encouraged the industry to continue to work together on 
developing a set of pharmacy performance measures through a consensus 
process and Part D sponsors to adopt such measures to ensure 
standardization, transparency and fairness. We also solicited comment 
on the principles that Part D pharmacy performance measures should 
adhere to, including potential burden or hardship of performance 
measures on small, independent, and/or rural pharmacies, and 
recommendations for instituting potential Part D Star Ratings metrics 
related to these measures. Finally, we solicited comment on the data 
elements, timeline, and method of submission for the reporting of 
pharmacy performance measures.
    We received the following comments and our response follows:
    Comment: The vast majority of comments were supportive of the 
proposal for CMS to establish a reporting requirement to collect 
pharmacy performance measures used by Part D sponsors in their network 
pharmacy contracts. Virtually all of the supportive comments shared the 
opinion that the current pharmacy performance measures and processes 
were either flawed, opaque or both. They believed the collection of 
this information would spur transparency and reveal the need for 
standardized measures via an industry driven consensus process 
facilitated by an experienced and neutral third-party.
    Response: We appreciate the support for the proposal to establish a 
requirement for Part D sponsors to disclose pharmacy performance 
measures to CMS. We agree that the information should provide 
transparency and help industry stakeholders come to a consensus on 
measures.
    Comment: A number of commenters believed that if CMS made the 
pharmacy performance measures used by Part D sponsors public it would 
result in a loss of leverage and flexibility for sponsors in their 
negotiations with network pharmacies. Other concerns were that it would 
stifle innovation and be harmful to market competition. A commenter 
requested that the measures only be shared with the involved parties. 
Another added that, if universal performance thresholds are applied, 
Part D sponsors would lose their ability to effectively negotiate 
performance programs with network pharmacies when true differences in 
performance may exist. Another believed the publication of performance 
measures without context could mislead patients about the performance 
of their pharmacies. A couple of commenters stated that the information 
was sensitive and that making it public would be harmful to market 
competition; believing it inappropriate to make sponsors' performance 
measure thresholds public.
    Response: We remind commenters that in the proposed rule we did not 
propose universal performance thresholds, but rather proposed to 
collect plans' pharmacy performance measures as an additional reporting 
section of our Part D reporting requirements. Given the growing 
magnitude of pharmacy price concessions based on performance measures 
in Part D, we believe it is important to provide transparency to the 
public regarding the measures in use. In addition, we believe that 
publishing a list of currently used pharmacy performance measures will 
promote the development of consensus-built standards by the industry 
that are transparent and equitable across various pharmacy types and 
patient populations, and support value-based care. Creating a ``level 
playing field'' to measure pharmacy network performance should not pose 
an obstacle to flexibility, innovation or competitiveness. Rather, a 
fair, more accurate and transparent system of measuring the strengths 
or weaknesses of a plan's network pharmacies should encourage both 
plans and the pharmacies within their respective networks to be 
innovative, flexible and competitive in how they use the data 
collected. Accurately identifying poorly performing pharmacies and 
well-performing pharmacies should encourage, when practical, a sharing 
of top pharmacy best practices' throughout a plan's network that would 
ideally enhance a plan's competitiveness in the marketplace.
    Comment: The large majority of commenters agreed with the reporting 
requirement proposal, but noted concerns related to industry burden, 
need for more industry input, that any elements or criteria be subject 
to rulemaking, and that a reasonable timeline for implementation be 
given.
    Response: As stated in the proposed rule, we are dedicated to the 
involvement of the industry in the development of this requirement. 
After publication of this final rule to establish the requirement that 
sponsors disclose pharmacy performance measure information to CMS, any 
new elements added to the Part D reporting

[[Page 5956]]

requirements (OMB 0938-0992) to implement this requirement would result 
from industry feedback through 60- and 30-day public comment periods in 
the Federal Register and approval through the Office of Management and 
Budget (OMB) Paper Reduction Act (PRA) process. As with any new 
elements added to the Part D reporting requirements, we believe the 
opportunity to provide comment through the PRA process will allow 
adequate input from the public and the industry. We also agree that to 
implement this provision we need to ensure the timeline and burden are 
reasonable for all parties involved. We will take into consideration 
the feedback received in response to the proposed rule when putting 
forth a timeline for implementation and potential elements for public 
comment.
    Comment: We received one comment that warned that implementing a 
standard set of performance measures held the potential of narrowing 
pharmacy networks, thereby impacting some pharmacies and the options 
available to beneficiaries. Other commenters, while expressing support 
for standardization of measures in principle, requested that sponsors 
not be locked into only specific measures.
    Response: We did not propose to implement a standard set of 
performance measures nor did we make any proposals with respect to 
requiring the use of any particular measures. Rather, in the proposed 
rule, we encouraged industry to come to a consensus on a standard set 
of pharmacy performance measures.
    Comment: A few commenters, while supportive of the industry 
standardizing pharmacy performance measures, cautioned against placing 
too many exacting limits on the performance measures, and stated that 
sponsors should retain the ability to use metrics beyond those decided 
by a third-party facilitator such as, but not limited to, the Pharmacy 
Quality Alliance (PQA), provided such measures are transparent to CMS 
and pharmacies.
    Response: We thank the commenters for their comments. We reiterate 
that we did not propose to standardize pharmacy performance measures in 
the proposed rule. We would expect that if through an industry 
consensus a standard set of pharmacy performance measures is 
established, it would be through a similar transparent and consensus 
process that additional measures would be added. We note, however, that 
transparency is of little consequence if the measures or the 
corresponding thresholds for that measure are ill-suited for the type 
of pharmacy or patient population that is being evaluated.
    Comment: We received a few comments regarding our request for 
feedback on recommendations on measures to consider for use in the Part 
D Star Ratings related to the uptake or evaluation of pharmacy 
performance measures. A commenter believed it premature to consider 
specific metrics for a Star Ratings program, and another opposed the 
idea, believing that the proposed use of Star Ratings for pharmacy 
performance would not be meaningful to Medicare beneficiaries who judge 
pharmacy performance on a highly personalized basis. Other commenters 
strongly supported our proposal with one asking the agency to follow 
its traditional approach when first introducing Star Ratings and report 
the results on the display page. We received a comment that requested 
that any future pharmacy performance measures be developed in a way 
that directly ties to the Part D Star Ratings program.
    Response: We appreciate the comments received and will consider 
them for any potential future development of measures based on pharmacy 
performance measure information. We note that we believe it is not 
premature to discuss potential Star Ratings as there would be a natural 
outgrowth to the development of standardized pharmacy measures. While 
we agree with the commenter that the selection of a pharmacy by a 
Medicare beneficiary is often a highly personalized choice, we believe 
that creating a rating system that leverages this plan-reported data 
could offer the beneficiaries additional information about the 
performance of pharmacies in the sponsors' pharmacy network.
    We agree with the commenter that requested we follow the regulatory 
process for the introduction of new Star Ratings measures. CMS codified 
the methodology for the Part C and D Star Ratings program in the CY 
2019 Medicare Part C and D Final Rule (83 FR 16725 through 83 FR 
16731), published in April 2018, for performance periods beginning with 
2019; that final rule lays out the methodology for the 2021 Star 
Ratings and beyond. CMS will continue to solicit feedback on new 
measure concepts as well as updated measures through the process 
described for changes in, and adoption of, payment and risk adjustment 
policies in section 1853(b) of the Act. We will also continue to 
provide advance notice regarding measures considered for implementation 
as future Star Ratings measures. As specified at Sec.  422.164(c)(2)-
(4), Sec.  423.184(c)(2)-(4), Sec.  422.164(d)(2), and Sec.  
423.184(d)(2), new measures and measures with substantive specification 
changes must remain on the display page for at least 2 years prior to 
becoming a Star Ratings measure. We appreciate the comment that we 
develop any future pharmacy performance measures in a way that can be 
directly tied to the Part D Star Ratings program.
    Comment: A few commenters responded to our solicitation for 
feedback regarding the principles that Part D pharmacy performance 
measures should adhere to, including potential burden or hardship of 
performance measures on small, independent and/or rural pharmacies. 
Most comments suggested that smaller pharmacies be exempt entirely from 
all performance measures or subject to a modified approach. A commenter 
indicated that a voluntary set of measures, or a custom measurement set 
that is more applicable and feasible for smaller pharmacies to report 
(for example, patient counseling, medication therapy management) be 
used.
    Response: We thank the commenters for their recommendations and 
will take them into consideration.
    Comment: A commenter stated that pharmacies should have the ability 
to appeal results of their performance measures.
    Response: We appreciate the comment regarding appeal rights; 
however, we did not propose to adopt any performance measures, and 
therefore did not propose an appeals procedure.
    Comment: In response to our solicitation for comments on the 
proposed list of potential data elements there were two primary 
objections made by commenters. Some commenters opposed the use of 
retrospective data that could include success/failure thresholds, and 
average scores or statistics that may reveal sensitive information 
regarding contractual arrangements. There were no comments supportive 
of the proposed rule specifically on the data elements.
    Response: We appreciate the comments. In the proposed rule, we 
recommend and encourage industry to continue, through a neutral third-
party facilitator, creating and testing potential pharmacy performance 
measures based on industry consensus. If an industry-wide consensus is 
reached on a set of standardized measures it follows that part of the 
process of reaching consensus will be determining what should and 
should not be reported retrospectively, and what would and would not be 
deemed sensitive

[[Page 5957]]

contractual information between a sponsor and its pharmacy network.
    Based on these comments, we are finalizing our proposal to amend 
the regulatory language at Sec.  423.514(a) to establish a requirement 
for Part D sponsors to disclose to CMS the pharmacy performance 
measures they use to evaluate pharmacy performance, as established in 
their network pharmacy agreements, with one modification to make the 
provision applicable starting January 1, 2022.

H. Dismissal and Withdrawal of Medicare Part C Organization 
Determination and Reconsideration and Part D Coverage Determination and 
Redetermination Requests (Sec. Sec.  422.568, 422.570, 422.582, 
422.584, 422.590, 422.592, 422.631, 422.633, 423.568, 423.570, 423.582, 
423.584, and 423.600)

    We proposed regulations for withdrawing or dismissing Part C 
organization determination and reconsideration requests and Part D 
coverage determination and redetermination requests. We also proposed 
regulations for withdrawing or dismissing Part C and Part D independent 
review entity (IRE) reconsiderations. We also proposed to apply these 
provisions to requests for integrated organization determinations and 
reconsiderations at Sec. Sec.  422.631 and 422.633. The proposals 
specifically addressed under what circumstances it would be appropriate 
to dismiss a coverage request or appeal at the plan or IRE level. We 
also proposed rules for how a party may request to withdraw their 
coverage request or appeal at the plan or IRE level. A withdrawal of a 
request is when the party that initiated the request voluntarily 
decides that a decision on their request is no longer needed, and the 
party communicates that desire to the plan to stop consideration of the 
request for determination (or reconsideration). A dismissal of a 
request is when a plan decides to stop consideration of a request 
before issuing a decision. The effect of both a withdrawal and a 
dismissal is that the plan does not proceed with making a substantive 
decision on the merits of the coverage request.
    Specifically, we proposed that:
     In new Sec. Sec.  422.568(g), 422.631(e), and 423.568(i), 
we proposed to permit a plan to dismiss a request for the initial plan 
level decision (that is, organization determination, integrated 
organization determination or coverage determination) when any of the 
following apply--
    ++ The individual or entity making the request is not permitted to 
request an organization determination or coverage determination.
    ++ The plan determines that the individual or entity making the 
request failed to make a valid request for an organization 
determination or coverage determination.
    ++ The enrollee dies while the request is pending and the 
enrollee's spouse or estate has no remaining financial interest in the 
case and no other individual or entity with a financial interest in the 
case wishes to pursue the organization determination or coverage 
determination; we explained in the proposed rule that we interpret 
having a financial interest in the case as having financial liability 
for the item(s) or service(s) underlying the coverage request.
    ++ The individual or entity who requested the review submits a 
timely written request for withdrawal of their request for an 
organization determination or coverage determination with the plan.
     In Sec. Sec.  422.570(g) and 423.570(f), we proposed to 
permit a plan to dismiss an expedited organization determination or 
coverage determination, consistent with the proposed requirements at 
Sec. Sec.  422.568 and 423.568, respectively. Applicability of these 
procedures to expedited integrated coverage determinations was proposed 
at Sec.  422.631(e).
     In Sec. Sec.  422.582(f), 422.633(h), and 423.582(e), we 
proposed to permit a plan to dismiss (either entirely or as to any 
stated issue) a request for the second plan level decision (that is, 
reconsideration, integrated reconsideration or redetermination) when 
any of the following apply --
    ++ The individual or entity making the request is not a proper 
party to the reconsideration, integrated reconsideration, or 
redetermination under the applicable regulation; we explained that this 
proposal would authorize dismissal when the individual or entity making 
the request is not permitted to request a reconsideration, integrated 
reconsideration, or redetermination.
    ++ When the plan determines the party failed to make a valid 
request for a reconsideration, an integrated reconsideration, or a 
redetermination that substantially complies with the applicable 
regulation for making a valid request for reconsideration or 
redetermination.
    ++ When the party fails to file the reconsideration, integrated 
reconsideration or redetermination request within the proper filing 
time frame in accordance with the applicable regulation.
    ++ When the enrollee dies while the reconsideration or 
redetermination is pending and the enrollee's spouse or estate has no 
remaining financial interest in the case and no other individual or 
entity with a financial interest in the case wishes to pursue the 
reconsideration or redetermination. We explained in the proposed rule 
that we interpret having a financial interest in the case as having 
financial liability for the item(s) or service(s) underlying the 
coverage request.
    ++ When the individual or entity submits a timely written request 
to withdraw their request for a reconsideration or redetermination.
     At new Sec.  422.584(g), we proposed to permit a plan to 
dismiss an expedited reconsideration using virtually identical language 
as for the proposed requirements at Sec.  422.582. At new Sec.  
423.584(f), we proposed to permit a plan to dismiss an expedited 
redetermination by cross referencing Sec.  423.582. Applicability of 
these procedures to expedited integrated coverage determinations was 
described in proposed Sec.  422.633(h).
     At new Sec. Sec.  422.592(d) and 423.600(g), we proposed 
to permit the Part C and Part D IRE to dismiss a request when any of 
the following apply--
    ++ The individual or entity is not a proper party under Sec.  
422.578 in the case of a Part C reconsideration or is not permitted to 
request a reconsideration by the IRE under Sec.  423.600(a) in the case 
of a Part D reconsideration.
    ++ The independent entity determines the party failed to make out a 
valid request for a reconsideration that substantially complies with 
the applicable regulation.
    ++ When the enrollee dies while the reconsideration request is 
pending and the enrollee's spouse or estate has no remaining financial 
interest in the case and no other individual or entity with a financial 
interest in the case wishes to pursue the reconsideration. We explained 
in the proposed rule that we interpret having a financial interest in 
the case as having financial liability for the item(s) or service(s) 
underlying the coverage.
    ++ When the individual or entity submits with the independent 
review entity a timely written request for a withdrawal of the 
reconsideration.
     In Sec. Sec.  422.568(h), 422.582(g), 422.592(e), 
422.631(f), 422.633(i), 423.568(j), 423.582(f), and 423.600(h) we 
proposed that a written notice of the dismissal must be delivered to 
the parties (either mailed or otherwise transmitted) to inform them of 
the action; this would include the

[[Page 5958]]

individual or entity who made the request. The notice must include 
certain information, as appropriate, including applicable appeal rights 
(that is, request to vacate dismissal, review of the dismissal).
     In Sec. Sec.  422.568(i), 422.582(h), 422.592(f), 
422.631(g), 422.633(j), 423.568(k), 423.582(g), and 423.600(i), we 
proposed that a dismissal may be vacated by the entity that issued the 
dismissal (that is, MA organizations, applicable integrated plans, Part 
D plan sponsors, and the IRE) if good cause for doing so is established 
within 6 months of the date of the dismissal.
     In Sec. Sec.  422.568(j), 422.631(h), and 423.568(l), we 
proposed that the dismissal of the organization determination or 
coverage determination is binding unless it is modified or reversed by 
the MA organization, applicable integrated plan, or Part D plan 
sponsor, as applicable, upon reconsideration or vacated under the 
provisions we proposed for vacating dismissals.
     At new Sec. Sec.  422.582(i), 422.633(k), and 423.582(h), 
we proposed that the dismissal of the reconsideration or 
redetermination is binding unless the enrollee or other valid party 
requests review by the IRE or the dismissal is vacated under the 
applicable regulation.
     At new Sec. Sec.  422.592(g) and 423.600(j), we proposed 
that a dismissal by the IRE is binding and not subject to further 
review unless a party meets the amount in controversy threshold 
requirements necessary for the right to a review by an administrative 
law judge or attorney adjudicator and the party files a proper request 
for review with the Office of Medicare Hearings and Appeals as outlined 
in Sec. Sec.  422.600, 422.602, and 423.600(j), as applicable.
     At new Sec. Sec.  422.568(k), 422.592(h), 422.631(i), 
422.633(g), 423.568(m), and 423.600(f), we proposed that a party that 
makes a request may withdraw its request at any time before the 
decision is issued by filing a written request for withdrawal. Each 
proposed regulation paragraph identifies the entity (that is, the MA 
organization, the applicable integrated plan, or the Part D plan) with 
which the request for withdrawal must be filed.
    We also proposed a change that applies to Part C only, given that 
the current rules do not include a process for an enrollee or other 
party to request IRE review of an MA organization's reconsideration 
(because review by the IRE of an adverse reconsidered determination is 
automatic). Specifically, we proposed to add a new paragraph (i) 
(mistakenly identified as a new paragraph (h) in the preamble of the 
February 2020 proposed rule) to Sec.  422.590 that would give the 
enrollee or another party to the reconsideration the right to request 
review by the independent entity of an MA organization's dismissal of a 
request for a reconsideration in accordance with Sec. Sec.  422.582(f) 
and 422.584(g). In new paragraph (i) of Sec.  422.590 we proposed that 
a request for review of such a dismissal must be filed in writing with 
the independent entity within 60 calendar days from the date of the MA 
organization's dismissal notice. Under existing rules at Sec.  
422.590(a)(2), (b)(2), (c)(2), (d), (e)(5), and (g),\67\ if the MA 
organization makes a reconsidered determination that affirms, in whole 
or in part, its adverse organization determination or fails to meet the 
timeframe for making a reconsidered determination, it must prepare a 
written explanation and send the case file to the independent 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 for a reconsideration (or no later than the expiration of 
an applicable extension). These regulations that require a case to be 
automatically sent to the independent entity do not apply in the case 
of a dismissal of a request for a reconsideration because the MA 
organization is not making a substantive decision on the merits of the 
request.
---------------------------------------------------------------------------

    \67\ We note that Sec.  422.590 was extensively amended by the 
April 2019 final rule, effective January 1, 2020.
---------------------------------------------------------------------------

    As a corollary to this proposal, we also proposed to revise 
paragraph (a) of Sec.  422.592 to add that, consistent with proposed 
Sec.  422.590(i), the independent entity is responsible for reviewing 
MA organization dismissals of reconsideration requests. As noted 
earlier in this section of the preamble, this new paragraph (i) to 
Sec.  422.590 was mistakenly identified as new paragraph (h) in the 
preamble of the February 2020 proposed rule; this incorrect citation at 
Sec.  422.592(a) has been corrected in this final rule to correctly 
refer to Sec.  422.590(i). Further, we proposed to add a new paragraph 
(i) at Sec.  422.592 to state that the independent entity's decision 
regarding an MA organization's dismissal, including a decision to deny 
a request for review of a dismissal, is binding and not subject to 
further review. In this final rule, we add a reference to Sec.  422.590 
at Sec.  422.592(i) to state if the independent entity determines that 
the MA organization's dismissal was in error, the independent entity 
vacates the dismissal and remands the case to the plan for 
reconsideration consistent with Sec.  422.590.
    We also proposed a change applying to Part D only, given that the 
current rules do not include a process for enrollees to request IRE 
review of plan sponsor dismissals of redetermination requests. We 
proposed to add a new paragraph (f) at Sec.  423.582 to establish in 
regulation the right of enrollees and other parties to request review 
by the independent entity of the Part D plan sponsor's dismissal of a 
request for a redetermination. As a corollary to this proposal, we also 
proposed to add paragraph (j) at Sec.  423.590 to state that, 
consistent with proposed Sec.  423.584(f), an enrollee can request 
review of a Part D plan sponsor's dismissal of a redetermination 
request by the independent entity. Finally, we proposed to add a new 
paragraph (k) at Sec.  423.600 to state that if the independent entity 
determines that the Part D plan sponsor's dismissal was in error, the 
independent entity would reverse the dismissal and remand the case to 
the plan for a redetermination on the merits of the case.
    We received the following comments on the proposals related to 
dismissal and withdrawal of Medicare Part C organization determination 
and reconsideration and Part D coverage determination and 
redetermination requests.
    Comment: Numerous commenters opposed the proposed language that 
required a party to submit a written request in order to withdraw 
requests for organization determinations, coverage determinations, 
reconsiderations, and redeterminations. Commenters noted that this 
language indicated that verbal withdrawal requests would not be 
accepted. Commenters referenced CMS guidance that states, in the 
``Parts C & D Enrollee Grievances, Organization/Coverage 
Determinations, and Appeals Guidance'' (Effective January 2020), at 
section 40.14, that a plan may accept verbal requests to withdraw a 
request for an organization or coverage determination. Additionally, 
commenters noted the same guidance states, in section 50.4, that a plan 
may also accept verbal requests to withdraw a request for a 
reconsideration, provided that the plan mails a written confirmation of 
the withdrawal to the party within 3 calendar days from the date of the 
verbal request. Commenters recommended removing the requirement for a 
written request to withdraw appeal requests in order to maintain 
consistency with the sub-regulatory guidance and current industry 
practice, and to reduce burden

[[Page 5959]]

on enrollees and plans. Commenters supported the current practice of 
requiring a written confirmation be mailed to the party within three 
calendar days from the date of the verbal request.
    Response: CMS thanks the commenters for their perspective and 
feedback. The proposed provisions were intended to generally model the 
current provisions regarding dismissal and withdrawal of requests for 
appeal codified in 42 CFR part 405, subpart I (see Sec. Sec.  405.952 
and 405.972) because under Sec.  422.562(d)(1), unless subpart M 
provides otherwise, and subject to specific exclusions set forth in 
paragraph (d)(2), the regulations in part 405 (concerning the 
administrative review and hearing processes and representation of 
parties under titles II and XVIII of the Act) apply to MA cases to the 
extent they are appropriate. Part 405, subpart I states that a party 
may withdraw a request by filing a written and signed request for 
withdrawal (see, Sec. Sec.  405.952 and 405.972). Accordingly, we 
proposed that a request for withdrawal be made in writing.
    However, the primary goal of codifying dismissal and withdrawal 
processes in regulation is to codify what we believe to be the current 
practices related to dismissal and withdrawal of Part C organization 
determination and reconsideration requests and Part D coverage 
determination and reconsideration requests, including those applicable 
to the Part C and Part D IRE. As commenters pointed out, current 
guidance permits plans to accept a request for withdrawal that has been 
made verbally. Accordingly, in response to these comments, we are 
finalizing the regulation changes with revisions to permit verbal 
requests to withdraw requests for organization determinations, coverage 
determinations, reconsiderations, and redeterminations are permitted 
under this final rule.
    In response to the comments asking that verbal dismissal and 
withdrawal requests not be prohibited by regulation, we are finalizing 
the proposed changes, with modifications, to permit withdrawal requests 
to be made verbally. Specifically, the word ``written'' is not being 
finalized in the following provisions in this final rule: Sec. Sec.  
422.568(g)(4), 422.568(k), 422.582(f)(5), 422.592(d)(4), 422.592(h), 
422.631(e)(4), 422.631(i), 422.633(g), 422.633(h)(5), 423.568(i)(4), 
423.568(m), 423.582(e)(5), 423.600(f), and 423.600(g)(5). Additionally, 
in this final rule we are finalizing revisions to Sec. Sec.  422.582(e) 
and 423.582(d) to remove the word ``written'' from the current 
regulation text describing a withdrawal of a request for a 
reconsideration. While this is a variance from the fee-for-service 
rules at 42 CFR part 405, subpart I (see Sec. Sec.  405.952 and 
405.972) upon which these final rules are generally modeled, this 
approach is consistent with existing Parts C and D guidance on these 
processes which allow for verbal withdrawal requests for organization 
determinations, coverage determinations, reconsiderations, and 
redeterminations.
    Comment: We received a number of comments on the proposals to 
require a plan to dismiss a request for organization determinations, 
coverage determinations, reconsiderations, and redeterminations when 
the individual or entity who requested the review submits a timely 
written request for withdrawal. Specifically, commenters were concerned 
about the requirements in Sec. Sec.  422.568(h), 422.582(g), 
422.592(e), 422.631(f), 422.633(i), 423.568(j), 423.582(f), and 
423.600(h) that would require plans to provide written notice to the 
parties of a dismissal, including instances where a party asks to 
withdraw their request for an organization determination, coverage 
determination or appeal. Commenters also noted that by considering a 
timely request for withdrawal as a circumstance under which a plan may 
dismiss a request, CMS is causing confusion between and conflation of 
withdrawals and dismissals. Commenters noted that the withdrawal 
process is different from the dismissal process and recommended that 
CMS exclude references to withdrawals in the list of circumstances 
under which a plan or IRE may dismiss a request for an organization 
determination, coverage determination or appeal under proposed 
Sec. Sec.  422.568(g), 422.582(f), 422.592(d), 423.568(i), 423.582(e) 
and 423.600(g).
    Response: CMS thanks the commenters for their perspective and 
feedback. The proposed provisions were intended to generally model the 
current provisions regarding dismissal and withdrawal of requests for 
appeal codified in part 405, subpart I (see Sec. Sec.  405.952 and 
405.972) because under Sec.  422.562(d)(1), unless subpart M provides 
otherwise and subject to specific exclusions set forth in paragraph 
(d)(2), the regulations in part 405 (concerning the administrative 
review and hearing processes and representation of parties under titles 
II and XVIII of the Act) apply to MA cases to the extent they are 
appropriate.
    The reasoning behind adopting the proposed provisions at Sec. Sec.  
422.568(h), 422.582(g), 422.592(e), 422.631(f), 422.633(i), 423.568(j), 
423.582(f), and 423.600(h) related to providing written notice to the 
parties of a dismissal, which are generally modeled on Sec. Sec.  
405.952 and 405.972, is to preserve the rights of other proper parties 
to the decision if one party submits a withdrawal request; other 
parties may wish to pursue the appeal. For example, a physician may 
file an organization determination request on behalf of the enrollee 
and then later decide to withdraw the request because the physician 
better understands the reason for denial after further research. The 
plan would then dismiss the physician's request and issue a dismissal 
notice to the physician and enrollee. The enrollee is still a party to 
the request for an organization determination and may have an interest 
in having that organization determination process continue so that the 
plan issues a complete decision in accordance with Sec. Sec.  422.566 
and 422.568 despite the physician's withdrawal of the physician's 
request. Under our proposed provisions, the enrollee could then file a 
request to review the dismissal at the next level and explain that he 
or she wants a decision to be reached and issued. CMS regulations do 
not require all parties to file a request for a determination or 
reconsideration in order for them to remain parties to the appeal; 
issuing a notice of dismissal to all parties when the dismissal is 
based on the withdrawal request from the party that initially filed a 
request acknowledges that involvement.
    Commenters also stated that they believe the requirement to issue a 
notice of dismissal when a party requests a withdrawal may cause 
confusion from both a reporting standpoint and a notification 
standpoint. CMS does not believe this proposal will cause confusion. 
For reporting, purposes, withdrawals and dismissals will remain 
distinct categories. Further, a notice of dismissal must contain the 
reason for dismissal; accordingly, the reason for dismissal in such 
cases would be the withdrawal of the request for the organization 
determination, coverage determination, reconsideration, or 
redetermination by a proper party to the request. Further operational 
guidance will be issued by CMS, as necessary.
    Comment: Several commenters noted that the circumstances for 
dismissal of a request for an organization determination, coverage 
determination, reconsideration, or redetermination listed in Sec. Sec.  
422.568(g), 422.570(g), 422.582(f), 422.584(g), 422.592(d), 422.631(e), 
422.633(h), 423.568(i), 423.570(f), 423.582(e), 423.548(f), and 
423.600(g) are permissive rather than mandatory, in that the word 
``may'' is

[[Page 5960]]

used. The commenters noted that all of the circumstances listed in the 
regulation imply the party requesting the reconsideration is either not 
a proper party or no longer has a financial interest in pursuing the 
reconsideration. The commenters recommend that CMS make the dismissal 
due to these circumstances mandatory and not permissive.
    Response: It was not CMS' intent that the proposed regulatory 
language related to dismissals for these reasons be permissive. In this 
final rule, we are finalizing the provisions at Sec. Sec.  422.568(g), 
422.570(g), 422.582(f), 422.584(g), 422.592(d), 422.631(e), 422.633(h), 
423.568(i), 423.570(f), 423.582(e), 423.584(f), and 423.600(g) without 
the word ``may'' to be clear on this point and to better align these 
provisions with Sec. Sec.  405.952(b) and 405.972(b).
    Comment: Several commenters noted that, under the proposed 
provision, written notice of a dismissal must be delivered to the 
parties (either mailed or otherwise transmitted) to inform them of the 
action. The commenters requested further guidance from CMS regarding 
applicable timeframes that would apply to this notice as well as the 
template or information that must be included.
    Response: With respect to the commenter's request for guidance 
regarding the timeframes applicable to a notice of dismissal, the 
existing regulatory timeframes for issuing a decision notice when a 
substantive decision is made on a request will also apply if a request 
is dismissed under these final rules. In other words, a decision to 
dismiss a request is a determination, albeit a procedural one, on the 
type of request that was made and is subject to the decision notice 
timeframes at Sec. Sec.  422.568(b) and (c), 422.572(a), 422.590(a), 
(b), (c), and (e), 422.631(d)(2), 422.633(f), 423.568(b) and (c), 
423.590(a), (b), and (d) and 423.600(d). As an example, if an enrollee 
requests a standard reconsideration for a medical item or service 
pursuant to Sec.  422.582 and the plan dismisses the request under the 
provisions at Sec.  422.582(f) set forth in this final rule, the 
enrollee must be notified of the dismissal no later than 30 calendar 
days from the date the plan receives the request for a standard 
reconsideration under the provisions at Sec.  422.590(a). A model 
Notice of Dismissal of Appeal Request can be found in section 50.9 of 
the Parts C & D Enrollee Grievances, Organization/Coverage 
Determinations, and Appeals Guidance (effective January 1, 2020). As 
necessary, additional operational guidance related to dismissal 
procedures will be issued by CMS. We note that the regulatory 
provisions we are finalizing regarding dismissals include specific 
provisions addressing the content of the notice of the dismissal (for 
example, Sec. Sec.  422.568(h), 422.582(g), 422.592(e), 422.631(f), 
422.633(i), 423.568(j), 423.582(f), and 423.600(h)); therefore, the 
current regulations governing the content of notices of substantive 
decisions on organization determinations, reconsiderations, integrated 
organization determinations, integrated reconsiderations, coverage 
determinations, and redeterminations and reconsiderations do not apply 
to dismissal notices. We also note that the proposed provisions 
addressing the content of the notice of dismissal for integrated 
organization determinations at Sec.  422.631(f) were inadvertently 
incomplete. In the final rule we have revised the proposed text of 
Sec.  422.631(f) to align with the analogous provisions for non-
integrated organization determinations at Sec.  422.568(h).
    Comment: A commenter noted that CMS proposed that an MA plan may 
properly dismiss an organization determination if ``the individual or 
entity making the request is not permitted to request an organization 
determination under Sec.  422.566(c).'' The commenter believes the 
referenced regulation, Sec.  422.566(c), is too vague and this 
authority to dismiss a request on this basis will lead to beneficiaries 
being denied fair organization determinations. Specifically, the 
commenter noted that hospitals are often told by MA plans that a 
rehabilitation physician seeking to admit a patient to an inpatient 
rehabilitation hospital/unit cannot participate in organization 
determinations with MA plans. The commenter believes that the 
rehabilitation physicians that are precluded from participating are the 
same rehabilitation physicians required to perform the de facto prior 
authorization process required by Medicare. The commenter asked CMS to 
consider clarifying Sec.  422.566(c) to allow any physician familiar 
with the patient's care needs, like a rehabilitation physician, to 
request an organization determination.
    Response: CMS believes that the existing provisions at Sec.  
422.566(c) are sufficiently clear regarding who may request an 
organization determination, which include any provider that furnishes, 
or intends to furnish, services to the enrollee. As such, under the 
commenter's example, if a rehabilitation physician furnished or 
intended to furnish a service to an enrollee, the physician is 
permitted to request an organization determination pursuant to this 
regulation under Sec. Sec.  422.568 and 422.570. Further, Sec.  422.578 
provides that a physician who is providing treatment to an enrollee 
may, upon providing notice to the enrollee, request a standard 
reconsideration of a pre-service request for reconsideration on the 
enrollee's behalf as described in Sec.  422.582; a physician acting on 
behalf of an enrollee may also request an expedited reconsideration as 
described in Sec.  422.584.
    Comment: Several commenters requested that CMS structure the Part C 
and Part D regulatory text the same way where possible, for clarity. A 
commenter noted by example that in Sec.  422.584 (Expediting certain 
reconsiderations) CMS repeats the rules from a different section while 
Sec.  423.584 (Expediting certain redeterminations) cross refers to 
them.
    Response: CMS strives for clarity in the structure of the Part C 
and Part D regulatory text. We are finalizing the amendment to Sec.  
422.584 using a cross reference to rules in Sec.  422.582 as opposed to 
repeating regulation text related to dismissals that is also applicable 
to the dismissal of expedited requests. With this change, the structure 
of the Part C and Part D regulation text will be in parity.
    Comment: Several commenters expressed concern that the proposed 
regulations allow dismissal or withdrawal of requests that are never 
valid in the first place. The commenters believe that requests that are 
invalid to begin with cannot be dismissed or withdrawn. The commenters 
believe CMS should not continue with the plan allowances to dismiss a 
case that should not have been started in the first place.
    Response: CMS recognizes that there may be invalid requests. 
However, whether a request is initially valid or not is a determination 
a plan makes upon receiving and reviewing a request for an organization 
determination. When a plan receives a request for an organization 
determination that it believes to be invalid, the plan refuses to 
approve, provide or pay for the requested services. Such refusal is an 
action that is considered an organization determination under Sec.  
422.566(b). Parties to an organization determination may request that 
the determination be reviewed under Sec.  422.578 and Sec.  422.592. 
The scope of the 42 CFR part 422, subpart M regulations is, in part, to 
set forth the appeal process for MA enrollees with respect to 
organization determinations. Removing appeal rights from enrollees who 
receive an organization determination is antithetical to the purpose 
and scope of

[[Page 5961]]

these regulations. The very purpose of these provisions is to provide a 
process and procedure (that is, dismissal) for the plan to dispense 
with invalid cases by issuing a procedural decision while also 
preserving an enrollee's right of review to a plan decision.
    Comment: Two commenters responded to our request for comments 
regarding whether the proposed rules would create inconsistencies with 
any state-specific Medicaid procedures pertaining to dismissals or 
withdrawals. The commenter noted that Medicare determination and 
coverage processes may be different than Medicaid, and therefore, if 
medical care or services are not covered by Medicare, but are covered 
by Medicaid, withdrawing the appeal is an effective way to minimize the 
administrative burden of appeals in Medicare.
    Response: CMS thanks the commenters for their feedback. We agree 
that for non-integrated plans that operate separate Medicare and 
Medicaid appeals processes, if an appeal concerns an item or service 
that is only coverable by Medicaid, withdrawing a Medicare appeal can 
reduce administrative burden. However, for applicable integrated plans 
that will follow the unified process established in Sec. Sec.  422.629-
422.634, one single coverage determination and appeals process applies 
to all requests for Medicare and Medicaid items and services covered by 
the plan, making withdrawal or dismissal of an appeal of a coverage 
denial inappropriate when there may be Medicaid coverage available from 
the applicable integrated plan. Applicable integrated plans must take 
into account both Medicare and Medicaid coverage available under the 
plan when making an integrated organization determination or integrated 
reconsideration.
    Comment: Several commenters noted that proposed Sec.  422.590(i) 
states ``the enrollee or other party has the right to request review of 
the dismissal by the independent entity.'' The commenters suggested the 
language be clarified to reflect it is the enrollee or other ``proper 
party under Sec.  422.578'' so as to be consistent with Sec.  422.592, 
which allows dismissals of requests for reconsideration if the 
individual requesting the reconsideration is not a proper party.
    Response: We are finalizing the amendment to Sec.  422.590(i) and 
Sec.  423.590(j) with revised text to clarify that only proper parties 
under Sec.  422.578 and Sec.  423.580, respectively, have the right to 
request review of the dismissal by the independent entity.
    Comment: Several commenters noted that CMS proposed to permit a 
plan to dismiss a request for a coverage determination in four 
specifically listed situations (that is, when any of the following 
apply: The individual or entity making the request is not permitted to 
request an organization determination or coverage determination, the 
plan determines that the individual or entity making the request failed 
to make a valid request for an organization determination or coverage 
determination, the enrollee dies while the request is pending and the 
enrollee's spouse or estate has no remaining financial interest in the 
case and no other individual or entity with a financial interest in the 
case wishes to pursue the organization determination or coverage 
determination; or the individual or entity who requested the review 
submits a timely written request for withdrawal of their request for an 
organization determination or coverage determination with the plan). 
The commenters requested clarification if this list is exhaustive or if 
there may be other scenarios under which a plan may dismiss a case.
    Response: As noted above, we are clarifying in this final rule that 
a plan must dismiss a request for the reasons set forth at Sec. Sec.  
422.568(g), 422.582(f), 422.592(d), 423.568(i), 423.582(e) and 
423.600(g). As explained in the proposed rule, we believe that 
codification of these procedures, including the scenarios in which a 
plan issues a dismissal, will reduce confusion and promote consistent 
and proper handling of withdrawals and dismissals. We do not believe 
there are other scenarios where it would be appropriate to require that 
a request be dismissed under these final rules. However, if program 
experience once these rules have been implemented reveals other 
appropriate scenarios for requiring that a request be dismissed, we 
will take that into consideration for future rulemaking.
    Comment: Several commenters noted these proposed regulations have 
highlighted the confusing differences in terminology between the 
initial levels of appeal for the Fee-For-Service Medicare Program, MA 
organizations, and Part D plans appeals. The commenters recommended 
that CMS align the appeal terminologies to avoid provider confusion and 
burden. For example, the initial level of appeal should have the same 
name for all programs, rather than redetermination for Fee-for-service 
and Part D and reconsideration for MA appeals.
    Response: CMS appreciates these comments. We note that the appeal 
terminologies mirror the terms set by statute, specifically Social 
Security Act section 1852(g)(2) for Part C appeals, Social Security Act 
section 1860D-4(g) for Part D, and Social Security Act section 
1869(a)(3) for Parts A and B. It is beyond the scope of this final rule 
to revise terminology across the Fee-for-Service, Part C, and Part D 
program regulations.
    Comment: A commenter noted that under proposed Sec.  422.592(i), if 
the IRE determines that the plan's dismissal was in error, the 
dismissal would be vacated and remanded to the plan for 
reconsideration. The commenter further noted that there is no timeframe 
indicated by which the plan is required to issue a decision on the 
remanded appeal. To ensure consistent deadlines CMS should specify that 
the deadlines enumerated in Sec.  422.590 apply to remanded appeals.
    Response: CMS appreciates the comment. We have modified the 
regulation text at Sec.  422.592(i) to clarify that if the independent 
entity vacates the dismissal and remands the case to the plan for 
reconsideration, the reconsideration must be conducted by the plan 
consistent with Sec.  422.590, which includes applicable adjudication 
timeframes. Similarly, we have modified the regulation text at Sec.  
423.600(k) to clarify that if the independent entity vacates the 
dismissal and remands the case to the Part D plan sponsor, the 
reconsideration must be conducted by the plan sponsor consistent with 
Sec.  423.590.
    Comment: A commenter noted that CMS proposed to permit a plan to 
dismiss a request for the initial plan level decision (that is, 
organization determination, integrated organization determination or 
coverage determination) when the plan determines that the individual or 
entity making the request failed to make a valid request for an 
organization determination or coverage determination. The commenter 
requested CMS clarify what is considered a `valid' request.
    Response: The regulations define what constitutes a valid request. 
For example, with respect to a request for a standard organization 
determination, a valid request would be one that substantially complies 
with Sec.  422.568(a); the regulation we are finalizing at Sec.  
422.568(g)(2) cross references Sec.  422.568(a) as establishing the 
standard for a request to be a valid one. Related guidance can be found 
in the Parts C & D Enrollee Grievances, Organization/Coverage 
Determinations, and Appeals Guidance (effective January 1, 2020).

[[Page 5962]]

    Comment: A commenter noted that CMS proposed to permit a plan to 
dismiss a request for the initial plan level decision (that is, 
organization determination, integrated organization determination or 
coverage determination) when the enrollee dies while the request is 
pending and the enrollee's spouse or estate has no remaining financial 
interest in the case and no other individual or entity with a financial 
interest in the case wishes to pursue the organization determination or 
coverage determination. The commenter believed this is stating that a 
plan would dismiss a pre-service request if the enrollee dies, as it 
would no longer be valid, and requested further clarification.
    Response: We clarify that these rules apply to a post-service 
request for payment as well as to pre-service requests for coverage. 
CMS proposed to permit a plan to dismiss a request for the initial plan 
level decision when the enrollee dies while the request is pending and 
the enrollee's spouse or estate has no remaining financial interest in 
the case and no other individual or entity with a financial interest in 
the case wishes to pursue the organization determination or coverage 
determination. The death of the enrollee alone is not sufficient to 
dismiss a request. There must also be no remaining financial interest 
of the enrollee's spouse or estate in the case and no other individual 
or entity with a financial interest in the case that wishes to pursue 
the organization determination or coverage determination.
    Comment: A commenter noted CMS proposed to permit the Part C and 
Part D IRE to dismiss a request when the independent entity determines 
the party failed to make out a valid request for a reconsideration that 
substantially complies with the applicable regulation. The commenter 
requested CMS clarify who would be responsible for notification 
requirements when the IRE makes this determination.
    Response: When the IRE makes a decision regarding a 
reconsideration, the IRE must comply with the notice requirements 
outlined in Sec.  422.594 and Sec.  423.602. This includes notifying 
the parties to the reconsideration of a dismissal.
    Comment: A commenter noted that CMS proposed to add a new paragraph 
to Sec.  422.590 to establish in regulation the right of enrollees and 
other parties to request review by the independent entity of the MA 
organization's dismissal of a request for a reconsideration made under 
Sec. Sec.  422.582(f) and 422.584(g). The commenter noted that the 
current process when a plan dismisses an appeal request is that the 
member has the right to go to the IRE to determine if the dismissal was 
correct. The commenter requested clarification on whether the proposed 
rule is stating the plan would send the case file to the IRE for all 
dismissals.
    Response: This final rule codifies the current practice regarding 
dismissals, that the enrollee or other party to the reconsideration may 
file a request for review by the IRE of the plan's dismissal of a 
request for reconsideration. We believe that Sec.  422.590(i), as 
proposed and finalized, is clear in establishing the regulatory 
authority for this request for IRE review in the MA context. We further 
clarify that this provision does not require MA plans to forward the 
case file to the IRE for all dismissals. MA plans and Part D plans must 
only forward the case file for a dismissal to the IRE when a proper 
party to the appeal requests IRE review of the dismissal under 
Sec. Sec.  422.590(i) and 423.590(j). This is somewhat different than 
the process for Part C appeals under Sec. Sec.  422.590 and 422.592, 
where the MA organization must gather and forward the relevant 
information to the IRE for an automatic review by the IRE of 
reconsidered determinations (standard or expedited) that are not 
completely favorable to the enrollee.
    Comment: A commenter noted that in some sections of the proposal, 
CMS indicated that it intends these dismissal determinations to be 
binding, but also notes the plan must include information on available 
appeal rights in the written notice of the dismissal. The commenter 
questioned if this would prohibit the requesting party(s) from 
resubmitting a claim with additional or new information. The commenter 
would like CMS to ensure as part of the process that a request could be 
resubmitted should new information come to light or was inadvertently 
not included in the initial request.
    Response: CMS only intends that dismissals be binding to the extent 
outlined in these provisions. For example, Sec.  422.568(j) provides 
for a dismissal of a request for an organization determination to be 
binding unless it is modified or reversed by the MA organization upon 
reconsideration or vacated under Sec.  422.568(i) of this section. So, 
as applied to this example, new or additional information could be 
submitted with a party's request for reconsideration of a dismissal 
(which would be requested under Sec. Sec.  422.582 or 422.584) or 
considered as part of the MA organization finding good cause to vacate 
its dismissal of a request for an organization determination under the 
provisions at Sec.  422.568(i). Note we have also added language to 
what we proposed at Sec.  422.633(k) regarding vacating dismissals of 
integrated reconsiderations. The additional language aligns with the 
analogous provision for reconsiderations at Sec.  422.582(i).
    Comment: A commenter questioned if CMS will modify the regulations 
concerning the withdrawal or dismissal of Part C and Part D 
determination requests, redetermination requests and IRE 
reconsiderations to better align with the regulations concerning 
limited English proficiency (LEP) communications.
    Response: Entities that receive federal financial assistance, 
including Medicare Part C and D plans, must take reasonable steps to 
provide meaningful access to their programs by persons with limited 
English proficiency, in accordance with title VI of the Civil Rights 
Act of 1964 and section 1557 of the Affordable Care Act and 
implementing regulations (title VI and section 1557 respectively). 
Nothing in this final rule alters that requirement.
    After consideration of the comments we received and for the reasons 
outlined in our responses and in the proposed rule, we are finalizing 
with modifications our proposed revisions to Sec. Sec.  422.568, 
422.570, 422.582, 422.584, 422.590, 422.592, 422.631, 422.633, 423.568, 
423.570, 423.582, 423.584, and 423.600 to address withdrawals and 
dismissals by MA organizations, applicable integrated plans, and Part D 
plans. In addition to minor clarifications that are not substantive 
changes to our proposed regulations, we are also finalizing 
modifications compared to our proposals to clarify that plans are 
required to dismiss a request under the provisions of these final rules 
and to permit verbal withdrawal of requests for organization 
determinations, coverage determinations, reconsiderations, and 
redeterminations.

I. Methodology for Increasing Civil Money Penalties (CMPs) (Sec. Sec.  
422.760 and 423.760)

    Sections 1857(g)(3)(A) and 1860D-12(b)(3)(E) of the Act provide CMS 
with the ability to impose CMPs of up to $25,000 per determination 
(determinations are those which could otherwise support contract 
termination, pursuant to Sec.  422.509 or Sec.  423.510), as adjusted 
annually under 45 CFR part 102, when the deficiency on which the 
determination is based adversely affects or has the substantial 
likelihood of adversely affecting an individual

[[Page 5963]]

covered under the organization's contract. The current regulations 
mirror the statute with respect to the amount of the penalty that CMS 
may impose for a per determination (contract level) penalty. 
Additionally, as specified in Sec. Sec.  422.760(b)(2) and 
423.760(b)(2) CMS is permitted to impose CMPs of up to $25,000, as 
adjusted annually under 45 CFR part 102, for each enrollee directly 
adversely affected or with a substantial likelihood of being adversely 
affected by a deficiency. CMS has the authority to issue a CMP up to 
the maximum amount permitted under regulation, as adjusted annually 
\68\ for each affected enrollee or per determination, however CMS does 
not necessarily apply the maximum penalty amount authorized by the 
regulation.
---------------------------------------------------------------------------

    \68\ Per the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015, which amended the Federal Civil Penalties 
Inflation Adjustment Act of 1990, the maximum monetary penalty 
amount applicable to 42 CFR 422.760(b), 423.760(b), and 460.46(a)(4) 
will be published annually in 45 CFR part 102. Pursuant to Sec.  
417.500(c), the amounts of civil money penalties that can be imposed 
for Medicare Cost Plans are governed by section 1876(i)(6)(B) and 
(C) of the Act, not by the provisions in part 422. Section 1876 
solely references per determination calculations for Medicare Cost 
Plans. Therefore, the maximum monetary penalty amount applicable is 
the same as Sec.  422.760(b)(1).
---------------------------------------------------------------------------

    CMS proposed to codify the methodology we would use to calculate 
the minimum penalty amounts that CMS would impose for certain types of 
program non-compliance by adding a new paragraph (b)(3) to Sec. Sec.  
422.760 and 423.760, and redesignating current paragraphs (b)(3) and 
(4) as paragraphs (b)(4) and (5).
    We proposed to update minimum penalty amounts no more often than 
every 3 years. CMS also proposed to increase the penalty amounts by 
including the increases that would have applied if CMS had multiplied 
the minimum penalty amounts by the cost-of-living multiplier released 
by the Office of Management and Budget (OMB) \69\ each year during the 
preceding 3-year period. In addition, CMS proposed to track the yearly 
accrual of the penalty amounts and announce them on an annual basis.
---------------------------------------------------------------------------

    \69\ Per OMB Memoranda M-19-04, Implementation of Penalty 
Inflation Adjustments for 2019, Pursuant to the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015, 
published December 14, 2018, the cost of-living adjustment 
multiplier for 2019 is 1.02522.
---------------------------------------------------------------------------

    Comment: We received one comment that supported our proposals. The 
commenter supported updating the minimum penalty amounts consistent 
with the three-year Part C and D organization audit cycle, and urged 
CMS to maintain the level of transparency afforded to the CMP 
methodology and updates.
    Response: We thank the commenter for the support.
    Comment: We also received one comment encouraging CMS to codify the 
process in which CMS notifies MA organizations and Part D sponsors of 
enforcement action referrals, including the opportunity to submit 
additional information before the final determination is made.
    Response: We appreciate the comment, but it is beyond the scope of 
the proposed changes. However, we will consider it for future 
rulemaking. After consideration of the public comments received, we are 
finalizing this provision as proposed.

V. Codifying Existing Part C and D Program Policy

A. Plan Crosswalks for Medicare Advantage (MA) Organizations and Cost 
Plans (Sec. Sec.  417.496 and 422.530)

    We proposed to codify the current process and conditions under 
which MA organizations and 1876 cost plans can transfer their enrollees 
into the same plan from year to year when no other election has been 
made (this process is a ``plan crosswalk''), as well as when MA 
organizations and cost plans can transfer their enrollees to other 
plans offered by the same MA organization or cost plan (this is a 
``crosswalk exception''). Our proposal was to define plan crosswalks, 
codify rules that protect a beneficiary's right to choose a plan, and 
specify the circumstances under which MA organizations and cost plans 
may transfer beneficiaries into another plan of the same type offered 
by the MA organization or, in the case of cost plans, transfer 
enrollees from that cost plan benefit package to another plan benefit 
package (PBP) under the same contract. In the proposed rule and this 
final rule, we generally use the terms ``plan'' and ``PBP'' 
interchangeably to refer to a specific plan offered under a contract. 
Specifically, the term PBP is used to describe the individual benefits 
packages that may be offered under a singular contract. Section 
1851(c)(3)(B) of the Act provides for evergreen elections which are 
when an individual who has made an election is considered to have 
continued to make the same election until the individual makes a change 
to the election, or the MA plan is discontinued or no longer serves the 
area in which the individual resides. In many cases, our crosswalk 
policy is a mechanism for operationalizing these evergreen elections.
    Section 1851 of the Act provides that Medicare beneficiaries who 
are entitled to Part A and enrolled in Part B may elect to receive 
benefits through enrollment in an MA plan of their choice and 
authorizes CMS to adopt the process, form and manner for making and 
changing enrollment elections. We proposed to codify existing policy 
regarding crosswalks and crosswalk exceptions using this authority and 
our authority under sections 1856(b)(1) and 1857(e)(1) of the Act to 
adopt standards and contract terms for MA organizations. In furtherance 
of the beneficiary's right to choose and implementing evergreen 
elections, we proposed to codify existing policy in new regulations at 
Sec.  417.496 and Sec.  422.530 to define plan crosswalks, implement 
rules that protect a beneficiary's right to choose a plan, and describe 
allowable circumstances under which MA organizations may transfer 
beneficiaries from one of its MA plans into another of its MA plans or 
a cost contract may transfer beneficiaries from one of its plans into 
another of its cost plans. With respect to cost plans, we proposed to 
codify existing enrollment policy related to the transfer of enrollees 
from one of an entity's PBPs to another PBP, under the authority of 
section 1876(i)(3)(D) of the Act, which requires that cost contracts 
shall contain such other terms and conditions, not inconsistent with 
the statute, as the Secretary may find necessary and appropriate. Our 
proposal and this final rule do not include rules for deeming 
enrollment from a cost plan to an MA plan under sections 1876(h)(5)(C) 
and 1851(c)(4) of the Act because the statute does not permit deeming 
of enrollees from cost plans to MA plans beyond contract year 2018.
    We also proposed, at Sec.  422.530(d), to codify the procedures 
that an MA organization must follow when submitting a crosswalk or a 
crosswalk exception request. An MA organization must submit all 
allowable crosswalks in writing through the bid submission process in 
HPMS by the bid submission deadline announced by CMS. Through the bid 
submission process, the MA organization may indicate if a crosswalk 
exception request is needed at that time, but the MA organization must 
request a crosswalk exception later through the crosswalk exception 
functionality in HPMS by the deadline announced by CMS. CMS verifies 
the exception request and notifies the requesting MA organization of 
the approval or denial of the request after the crosswalk exception 
deadline has expired. These exceptions must be submitted by the

[[Page 5964]]

MA organization to ensure that plan benefit package (PBP) enrollment is 
allocated appropriately.
    CMS has developed extensive guidance addressing the transfer of 
enrollees from one PBP offered by an organization to another PBP 
offered by that organization under the same contract.\70\ The guidance, 
applicable to MA organizations and cost plans, was developed in light 
of the ability of MA organizations and cost plans to revise their 
benefit offerings and PBPs from year to year. The transfer of enrollees 
from one PBP to another under these circumstances serves to facilitate 
evergreen elections. MA organizations frequently make business 
decisions resulting in changes to and in their MA plans offered for 
enrollment in the following contract year. Each year, through the bid 
process for plan design and an application process for service area 
changes, MA organizations submit changes in coverage and cost sharing 
design for their MA plans. In addition, MA organizations have the 
ability to terminate existing plans and apply to offer new plans. While 
cost plan organizations may not offer new cost plans, they also may 
make changes in their benefit and cost sharing design and seek service 
area changes through an annual process. CMS has issued annual sub-
regulatory guidance related to changes of this type for MA and cost 
plans to address how MA organizations and cost plans may transition 
enrollees from a plan that is terminating or changing its service area 
to another plan offered by the same organization. These transitions are 
useful to preserve beneficiary enrollment and are subject to a number 
of beneficiary protections. We proposed to codify existing crosswalk 
policy to clearly identify the basic rules for plan crosswalks, 
including the parameters for allowable crosswalks, and formalize CMS's 
crosswalk exception review process. Crosswalk exceptions are specific 
circumstances where a crosswalk is not automatically authorized under 
our policies but CMS may permit MA organizations and cost plans to 
transfer beneficiaries into another plan of the same type offered by 
the MA organization or cost plan after a review, provided that certain 
requirements are met. The crosswalk exceptions process, as currently 
conducted and as proposed, allows CMS to review and validate the 
existence of an exception and then manually effectuate the transaction 
in our system. Crosswalk exceptions are not part of the standard, 
annual PBP renewal process. We proposed to codify these new regulations 
at Sec. Sec.  417.496 and 422.530 to govern, respectively, cost plans 
and MA organizations.
---------------------------------------------------------------------------

    \70\ Chapter 16b of the Medicare Managed Care Manual and Process 
for Requesting an HPMS Crosswalk Exception for Contract Year (CY) 
2020 (released annually).
---------------------------------------------------------------------------

    We proposed, at Sec. Sec.  417.496(a)(1) and 422.530(a)(1), to 
define a plan crosswalk as the movement of enrollees from one PBP to 
another PBP under the same contract between the MA or cost organization 
and CMS. MA and cost organizations complete these crosswalk 
transactions annually as part of the renewal process. Unlike MA plans, 
however, cost plans do not include different plan types such as PPOs, 
PFFS, and special needs plans, therefore proposed Sec.  417.496(a)(2) 
did not specify that crosswalks from one plan type to another are 
prohibited while proposed Sec.  422.530(a)(2) did.
    In proposed Sec.  422.530(a)(5), we defined the types of MA plans 
that are ``different plan types'' for purposes of crosswalk policy: 
Health maintenance organizations, provider-sponsored organizations, and 
regional and local preferred provider organizations coordinated care 
plans are different plan types, even though they are all coordinated 
care plans. Additionally, we noted that the segmented plans are not a 
``type'' of plan in MA and that crosswalks are permitted between 
segmented and non-segmented plans. We did not include in the proposed 
cost plan crosswalk regulation provisions about contract transactions 
related to plan types and policies such as segmentation and 
continuation because they are specific to MA contract transactions. The 
majority of crosswalks involve moving enrollees from one contract year 
plan to the corresponding plan for the following contract year. 
Therefore, under our current policy and the proposal, enrollees are not 
required to make an enrollment election to remain enrolled in their 
chosen plan. In Sec.  417.496(a)(2)(i), we proposed to codify the 
general rule that crosswalks are prohibited between different cost 
contracts, and in Sec.  417.496(a)(2)(ii), we proposed to codify that 
crosswalks are prohibited between different cost plan IDs under a cost 
contract unless the crosswalk qualifies for an exception to this 
requirement. In Sec.  417.496(c)(1)(i) and (ii) we proposed to codify 
the exception that cost contracts terminating PBPs with optional 
supplemental benefits may transfer enrollees to another PBP with or 
without optional benefits under the same cost contract as long as 
enrollees who have Part A and B benefits only are not transferred to a 
PBP that includes Part D. In Sec.  417.496(c)(1)(iii)(A), (B), and (C), 
we proposed to codify the rule that an enrollee in a terminating PBP 
that includes Part D may only be moved to a PBP that does not include 
Part D if the enrollee is notified in writing that she/he is losing 
Part D coverage, the options for obtaining Part D, and the implications 
of not getting Part D through some other means. In Sec.  422.530(a)(2), 
we proposed to codify the general rule that crosswalks are prohibited 
between different MA contracts or different plan types (for example, 
HMO to PPO), which means that crosswalks are only permitted between 
plans of the same type under the same contract. However, proposed Sec.  
422.530(c) specified the limited circumstances in which CMS would allow 
a crosswalk transaction that does not comply with this general 
prohibition on crosswalks to different contracts. We included in 
proposed Sec.  422.530(a)(2) a reference to these ``exceptions'' 
permitted under paragraph (c). We explained that these exceptions in 
Sec.  422.530(c) apply to MA plans only because they pertain to MA 
policies; therefore, we did not propose similar regulation text in 
Sec.  417.496.
    As most plan crosswalks are related to contract renewals and non-
renewals, we proposed a general rule at Sec.  422.530(a)(3) that would 
require MA organizations to comply with renewal and nonrenewal rules in 
Sec. Sec.  422.505 and 422.506 in order to be eligible to complete plan 
crosswalks. In Sec.  417.496(a)(3), we proposed that cost plan entities 
must comply with the renewal and non-renewals rule per Sec. Sec.  
417.490 and 417.492, in order to be eligible to complete plan 
crosswalks. In Sec.  422.530(a)(4), we proposed that enrollees must be 
eligible for enrollment under Sec. Sec.  422.50 through 422.54 in order 
to be moved from one PBP to another PBP as part of a crosswalk.
    In Sec. Sec.  422.530(b) and 417.496(b), we proposed to codify the 
existing crosswalk policy by specifying the circumstances under which a 
crosswalk is permitted so that an MA organization or cost plan may move 
enrollees into, respectively, another MA plan or cost plan. For MA 
plans, in paragraph (b)(1), we proposed permissible crosswalks for all 
plan types and in paragraph (b)(2), we proposed crosswalks that are 
permissible only for MA special needs plans (SNPs). We reminded readers 
that the MA plan types are identified in Sec.  422.4; therefore, we 
specified in proposed Sec.  422.530(a)(5) that the different types of 
coordinated care plans are considered different ``plan types'' for 
purposes of crosswalking policy. For cost plans, in proposed paragraph 
(b), we addressed permissible crosswalks for

[[Page 5965]]

cost plans. Each of these proposals was consistent with current policy.
1. Cost Plans and All MA Plan Types
a. Renewal Plan
    Under existing program rules, an MA or cost organization may 
continue to offer, that is renew, a current PBP that retains all of the 
same service area for the following year; the renewing plan must retain 
the same PBP ID number as in the previous contract year. We proposed to 
codify moving the enrollees in the existing PBP to the PBP with the 
same ID number for the following year as a permissible crosswalk in 
paragraph (b)(1)(i) for MA plans and Sec.  417.496(b)(1) for cost 
plans. Under the proposal, as with current policy, current enrollees 
are not required to make an enrollment election to remain enrolled in 
the renewal PBP, and the MA or cost organization will not submit 
enrollment transactions to CMS for current enrollees but will 
transition all enrollees from the current PBP to the new PBP with the 
same PBP ID number for the following year. New enrollees must complete 
enrollment requests, and the MA or cost organization will submit 
enrollment transactions to CMS for those new enrollees. Under 
Sec. Sec.  422.111 and 417.427 current MA and cost enrollees of a 
renewed PBP, respectively, must receive an Annual Notice of Change 
(ANOC) notifying them of any changes to the renewing plan.
b. Consolidated Renewal Plan
    Under existing program rules, MA and cost organizations may combine 
two or more PBPs offered under the same contract in the current 
contract year into a single renewal plan, as a plan consolidation. We 
explained that when the consolidation includes two or more complete 
PBPs being combined and no PBP being split among more than one PBP in 
the next contract year, the MA or cost organization is permitted to 
transition all enrollees in the combined plans under one PBP under that 
contract, with the same benefits in the following contract year; the 
resulting PBP must have the plan ID of one of the consolidated plans. 
We proposed to codify this as a permissible crosswalk in Sec. Sec.  
417.496(b)(2) and 422.530(b)(1)(ii) and explained that under the 
proposal (as with current policy), current enrollees of a plan or plans 
being consolidated into a single renewal plan will not be required to 
take any enrollment action, and the MA or cost organization does not 
submit enrollment transactions to CMS for those current enrollees. The 
renewal PBP ID is used to transition current enrollees of the plans 
being consolidated into the designated renewal plan. In 
operationalizing this crosswalk, the MA or cost organization may need 
to submit updated data to CMS for the enrollees affected by the 
consolidation. New enrollees in the consolidated renewal plan must 
complete enrollment forms and the MA or cost organization must submit 
the enrollment transactions to CMS for those new enrollees. Under 
Sec. Sec.  422.111 and 417.427 MA and cost plans, respectively, are 
required to provide an ANOC to all current enrollees in the 
consolidated renewal plan.
c. Renewal Plan With a Service Area Expansion (SAE)
    Under existing program rules, an MA or cost organization may 
continue to offer the same cost plan or local MA plan but expand the 
service area to include one or more additional counties for the 
following contract year. We explained that to expand the service area 
of its plan(s), an MA or cost organization must submit a service area 
expansion (SAE) application to CMS for review and approval; CMS treats 
service area expansions as applications subject to the rules in part 
422, subpart K, and Sec.  417.402. Under our current policy an MA or 
cost organization renewing a plan with a SAE must retain the renewed 
PBP's ID number in order for all current enrollees to remain enrolled 
in that plan the following contract year; current enrollees of a PBP 
that is renewed with a SAE are not required to take any enrollment 
action, and the MA or cost organization does not submit enrollment 
transactions to CMS for those current enrollees but can transition all 
enrollees using a crosswalk from the current PBP to the new PBP with 
the same PBP ID number for the following year. We proposed to codify 
this as a permissible crosswalk in Sec.  422.530(b)(1)(iii) for MA 
plans and Sec.  417.496(b)(3) for cost plans. New enrollees must 
complete enrollment forms and the MA or cost organization must submit 
the enrollment transactions to CMS for those new enrollees. Under 
Sec. Sec.  422.111 and 417.427 MA and cost plans, respectively, are 
required to provide an ANOC to all current enrollees of a renewed PBP 
with a SAE.
d. Renewal Plan With a Service Area Reduction
    Under existing program rules, an MA organization offering a local 
MA plan may reduce the service area of a current contract year PBP; 
similarly, a cost organization may reduce the service area of a cost 
plan. We explained that this service area reduction (SAR) means that 
enrollees who were in the part of the service area being reduced will 
generally not be eligible to remain in the plan because of the 
residence requirement in Sec. Sec.  417.422(b), 422.50(a)(3), and 
422.54. We addressed crosswalks that may occur in connection with a 
service area reduction in proposed Sec. Sec.  422.530(b)(1)(iv) and 
417.496(b)(4). Under our proposal (as in current practice), when there 
is a service area reduction for a plan, the MA organization or cost 
plan may only crosswalk the enrollees who reside in the remaining 
service area to the plan in the following contract year that links to a 
current contract year plan but only retains a portion of the prior 
service area. The following contract year plan must retain the same 
plan ID as the current contract year plan. The crosswalk is limited to 
the enrollees in the remaining service area. MA organizations may have 
different options available to them in terms of notices and the ability 
to offer a continuation of enrollment under Sec.  422.74(b)(3)(ii) 
depending on the other MA plans in the service area at the time of the 
service area reduction. We included regulation text in proposed Sec.  
422.530(b)(1)(iv)(A) and (B) to address the different scenarios.
    We proposed in Sec.  422.530(b)(1)(iv)(C), that enrollees that are 
no longer in the service area of the MA or cost plan will be 
disenrolled at the end of the contract year and will need to elect 
another plan (or default to original Medicare). The MA or cost 
organization must submit disenrollment transactions to CMS for these 
enrollees. In addition, the MA or cost plan organization must send a 
Medigap guaranteed issue rights to the affected enrollees and a non-
renewal notice to enrollees in the reduced portion of the service area 
that includes notification of special election period (SEP). We 
proposed to codify at Sec.  422.530(b)(1)(iv)(D) specific rules about 
what information may be provided by the MA organization about its other 
MA plan options in the area that will no longer be part of the service 
area of the continued plan. Per the marketing and communication 
regulations, at Sec. Sec.  422.2263(a) and 423.2263(a) and discussed 
elsewhere in this final rule, marketing information about other MA plan 
options offered by the MA organization for the prospective plan year 
can begin October 1 of each year for the following contract year.
2. Special Needs Plans (SNPs)
    Under our current crosswalk policies, MA Special Needs Plans (SNPs) 
follow the general rules, which we proposed to

[[Page 5966]]

codify in Sec.  422.530(b)(1), and are permitted additional flexibility 
for crosswalks in specific situations. We proposed regulation text to 
identify the additional crosswalks permitted for SNPs in Sec.  
422.530(b)(2), which vary based on the type of SNP. In the proposed 
rule, we explained that MA organizations may not crosswalk enrollees 
from one SNP type to a different SNP type, as that would constitute 
crosswalking into a different type of plan, which is prohibited by 
Sec.  422.530(a)(2). We clarify here as well that the rules in 
paragraph (a) all apply to the crosswalk authority for SNPs described 
in paragraph (b)(2) just as the rules in paragraph (a) apply to the 
crosswalk authority in paragraph (b)(1).
a. Chronic Condition SNPs (C-SNPs)
    We proposed to codify four permissible crosswalks specific to C-
SNPs at Sec.  422.530(b)(2)(i)(A) through (D). C-SNPs serve and are 
limited to enrolling special needs individuals who have a severe or 
disabling chronic condition(s) and would benefit from enrollment in a 
specialized MA plan. The MA organization offering the C-SNP may target 
one or more specific severe or disabling chronic conditions. When a C-
SNP targets more than one severe or disabling chronic condition, we 
refer to that as a ``grouping'' and we have addressed groupings in 
guidance in Chapter 16b of the Medicare Managed Care Manual. We 
proposed that these permissible crosswalks reflect the limitations on 
eligibility for C-SNPs, as different C-SNPs serve different populations 
depending on the chronic condition(s) targeted for enrollment 
restriction.
     Renewing C-SNP with one chronic condition that transitions 
eligible enrollees into another C-SNP with a grouping that contains 
that same chronic condition.
     Non-renewing C-SNP with one chronic condition that 
transitions eligible enrollees into another C-SNP with a grouping that 
contains that same chronic condition.
    --Renewing C-SNP with a grouping that is transitioning eligible 
enrollees into another C-SNP with one of the chronic conditions from 
the grouping.
     Non-renewing C-SNP in a grouping that is transitioning 
eligible enrollees into a different grouping C-SNP if the new grouping 
contains at least one condition that the prior plan contained.
b. Institutional-SNPs
    We proposed to codify five permissible crosswalks specific to I-
SNPs at Sec.  422.530(b)(2)(iii)(A) through (E). I-SNPs are limited to 
enrolling individuals who are institutionalized or institutionalized-
equivalent, as those terms are defined inSec.  422.2. I-SNPs may limit 
their enrollment to either institutionalized or institutionalized-
equivalent individuals or may enroll both categories of individuals. 
These permissible crosswalks reflect the enrollment limitations on I-
SNPs.
     Renewing Institutional SNP that transitions enrollees to 
an Institutional/Institutional Equivalent SNP.
     Renewing Institutional Equivalent SNP that transitions 
enrollees to an Institutional/Institutional Equivalent SNP.
     Renewing Institutional/Institutional Equivalent SNP that 
transitions eligible enrollees to an Institutional SNP.
     Renewing Institutional/Institutional Equivalent SNP that 
transitions eligible enrollees to an Institutional Equivalent SNP.
     Non-renewing Institutional/Institutional Equivalent SNP 
that transitions eligible enrollees to another Institutional/
Institutional Equivalent SNP.
c. Dual Eligible-SNPs (D-SNPs)
    We did not propose to codify any permissible crosswalks specific to 
D-SNPs, which is consistent with our current crosswalk policy (which 
does not authorize additional crosswalk scenarios for D-SNPs outside of 
the crosswalk exceptions).
d. Exceptions
    In some instances, crosswalk actions must be manually reviewed and 
entered by CMS staff. We call these crosswalk exceptions. We proposed 
to codify at Sec.  422.530(c) when CMS will approve a request for a 
crosswalk exception and permit crosswalks in situations that are not 
specified in Sec.  422.530(b). These exceptions address certain unusual 
circumstances involving specific types of plans or contract activities. 
Under our proposal, only an exception specified in Sec.  422.530(c) 
would be approved and recognized as an additional circumstance when a 
crosswalk is permitted. We proposed to allow the following exceptions 
to the limits on the crosswalk process:
     When a non-network or partial network based private fee-
for-service (PFFS) plan is transitioning to either a partial network or 
a full network PFFS plan, we would permit a crosswalk when CMS 
determines it is in the interest of beneficiaries. CMS will consider 
whether the risks to enrollees are such that they would be better 
served by remaining in the plan, whether there are other suitable 
managed care plans available, and whether the enrollees are 
particularly medically vulnerable, such as institutionalized enrollees. 
We anticipate that granting these exceptions would be extremely rare 
since in the great majority of instances enrollees have choices of 
multiple MA plans or Original Medicare and are able to exercise their 
choice. We specifically proposed to restrict crosswalks between these 
network and non-network PFFS plans because the way enrollees will 
access health care services is significantly different in each of these 
plans. Section 1852(d)(5) of the Act establishes that in areas that are 
determined to be ``network areas'' PFFS plans can only operate by 
having a network of providers that meets CMS current network adequacy 
standards. The network based PFFS plan functions very much like a MA 
PPO plan in that there is a network of contracted providers through 
which enrollees can obtain Medicare covered services. In addition, an 
enrollee in a network based PFFS plan has the option of also going out-
of-network for plan covered services though their cost sharing may be 
higher. However, in areas of the country that have determined to be 
non-network areas with respect to PFFS plans, the PFFS plan can operate 
without a network and enrollees must seek care from any willing 
provider under the non-network PFFS plan's terms and conditions of 
payment. Because these two types of PFFS plans function very 
differently for enrollees obtaining covered health care services, we do 
not believe crosswalks should be generally permitted between these two 
types of PFFS plans.
     When MA plans offered by two different MA organizations 
that share the same parent organization are consolidated such that the 
MA plans under separate contracts consolidated under one surviving 
contract, the enrollees from the consolidating plans may be moved to an 
MA plan under the surviving plan. As a result of the consolidation of 
contracts, enrollees from at least one of the PBPs are transitioned to 
another contract; therefore, CMS limits approval of these crosswalks to 
an exception because of the movement across different contracts. As 
part of reviewing a request for this crosswalk exception, CMS reviews 
the contract consolidation to ensure compliance with the change of 
ownership regulations (Sec. Sec.  422.550 through 422.553).
     When a renewing D-SNP in a multi-state service area is 
reducing its service area to accommodate a state contract in part of 
the service area, we would permit enrollees who are no

[[Page 5967]]

longer in the service area to be moved into one or more new or renewing 
D-SNPs for which they are eligible, when CMS determines it is necessary 
to accommodate changes to D-SNP state contracts. We proposed to codify 
this crosswalk exception at Sec.  422.530(c)(3).
     When an MA organization renews a D-SNP for the upcoming 
contract year with changes in the D-SNP eligibility criteria, has 
another available new or renewing D-SNP for the upcoming contract year, 
and the two D-SNPs are offered to different populations, we would 
permit a crosswalk exception if it is in the best interest to current 
enrollees who are no longer eligible for their non-renewing D-SNP. We 
proposed to codify this crosswalk exception at Sec.  422.530(c)(4). An 
MA organization may change--or as part of state contracting, may be 
required to change--a D-SNP's eligibility criteria for the upcoming 
contract year. As a result, some current enrollees may no longer be 
eligible for their current D-SNP. However, the MA organization may have 
a new or renewing D-SNP in the same service area with eligibility 
requirements that can accommodate the enrollees who are no longer 
eligible for their current D-SNP.
     When a renewing C-SNP with a grouping of multiple 
conditions is transitioning eligible enrollees into another C-SNP with 
one of the chronic conditions from that grouping. This crosswalk 
exception, which we proposed to codify at Sec.  422.530(c)(5), differs 
from the allowable crosswalk in proposed Sec.  422.530(b)(2)(i)(B) 
because it is a renewing C-SNP and not a non-renewing C-SNP. A 
crosswalk exception is required in order for CMS to identify which 
enrollees are moving from the renewing plan C-SNP to the other C-SNP. 
In a non-renewing C-SNP, all enrollees would be crosswalked to another 
plan or disenrolled.
    In the proposed rule, CMS explained that the crosswalk policies we 
proposed to codify are designed to protect the rights of enrollees to 
make a choice about the plan from which they wish to receive Medicare 
benefits while facilitating how section 1851(c)(3)(B) of the Act 
requires evergreen elections. We proposed to codify policies and 
standards that CMS has implemented that allow MA and Cost organizations 
the flexibility to make business decisions about the benefit and cost 
sharing design of a plan while preserving the rights of beneficiaries 
to make informed choices about their health care coverage. We summarize 
the comments we received on these crosswalk proposals and our 
responses.
    Comment: CMS received a comment specific to the crosswalk 
exceptions process for cost plans. The commenter expressed concern with 
CMS having an exception permitting cost organizations to move enrollees 
from one of its plans with Part D to a plan that does not have Part D. 
The commenter stated that enrollees might not be aware of the 
implications of losing Part D and, as a result, CMS should require that 
enrollees actively ``opt out'' of Part D before being enrolled by the 
cost organization into one of its non-Part D plans. The commenter 
acknowledged that we proposed that the cost organization be required to 
notify enrollees of the implications of losing Part D but expressed 
concern that this information could become lost in the barrage of 
advertising and other materials mailed during the annual enrollment 
period.
    Response: We believe that the notice requirements proposed and 
finalized at Sec.  417.496(c)(1)(iii) offer robust protections for 
enrollees. Cost enrollees with Part D may be crosswalked to a plan 
without Part D because, unlike MA plans, Part D can only be an optional 
supplemental benefit for cost enrollees. In addition to specific 
information on plan benefits and costs for the new plan, affected 
enrollees will receive information from the cost organization on the 
implications of losing creditable Part D coverage and options for 
acquiring Part D coverage. In addition, the enrollee will have the 
annual coordinated election period to choose another Part D plan or to 
elect coverage in another Medicare health plan that does offer Part D 
coverage. We also believe that the provision as proposed strikes the 
proper balance between protections for enrollees and flexibility for 
cost organizations. CMS is therefore finalizing Sec.  417.496.
    Comment: CMS received comments asking for a waiver of the 
requirement to provide an Annual Notice of Change (ANOC) document to 
enrollees who are crosswalked between SNP plans under the same legal 
entity if there are no substantive changes in premiums, benefits, and 
cost-sharing as a result of the transition.
    Response: Under Sec.  422.111, MA organizations are required to 
disclose key changes to coverage to all enrollees annually. This 
crosswalk regulation was not proposed to, and as finalized does not, 
supersede or circumvent those disclosure requirements. The ANOC 
requires any and all changes to premiums, benefits, and cost-sharing to 
be disclosed in the ANOC, not just substantive changes. In addition, 
the ANOC requires these plans to make it clear that if a beneficiary 
doesn't make a different choice, they will be automatically enrolled in 
the new plan. This helps preserve the beneficiary's right to make an 
informed choice about their health care coverage.
    Comment: Commenters are seeking additional options to comply with 
the D-SNP integration requirements set forth in the BBA of 2018 and the 
implementing regulations. Several commenters suggested allowing D-SNP 
crosswalk exceptions to permit a non-renewing D-SNP plan benefit 
package (PBP) of one legal entity to crosswalk into a new or renewing 
D-SNP PBP of another legal entity within the same parent organization 
in cases where it would facilitate integration for dually eligible 
individuals in Medicare and Medicaid.
    Response: We thank commenters for their suggestion. In our recent 
experience, contracting processes between D-SNPs and states to comply 
with provisions of the BBA of 2018 are raising new questions and 
challenges. In some cases, the current way a parent organization 
structures its MA contracts using different subsidiaries (so that the 
MA organizations on various contracts are different legal entities) may 
raise an impediment to achieving higher levels of integration between 
Medicare and Medicaid. Moving enrollees from one PBP to another PBP 
operated by the same parent organization but under a different legal 
entity, in some cases, could result in better experiences and outcomes 
for enrollees but may not always be permitted as a crosswalk under our 
proposal.
    Under current rules, and without a crosswalk exception, there are 
two mechanisms for moving D-SNP members into another D-SNP operated by 
another MA organization under the same parent organization: (1) 
Consolidating contracts consistent with the change of ownership 
regulations (Sec. Sec.  422.550 through 422.553), then crosswalking 
between plans in the next year; or (2) if approved by CMS, under the 
passive enrollment provisions at Sec.  422.60(g). These mechanisms may 
be appropriate in some instances, but they may be more burdensome than 
we believe necessary in some types of within-parent-organization 
scenarios posed by commenters. The passive enrollment provision is also 
more narrowly targeted to enrollees already in an integrated D-SNP who 
would move to a fully integrated or highly integrated D-SNP, 
circumstances that would be most applicable when state Medicaid managed 
care contracting results in disruption of a current integrated care 
arrangement.

[[Page 5968]]

    We proposed to permit two crosswalk exceptions for D-SNPs 
specifically at Sec.  422.530(c)(3) and (c)(4). The first would allow 
an MA organization renewing a D-SNP in a multi-state service area that 
is reducing its service area to accommodate a state contract in part of 
the service area to crosswalk enrollees who are no longer in the 
service area to one or more new or renewing D-SNPs for which they are 
eligible, when CMS determines it is necessary to accommodate changes to 
D-SNP state contracts. The second would apply for an MA organization 
renewing a D-SNP for the upcoming contract year with changes in the D-
SNP eligibility criteria, but which has another available new or 
renewing D-SNP for the upcoming contract year, where the two D-SNPs are 
offered to different populations. In this scenario, we proposed to 
permit a crosswalk exception if it is in the best interest to current 
enrollees who are no longer eligible for their D-SNP to allow such a 
crosswalk exception.
    We agree with commenters that--where necessary to accommodate 
changes to D-SNP state contracts--we should permit crosswalk exceptions 
in additional scenarios. We are finalizing Sec.  422.530(c)(3) in the 
final rule with two significant changes compared to the proposed rule. 
First, we are finalizing additional language applying this exception to 
multi-state regional PPOs (RPPOs). Our original proposal focused on 
service area reductions by multi-state D-SNPs. However, multi-state 
RPPOs cannot eliminate states from their service areas while remaining 
RPPOs. As finalized, Sec.  422.530(c)(3) also allows a non-renewing D-
SNP that is a MA regional plan (an RPPO) to crosswalk enrollees to D-
SNPs in state-specific local PPOs. Second, we are finalizing additional 
language to allow crosswalking of members across D-SNPs within the same 
parent organization but across legal entities in these scenarios. This 
crosswalk exception in Sec.  422.530(c)(3) only applies for D-SNPs with 
multi-state service areas, and we believe Sec.  422.530(c)(3) as 
finalized with these changes will create additional opportunities to 
comply with state D-SNP contracting while promoting continuity of care 
for enrollees. We are declining, at this time, to extend this crosswalk 
exception to D-SNPs without multi-state service areas to allow us 
additional opportunity to assess the potential impacts of such a 
change. The D-SNP crosswalk exception we proposed and are finalizing at 
Sec.  422.530(c)(4) does not require that the D-SNP service areas 
include multiple states and is not limited to accommodating changes to 
the contracts between the state(s) and the D-SNP under Sec.  422.107; 
this other crosswalk exception addresses changes in the eligibility 
criteria for the current year D-SNP and permits moving enrollees to 
another D-SNP offered by the same MA organization where CMS determines 
it is the best interests of the enrollees to move to the other D-SNP 
for the new contract year in order to promote access to and continuity 
of care for the enrollees whose enrollment would be terminated from the 
D-SNP based on the change in eligibility criteria. We are declining, at 
this time, to extend this crosswalk exception at Sec.  422.530(c)(4) to 
D-SNPs offered by different MA organizations, even if the parent 
organization is the same, to allow us additional opportunity to assess 
the potential impacts of such a change.
    We will consider other potential crosswalk exceptions for future 
rulemaking.
    After consideration of the public comments we received and for the 
reasons outlined in the responses to comments and the proposed rule, we 
are finalizing our proposal with the following modifications:
     Section 422.530(c)(1) is being finalized with additional 
text from the preamble of the proposed rule (85 FR 9091) to identify 
the factors considered by CMS in making a determination that moving 
enrollees from a non-network or partial network PFFS plan to a partial 
or full-network PFFS plan is in the interest of beneficiaries. The 
factors CMS will take into consideration are whether enrollees would be 
better served by being crosswalked to the new PFFS plan. Another 
consideration is if there are no other MA plans available where the 
enrollee resides (including whether there are a number of potentially 
more suitable MA plans available for the enrollee to select) and 
whether the enrollees are particularly medically vulnerable, such as 
institutionalized enrollees. A PFFS plan requesting a crosswalk of 
enrollees from a non-network PFFS plan to a partial or full-network 
PFFS plan would need to include in their exception request an 
explanation of why the crosswalk would be in the best interest of the 
beneficiary (or beneficiaries) rather than the alternative of the 
enrollee(s) making an selection among available MA plans or Original 
Medicare during the Annual Election Period. This section also finalizes 
the requirement that CMS will not permit crosswalks from network based 
PFFS plans to non-network or partial network PFFS plans. As discussed 
in the proposed rule, CMS is finalizing this requirement because 
network based PFFS plans function very much like an MA PPO plan. In 
consequence, an enrollee in a network based PFFS plan crosswalked to a 
non-network or partial network PFFS plan would no longer have assured 
access to a network of contracted providers. Such a change in how their 
plan functions would be significant and potentially problematic for the 
enrollee in accessing their health care services.
     Section 422.530(c)(2) is being finalized with a slight 
revision to clarify that MA contracts, rather than MA plans, are 
consolidated. When MA contracts under two different MA organizations 
that share a parent organization are consolidated, the MA plans under 
the different contracts are then offered under the surviving MA 
contract. Some of the MA plans may also be consolidated under the 
surviving MA contract. The crosswalk exception permits the enrollees 
from the consolidated contracts to be crosswalked to an MA plan under 
the surviving contract.
     Section 422.530(c)(3) is being finalized as proposed to 
address multi-state D-SNPs and with additional text to address a 
crosswalk exception for non-renewing D-SNPs in multi-state RPPOs. In 
situations involving both types of D-SNPs, a crosswalk exception may be 
permitted in cases CMS determines it is necessary to accommodate 
changes to state contracts, as discussed in more detail in the response 
to the public comment. Section 422.530(c)(3) is also being finalized 
with additional text to clarify that the crosswalk exception permits 
moving enrollees to a different contract,
     Section 422.530(c)(4) is being finalized with additional 
text to clarify that the receiving D-SNP must be offered by the same MA 
organization and to specify that CMS would approve the crosswalk 
exception if the enrollees are eligible for the receiving D-SNP and CMS 
determines the crosswalk exception would be in the best interests of 
enrollees in order to promote access to and continuity of care for 
enrollees relative to the absence of a crosswalk exception.
     The crosswalk proposed at Sec.  422.530(b)(2)(C) to permit 
a renewing C-SNP with a grouping that is transitioning eligible 
enrollees into another C-SNP with one of the chronic conditions from 
that grouping is not being finalized because it was duplicative of 
proposed Sec.  422.530(c)(5), which is being finalized. Under our 
current policy, an exception is not automatically granted in this 
situation. We believe that codifying our current

[[Page 5969]]

policy on this point is appropriate. What was proposed at Sec.  
422.530(b)(2)(D) is being finalized as Sec.  422.530(b)(2)(C) instead.
     Finally, we are finalizing the regulation text at Sec.  
417.496(c)(1) and introductory text at Sec.  422.530(c) using ``may 
permit'' instead of ``permits'' to clarify that CMS approval is not 
automatic for the crosswalk exceptions.
    As finalized, Sec.  422.530 also contains several non-substantive 
grammatical and technical changes to improve the clarity and 
readability of the regulation text.

B. Medicare Advantage (MA) Change of Ownership Limited to the Medicare 
Book of Business (Sec. Sec.  422.550 and 423.551)

    Section 1857 of the Act requires each MA organization to have a 
contract with CMS in order to offer an MA plan. Section 1857(e)(1) of 
the Act authorizes the adoption of additional contract terms that are 
consistent with the statute and that the Secretary finds are necessary 
and appropriate. Consistent with this authority, at the beginning of 
the Part C program we implemented contracting regulations in Sec.  
422.550 which provide for the novation of an MA contract in the event 
of a change of ownership involving an MA organization. (63 FR 35106) 
Under the regulations, codified at Sec. Sec.  422.550 through 422.553, 
the execution of a novation agreement is required when an MA 
organization is acquired or when it wants to transfer its ownership to 
a different entity. When an MA organization is no longer able or 
willing to participate in the MA program, a change of ownership can 
provide both the holder of the contract and CMS with an opportunity to 
transfer the ownership of the contract to a different entity with 
little or no disruption to enrolled beneficiaries. In this instance, 
CMS has an interest in agreeing to a novation of the existing MA 
contract because it promotes the efficient and effective administration 
of the MA program.
    We proposed to revise Sec.  422.550 by adding a new paragraph at 
Sec.  422.550(f) to restrict the situations in which CMS will agree to 
an MA contract novation to those transfers involving the selling of the 
organization's entire line of MA business, which would include all MA 
contracts held by the legal entity that is identified as the MA 
organization. It has been long-standing policy in the MA program that 
CMS will only recognize the sale or transfer of a legal entity's entire 
MA line, or book of business, consisting of all MA contracts held by 
the MA organization because we believe that allowing the sale of just 
one contract (when the MA organization has more than one MA contract) 
or pieces of a single contract can have a negative impact on 
beneficiary election rights. We explained that the change codifies 
existing policy and also create more consistency in regulations between 
the Part D program, which has an explicit regulation requiring the sale 
of the entire book of Part D business at Sec.  423.551(g), and the MA 
program.
    In the proposed rule, we explained that this policy has not been 
applied in cases where contracts are transferred among subsidiaries of 
the same parent organization and we do not wish to interfere with an MA 
organization's (or parent organization's) ability to decide its 
corporate structure or contractual arrangements with its subsidiaries. 
Therefore, we also proposed, at Sec.  422.550(f)(1), an exception to 
the proposed limit for changes of ownership to only when the entire MA 
book of business is being transferred; that exception would be when the 
sale or transfer is of a full contract between wholly owned 
subsidiaries of the same parent organization.
    We proposed to codify explicitly in Sec.  422.550(f)(2) that CMS 
will not recognize or allow a sale or transfer that consists solely of 
the sale or transfer of individual beneficiaries, groups of 
beneficiaries enrolled in a plan benefit package, or one MA contract if 
the organization holds more than one MA contract. We stated that 
allowing the sale of just one contract (when the MA organization has 
more than one MA contract) or pieces of a single contract can have a 
negative impact on beneficiary election rights as our primary rationale 
for this proposal.
    We thank commenters for their input to help inform our final rule 
on changes of ownership. We received the following comments on this 
proposal, and our responses follow:
    Comment: Some commenters were supportive of CMS's proposal and 
agreed that allowing a sale or transfer that consists solely of the 
sale or transfer of a cohort of beneficiaries/contracts, if the 
organization holds more than one MA contract, can have a negative 
impact on beneficiary election rights. Additionally, we received 
support on the exception to allow the sale or transfer of a full 
contract between wholly owned subsidiaries of the same parent 
organization.
    Response: We thank commenters for their support of our proposal.
    Comment: A commenter suggested that CMS's proposal would remove a 
viable option for an organization to transfer a contract with minimal 
disruption to enrollees because the enrollee would move with the 
contract and the move would be invisible to the enrollee. They 
explained that this limitation would require an organization to retain 
a contract that is not working and force them to exit the MA market 
entirely in order to close an underperforming contract.
    Response: Section 1851 of the Act provides that Medicare 
beneficiaries who are entitled to Part A and enrolled in Part B may 
elect to receive benefits through enrollment in an MA plan of their 
choice and authorizes CMS to adopt the process, form and manner for 
making and changing enrollment elections. Additionally, section 
1851(c)(3)(B)(ii) of the Act provides for evergreen elections, which 
are when an individual who has made an election is considered to have 
continued to make the same election until the individual makes a change 
to the election or the MA plan is discontinued or no longer serves the 
area in which the individual resides. Both of these statutes protect an 
enrollee's right to choose and remain in an MA plan of their choosing. 
We believe that allowing the sale or transfer of contracts, without the 
entire line of business, does not support the enrollee's right to 
choose their MA plan under the statute because a plan offered and 
administered by a specific MA organization is necessarily different 
than a plan, even with the same benefits coverage and cost sharing, 
offered and administered by a different organization. A different 
parent organization is likely to have different administrative policies 
and processes, such as appeals processing, medical necessity policies, 
or customer service functions, which an enrollee should be able to 
consider before electing to enroll in a plan. An individual that has 
elected coverage in a plan offered by one entity is necessarily 
choosing not to be in a plan offered by a different entity; the sale of 
a single contract frustrates those choices. We distinguish this from 
the sale or transfer of the entire line of business to another MA 
organization, where the seller/transferor is choosing to leave the 
market entirely and the buyer/transferee is taking on all 
responsibilities and obligations to continue providing benefits to all 
enrollees without interruption. Also, we disagree that this limitation 
would require a plan to retain a contract that is not working and force 
them to exit the MA market entirely in order to close an 
underperforming contract. MA organizations retain the right to non-
renew a contract for any reason, provided it meets the timeframes for

[[Page 5970]]

doing so at Sec.  422.506, and may continue to operate other existing 
MA contracts without interruption.
    Comment: A commenter requested that CMS clarify whether the 
divestiture of an MA organization's business would allow the blending 
of contracts by virtue of a novation.
    Response: By ``blending'' we understand the commenter to be 
referring to combination of transferring a contract to a new MA 
organization and consolidating the contracts at the same time. The 
divestiture of an MA organization's entire line of business does not 
allow those transferred contracts to be consolidated with the acquiring 
MA organization's existing contracts in the same year. In other words, 
the plans in the acquired contract must continue to operate under their 
given contract number. After the acquisition is complete and during the 
next bidding cycle, the MA organization may follow crosswalk rules 
finalized at Sec.  422.530 in order to consolidate contracts into a 
single contract.
    Comment: Two commenters recommended that CMS allow flexibilities to 
transfer or sell plans or contracts under certain, additional 
conditions through specific exceptions to the ``entire line of 
business'' rule. One commenter recommended that we create an exception 
based on certain geographies or markets. Another commenter recommended 
an exception based on special circumstances, such as one involving the 
sale of an I-SNP. The commenter suggested that the sale of an I-SNP 
would benefit the Medicare program and beneficiaries because the 
acquiring MA organization could better serve that population and would 
likely be a better solution to maintain appropriate coverage for the 
impacted beneficiaries over terminating the contract.
    Response: It has been long-standing policy in the MA program that 
CMS will only recognize the sale or transfer of a legal entity's entire 
MA line of business, or book of business, consisting of all MA 
contracts held by the MA organization because we believe that allowing 
the sale of just one contract (when the MA organization has more than 
one MA contract) or pieces of a single contract can have a negative 
impact on beneficiary election rights, particularly where an exception 
is based on a decision that a specific plan or MA organization is 
``better for'' enrollees. The same policy is in place in the Part D 
program, in Sec.  423.551(g). We do not believe that allowing an 
exception based on ``special circumstances'', either because of a 
product type (for example, I-SNP) or characteristics of a region or 
marketplace, outweighs the importance of upholding an enrollee's right 
to elect a plan of their choosing. Additionally, commenters did not 
provide specific information about which markets or geographic regions 
would benefit from this type of exception and why an exception for 
specific areas is necessary for us to evaluate in more detail. We may 
monitor issues like this and consider specific exceptions to this 
policy in future rulemaking.
    Comment: A commenter recommended that we consider special 
circumstances permitting an MA organization to transfer one PBP to 
another legal entity within the same parent organization in cases where 
it would facilitate D-SNP integration. The commenter explained that an 
MA organization may need to shift a D-SNP PBP to an H-contract 
affiliated with a different legal entity to meet federal requirements 
that FIDE plans be on the same legal entity as the corresponding 
Medicaid product.
    Response: We do not agree that adding explicit regulatory text to 
permit an organization to transfer one PBP in a contract to another 
legal entity (even if limited to transfers within the same parent 
organization) in cases where it would facilitate D-SNP integration is 
necessary. The regulatory text, as proposed and finalized, permits the 
sale or transfer of a single contract (that is not the full book of 
business) where both MA organizations (the seller and the buyer) are 
wholly owned subsidiaries of the same parent organization, regardless 
of the plan types under the contract. Additionally, MA organizations 
will be able to use crosswalk exceptions discussed in section V.A of 
this final rule to facilitate D-SNP integration with Sec.  422.107. As 
we discuss in Section V.A of this final rule, we are permitting, at 
Sec.  422.530(c)(3), an MA organization to crosswalk enrollees from one 
PBP to a PBP of another legal entity within the same parent 
organization in certain cases where it is necessary to accommodate 
changes to the D-SNP state contracts required under Sec.  422.107. We 
believe these crosswalk exceptions, as finalized, will provide MA 
organizations with any additional flexibility needed to accommodate D-
SNP integration.
    Comment: One commenter recommended that we consider special 
circumstances allowing an MA organization to buy or sell a single PBP 
when the intent is to promote integration for dual eligible 
beneficiaries. The commenter explained that the ability to sell a D-SNP 
PBP to an existing, incoming, or re-procured Medicaid organization will 
prevent disruption that otherwise would occur when a D-SNP must exit a 
market (unless authority for Medicare passive enrollment is expanded).
    Response: We do not agree that adding explicit regulation text to 
permit an organization to buy or sell one PBP to another legal entity 
to facilitate D-SNP integration is necessary. The regulation text, as 
proposed and finalized, permits the sale or transfer of a single 
contract (that is not the full book of business) where both MA 
organizations (the seller and the buyer) are wholly owned subsidiaries 
of the same parent organization, regardless of the plan types under the 
contract. In accordance with Sec.  422.552(a)(3)(iii), which has been 
in place for several years, the successor organization must meet the 
requirements to qualify as an MA organization under part 422, subpart 
K; this means that all of the requirements to offer a SNP must also be 
met if the contract includes PBPs that are SNPs. We do not believe 
carving out a specific PBP from a contract, even if that PBP is a D-
SNP, to sell the PBP would serve MA program purposes and goals. In 
addition, we do not believe that an expansion of the passive enrollment 
authority for the MA program is within the scope of this rulemaking.
    Comment: One commenter recommended that the last part of the 
sentence in Sec.  422.550(f)(2)--``or one contract if the organization 
holds more than one MA contract''--be removed because it contradicts 
Sec.  422.550(f)(1) which explicitly allows an exception for one 
contract when it is owned within the same parent organization. They 
also recommended that the corresponding language in the Part D 
regulation at Sec.  423.551(g)(2)) be revised.
    Response: We agree with the commenter and believe the removal of 
``or one contract if the organization holds more than one MA contract'' 
would reduce potential confusion. We also agree that the same change 
should be made to the Part D regulation at Sec.  423.551(g)(2), since 
the proposed language at Sec.  422.550(f)(2) was meant to mirror the 
language in Sec.  423.551(g)(2). Therefore, we are modifying the 
regulation at Sec.  422.550(f)(2) and Sec.  423.551(g)(2) to remove 
``or one contract if the organization holds more than one MA 
contract.'' We emphasize that the prohibition on transfers or sales of 
single contracts, is prohibited under the first sentence of Sec.  
422.550(f)(1) and 423.551(g)(1): CMS will not recognize the sale of 
anything less than an MA organization or PDP sponsor's book of business 
except for the limited situation

[[Page 5971]]

where the sale or transfer of a full contract is between wholly owned 
subsidiaries of the same parent organization. Further, CMS will not 
recognize or allow a sale or transfer that consists solely of the sale 
or transfer of individual beneficiaries or groups of beneficiaries 
enrolled in a plan benefit package.
    After careful consideration of all comments received, and for the 
reasons set forth in the proposed rule and in our responses to the 
comments, we are finalizing the proposed changes to Sec.  422.550(f) 
without the phrase ``or one contract if the organization holds more 
than one MA contract'' in Sec.  422.522(f)(2). We are also finalizing a 
change to Sec.  423.551(g)(2) to remove ``or one contract if the 
organization holds more than one MA contract.''

C. Supplemental Benefit Requirements (Sec. Sec.  422.100)

    CMS has released guidance on supplemental benefits several times 
since April 2, 2018, including the 2019 Call Letter \71\ and a 
subsequent HPMS memo,\72\ concerning the definition of `primarily 
health related' with respect to supplemental benefits. Under a 
longstanding interpretation of the MA statute and regulations, CMS 
defines a mandatory or optional supplemental health care benefit as an 
item or service (1) not covered by original Medicare, (2) that is 
primarily health related, and (3) for which the plan must incur a non-
zero direct medical cost. Only an item or service that meets all three 
conditions could be proposed and covered as a supplemental benefit in a 
plan's PBP. We proposed to codify this policy at Sec.  
422.100(c)(2)(ii) by setting forth these criteria as requirements that 
supplemental benefits must meet.
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    \71\ https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2019.pdf.
    \72\ https://hpms.cms.gov/hpms/upload_area/NewsArchive_MassEmail/000011202/HPMS%20Memo%20Primarily%20Health%20Related%204-27-18.pdf.
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    The current regulation text at Sec.  422.100(c)(2) focuses on 
distinguishing between mandatory supplemental benefits and optional 
supplemental benefits. We proposed to re-designate the substance of 
that current regulation text as new paragraphs (c)(2)(i)(A) and (B). We 
proposed to codify our longstanding definition of supplemental benefits 
as three requirements that must be met by a supplemental benefit at 
paragraph (c)(2)(ii). In paragraph (c)(2)(ii)(A), we proposed to codify 
that a supplemental benefit must be primarily health related, using a 
standard discussed in more detail in this section of this final rule 
and with specific text to address SSBCI. In paragraph (c)(2)(ii)(B), we 
proposed to codify that a MA organization must incur a non-zero direct 
medical cost in furnishing or covering the supplemental benefit to 
verify that the benefit is medically related, with specific text to 
address special supplemental benefits for the chronically ill (SSBCI), 
discussed in more detail in section II.A of the proposed rule and 
section II.A of the final rule titled ``Medicare Program; Contract Year 
2021 Policy and Technical Changes to the Medicare Advantage Program, 
Medicare Prescription Drug Benefit Program, and Medicare Cost Plan 
Program,'' which appeared in the Federal Register on June 2, 2020 
(``June 2020 Final Rule'') (85 FR 33796, 33800 through 33805). Finally, 
in paragraph (c)(2)(ii)(C), we proposed to codify the requirement that 
the supplemental benefit is not covered by Medicare. The portion of a 
benefit where coverage is more generous or greater coverage of a 
Medicare Part A or Part B benefit--such as coverage of more inpatient 
days or coverage with lower cost sharing compared to Medicare--is a 
supplemental benefit. However, an MA plan may not cover a Part D drug 
or reduce Part D cost sharing as an MA supplemental benefit. Under 
Sec.  422.500, an MA plan that covers any Part D benefit must comply 
with the Part D regulations in part 423 and, therefore, must be a Part 
D sponsor of a Part D plan. In addition, Sec.  422.266(b)(1) provides 
that an MA plan may use its rebates to buy down a Part D premium, 
including the premium for supplemental drug coverage described at Sec.  
423.104(f)(1)(ii).
1. Primarily Health Related
    We explained in the proposed rule that, as discussed in the 2019 
Call Letter and an April 2018 HPMS memo, CMS currently interprets 
``primarily health related'' as meaning that the item or service is 
used to diagnose, compensate for physical impairments, acts to 
ameliorate the functional/psychological impact of injuries or health 
conditions, or reduces avoidable emergency and healthcare utilization. 
We are clarifying in this final rule that the current interpretation is 
that in order for a service or item to be ``primarily health related'', 
it must diagnose, prevent, or treat an illness or injury, compensate 
for physical impairments, act to ameliorate the functional/
psychological impact of injuries or health conditions, or reduce 
avoidable emergency and healthcare utilization; these key words 
(``diagnose, prevent, or treat an illness or injury'') were 
inadvertently left out of the proposed rule. Using this interpretation, 
CMS has provided MA plans with flexibility in designing and offering 
supplemental benefits that may enhance beneficiaries' quality of life 
and improve health outcomes. We proposed to codify that supplemental 
benefits must be primarily health related, with this definition, at 
Sec.  422.100(c)(2)(ii)(A).
    Examples of supplemental benefits include: Dental, vision, adult 
day health services, home-based palliative care, in-home support 
services, support for caregivers of enrollees, stand-alone memory 
fitness, expanded home and bathroom safety devices and modifications, 
wearable items such as compression garments and fitness trackers, over-
the-counter items, and expanded transportation for medical purposes. A 
supplemental benefit is not primarily health related under this 
definition if it is an item or service that is solely, or primarily 
used for cosmetic, comfort, general use, or social determinant 
purposes. Also, to be primarily health related, the benefit must focus 
directly on an enrollee's health care needs and should be recommended 
by a licensed medical professional as part of a care plan, if not 
directly provided by one. Enrollees are not currently required to get 
physician orders for supplemental benefits (for example, OTC items), 
and requiring it now would impose new restrictions on MA plans and 
potentially cause large administrative burden and interruptions in 
care. Therefore, our proposal included continued use of the 
``recommended'' standard as part of interpreting and applying this 
component of the definition of supplemental benefit. We note that 
supplemental benefits must also be medically appropriate to be 
primarily health related; if a service or item is not medically 
appropriate, it is not primarily health related. This is consistent as 
well with our longstanding guidance in Chapter 4, section 30.2, of the 
Medicare Managed Care Manual that supplemental benefits must be 
medically necessary. We will continue our current interpretations and 
guidance in codifying existing policy on this issue.
    We noted in the proposed rule that the BBA of 2018 amended section 
1852(a)(3) of the Act to permit MA plans to offer additional 
supplemental benefits that are not primarily health related for 
chronically ill enrollees, beginning January 1, 2020. In section II.A 
of the proposed rule, we proposed a regulation, to be codified at Sec.  
422.102(f), to set standards for special supplemental benefits for 
chronically ill enrollees (SSBCI); we finalized that

[[Page 5972]]

regulation largely as proposed in the June 2020 Final Rule. We 
explained that the expansion of supplemental benefits for chronically 
ill enrollees would not affect our proposed definition of ``primarily 
health related'' and how it applied to traditional supplemental 
benefits under our proposal at Sec.  422.100(c)(2)(ii), but we proposed 
to exclude SSBCI from compliance with the requirement that supplemental 
benefits be primarily health related at Sec.  422.100(c)(2)(ii)(A). We 
also explained that the standard that supplemental benefits be 
primarily health related was a higher standard than the requirement 
that have reasonable expectation of improving overall health.
2. Uniformity Requirements
    We also proposed to codify an existing policy regarding the 
requirement that benefits covered by an MA plan be uniform for all 
enrollees in the plan. There are several MA regulations that address 
uniformity, including the definition of MA plan at Sec.  422.2, the 
requirement at Sec.  422.100(d), and the bidding and premium 
requirements at Sec. Sec.  422.254(b) and 422.262(c). As explained in 
the final rule, published in April 2018, 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, (``April 2018 
final rule'') (83 FR 16440, 16480-85), CMS has determined that 
providing access to supplemental benefits that are tied to health 
status or disease state in a manner that ensures that similarly 
situated individuals are treated uniformly is consistent with the 
uniformity requirement in the MA program. We solicited comments on this 
reinterpretation and finalized it in that prior rulemaking. In response 
to those comments and based on our further consideration of this issue, 
we provided guidance to MA organizations in both the April 2018 final 
rule and a subsequent HPMS memo \73\ released April 27, 2018. We 
proposed to codify this reinterpretation specifically in regulation 
text at Sec.  422.100(d)(2).
---------------------------------------------------------------------------

    \73\ https://hpms.cms.gov/hpms/upload_area/NewsArchive_MassEmail/000011207/HPMS%20Memo%20Uniformity%20Requirements%204-27-18.pdf.
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    The regulations on MA uniform benefits implement both section 
1852(d) of the Act, which requires that benefits under the MA plan are 
available and accessible to each enrollee in the plan, and section 
1854(c) of the Act, which requires uniform premiums for each enrollee 
in the plan. Previously, we required MA plans to offer all enrollees 
access to the same benefits at the same level of cost sharing. In 2018, 
in issuing a final rule and guidance for contract year 2019, we 
determined that these statutory provisions and the regulation at Sec.  
422.100(d) meant that we had the authority to permit MA organizations 
the ability to reduce cost sharing for certain covered benefits, 
including lower deductibles, and offer specific tailored supplemental 
benefits for enrollees that meet specific medical criteria, provided 
that similarly situated enrollees (that is, all enrollees who meet the 
medical criteria identified by the MA plan for the benefits) are 
treated the same. We explained this in the proposed rule and that our 
interpretation means that there must be some nexus between the health 
status or disease state and the specific benefit package designed for 
enrollees meeting that health status or disease state. We proposed to 
redesignate paragraph (d)(2) as (d)(2)(i) and add new paragraph 
(d)(2)(ii) to specifically state that MA organizations may reduce cost 
sharing for certain covered benefits, including lower deductibles, and 
offer specific tailored supplemental benefits for enrollees that meet 
specific medical criteria, provided that similarly situated enrollees 
are treated the same and that there is some nexus between the health 
status or disease state and the tailored benefits. We explained in the 
proposed rule that we review MA benefit designs to make sure that the 
overall impact is non-discriminatory and that higher acuity, higher 
cost enrollees are not being excluded in favor of healthier 
populations; this review applies various standards in addition to the 
uniformity requirements.
    We thank commenters for helping inform CMS' policy on supplement 
benefit requirements. We received approximately 27 comments on this 
proposal; we summarize them and our responses follow:
    Comment: Many commenters supported this proposal.
    Response: We thank commenters for their feedback.
    Comment: A few commenters requested CMS provide greater detail on 
allowable supplemental benefits and confirm examples. Additionally, 
commenters requested that CMS update the Medicare Managed Care Manual 
to include these new policies.
    Response: We believe that our discussion in the proposed rule 
explaining the proposal we are finalizing provides sufficient guidance 
for MA organizations on this topic in this context. The proposal was to 
codify existing guidance. In addition to the CY2019 Call Letter 
(specifically about the expanded definition of ``primarily health 
related'') and the April 2018 HPMS memo on the Reinterpretation of 
``Primarily Health Related'' for Supplemental Benefits, Chapter 4 of 
the Medicare Managed Care Manual provides extensive guidance about 
basic benefits and supplemental benefits offered by MA plans. 
Specifically, section 30 of Chapter 4 discusses a number of examples. 
Additionally, CMS will consider additional subregulatory guidance, 
including manual updates, as necessary in implementing and 
administering the legal standards for MA benefits.
    Comment: Some commenters stated concern that recent changes to the 
Medicare Communications and Marketing Guidelines (MCMG) could also 
increase confusion about supplemental benefits among enrollees.
    Response: As stated in the April 2018 HPMS memo on primarily health 
related supplemental benefits, MA plans are responsible for clearly 
identifying what will and will not be covered in the plan's Evidence of 
Coverage (EOC). Any limitations on coverage should be clearly noted in 
the EOC. Organizations are encouraged to provide explanations to 
establish how a supplemental benefit, particularly a new or novel 
benefit, is primarily health related or how coverage of an item or 
service will be limited to when it is primarily health related. 
Activities and materials that mention benefits are considered marketing 
(as defined under Sec. Sec.  422.2260 and 423.2260) and are subject to 
the requirements at Sec. Sec.  422.2263 and 423.2263 (General marketing 
requirements). Please refer to section V.E. of this final rule, where 
we address proposals to codify our current policies for marketing and 
communications by MA and Part D plans. We believe that our requirements 
for how MA plans market their benefits and how the scope and rules for 
coverage must be disclosed annually to enrollees ensure that confusion 
is minimized for enrollees. As we monitor the MA program and complaints 
(submitted to 1-800-Medicare and otherwise), we will consider if 
additional guidance or rulemaking is necessary to address unforeseen 
confusion among beneficiaries.
    Comment: Some commenters expressed concern that original Medicare 
beneficiaries do not have access to supplemental benefits. One 
commenter stated that MA plan premiums for supplemental benefits may 
pose a barrier to the receipt of supplemental benefits. One commenter

[[Page 5973]]

suggested CMS introduce models that allow original Medicare 
beneficiaries access to supplemental benefits.
    Response: Comments regarding Original Medicare beneficiaries' 
access to MA plans supplemental benefits are out of scope for this 
regulation. As to the comment about MA premiums, sections 1853 and 1854 
of the Act address how MA plan premiums are defined and charged. 
Further, section 1852 of the Act explicitly authorizes MA organizations 
to offer supplemental benefits to their enrollees and section 1854 of 
the Act addresses how MA plans that bid below the payment benchmark for 
their service area may use a portion of the amount by which the 
benchmark exceeds the bid to pay the premiums for supplemental 
benefits. Information about premiums and supplemental benefits is 
available during the annual coordinated election period for 
beneficiaries to use in making enrollment decisions.
    Comment: A commenter suggested CMS allow MA plans the ability to 
offer supplemental benefits at a county level within a multi-county 
service area plan.
    Response: Plans segments are county-level portions of a plan's 
overall service area. As discussed in the April 2018 Final Rule (83 FR 
16486), Sec.  422.262(c)(2) permits MA plans to vary supplemental 
benefits, in addition to premium and cost sharing, by segment so long 
as the supplemental benefits, premium, and cost sharing are uniform 
within each segment of an MA plan's service area. MA plan segments 
currently may be composed of one or more counties within the service 
area.
    Comment: A few commenters expressed concern that supplemental 
benefits are not visible in the MPF.
    Response: We will take this recommendation under consideration as 
we continue to refine the MPF tool.
    Comment: A commenter expressed concern about the lack of community-
based providers available to provide supplemental benefits.
    Response: CMS is prohibited from requiring MA plans to contract 
with specific providers under section 1854(a)(6)(B)(iii) of the Act and 
Sec.  422.256(a)(2)(i), but so long as they comply with the standards 
established for provider contracting in part 422, subpart E, MA 
organizations may contract with community-based providers. Further, 
Sec.  422.112(b)(3) provides for coordinated care MA plans to include 
community-based services in their plans for coordination and continuity 
of care for enrollees. In addition, Sec.  422.112(b)(3) specifically 
states that MA coordinated care plans are required to ``coordinate MA 
benefits with community and social services generally available in the 
area served by the MA plan.'' MA plans may contract with community-
based organizations to provide supplemental benefits that are compliant 
with the statutory and regulatory requirements. For example, an MA plan 
could elect to offer a meals or food/produce supplemental benefit (so 
long as the benefit is primarily health related and the plan incurs a 
non-zero direct medical cost consistent with Sec.  422.100(c)(2)) and 
pay a community-based organization for furnishing the covered benefit. 
We understand that in some areas there may be a limited number of 
community-based providers and hope that the increased supplemental 
benefit flexibilities discussed in this rule encourage increased 
opportunities for community provider participation.
    Comment: A commenter requested CMS provide additional guidance on 
how plans can make sure that supplemental benefits meet the ``primarily 
health related'' requirement.
    Response: We suggest plans review the April 27, 2018 memo titled 
``Reinterpretation of ``Primarily Health Related'' for Supplemental 
Benefits''. In addition, Chapter 4 of the Medicare Managed Care Manual 
contains guidance on permissible supplemental benefits, which gives MA 
organizations and the public an understanding of which benefits we have 
previously determined to meet this standard. The standard we are 
finalizing at Sec.  422.100(c)(2)(ii)(A) provides that to be primarily 
health related, a benefit must--as a primary matter--diagnose, prevent, 
or treat an illness or injury; compensate for physical impairments; act 
to ameliorate the functional/psychological impact of injuries or health 
conditions; or reduce avoidable emergency and health care utilization. 
A supplemental health benefit proposed by an MA organization must be 
reasonably and rationally encompassed by this standard and may not have 
a primary purpose that is outside of this standard. The primary purpose 
of an item or service is determined by national typical usages of most 
people using the item or service and by community patterns of care. To 
be considered healthcare benefits, supplemental benefits must focus 
directly on an enrollee's healthcare needs and be medically appropriate 
for the enrollee. While we do not require that the physician or health 
care professional prescribe or order an item or service for it to be 
considered primarily health care, we believe that recommendation by a 
licensed provider as part of a care plan is an important sign that an 
item or service meets this standard. We cannot provide an exhaustive 
list of items and services that potentially are primarily health 
related. We consider this sufficient general guidance for plans to make 
sure that supplemental benefits meet the ``primarily health related'' 
requirement.
    Comment: In light of COVID-19, one commenter suggested CMS provide 
additional flexibility to provide supplemental benefits for high-risk 
populations that must remain in their homes. This commenter suggested 
CMS allow plans to provide home delivered meals, grocery, produce, and 
non-medical transportation for this population.
    Response: We are not finalizing a change to the proposed standards 
for defining supplemental benefits to specifically address the COVID-19 
public health emergency. Earlier in 2020, CMS issued guidance \74\ to 
MA plans, in response to the unique circumstances resulting from the 
outbreak of COVID-19. CMS exercised its enforcement discretion to adopt 
a temporary policy of relaxed enforcement in connection with the 
prohibition on mid-year benefit enhancements that was adopted in a 2008 
final rule (73 FR 43628); CMS allowed MA plans to implement additional 
or expanded benefits that address medical needs and access to 
healthcare raised by the COVID-19 outbreak, such as covering meal 
delivery or medical transportation services to accommodate the efforts 
to promote social distancing during the COVID-19 public health 
emergency. For CY2021, CMS issued additional guidance on December 28, 
2020 titled ``Contract Year 2021 Coronavirus Disease 2019 (COVID-19) 
Permissive Actions FAQ'' stating that we will continue this use of 
enforcement discretion in connection with the prohibition on mid-year 
benefit enhancements.
---------------------------------------------------------------------------

    \74\ https://www.cms.gov/files/document/updated-guidance-ma-and-part-d-plan-sponsors-42120.pdf.
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    Comment: A commenter requested that CMS provide additional clarity 
around what is intended by CMS's statement in the preamble and 
referenced guidance that a primarily health related benefit should be 
recommended by a licensed medical professional as part of a care plan 
and to clarify what is acceptable when the supplemental benefit is not 
directly provided by a licensed medical professional and the enrollee 
does not receive case management services and an individual care plan.

[[Page 5974]]

    Response: A medical professional does not have to be the individual 
or entity furnishing the supplemental item or service. We recognize 
that there are scenarios in which a medical professional would not be 
furnishing a service (for example, meals). However, the item or service 
must still meet the regulatory criteria for a supplemental benefit at 
Sec.  422.100(c)(2)(ii)(A) being finalized here, that is to be 
primarily health related, a benefit must benefits diagnose, prevent, or 
treat an illness or injury; compensate for physical impairments; act to 
ameliorate the functional/psychological impact of injuries or health. 
Recommendation by a medical professional, even if not part of a formal 
care management or care coordination plan, is an important indicator 
that a particular item or service is being furnished for primarily 
health-related purposes but is not necessarily the only indication. The 
primary purpose of an item or service is determined by national typical 
usages of most people using the item or service and by community 
patterns of care and/or by established research or medical compendia 
and journals about such item or service. To be considered healthcare 
benefits, supplemental benefits must focus directly on an enrollee's 
healthcare needs and must be medically appropriate for the enrollee. We 
expect MA plans to have procedures and processes in place to ensure a 
reasonable determination is made that the covered benefit is medically 
appropriate for the enrollee in the event that it is not practical for 
a medical professional to make a specific recommendation or evaluation.
    After consideration of the comments received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing, substantively as proposed but with clarifications, the 
proposed amendments to Sec.  422.100(c) to restructure the regulation 
text and add the three requirements for an item or benefit to be a 
supplemental benefit and to Sec.  422.100(d)(2) to restructure the 
regulation text and add a provision explicitly addressing how 
supplemental benefits that are tied to disease state or health status 
may meet the uniformity requirement and be offered as supplemental 
benefits. Although we are finalizing this provision as applicable 
beginning January 1, 2022 (2022 calendar/contract year), it effectively 
applies to 2022 bids and all plan materials and activities affecting or 
in furtherance of facilitating enrollment for the 2022 contract year. 
Therefore, the final rule will govern most plan communication and 
marketing activities and materials during the second half of 2021. 
Furthermore, it codifies current policies so we encourage MA 
organizations to take this final rule into account immediately.
    In addition, we are finalizing Sec.  422.100(c)(2)(ii)(A) with 
clarifying changes. First, we are adding the phrase ``prevent, or treat 
an illness or injury,'' which was mistakenly left out of the proposed 
rule but is part of the current policy we are codifying. Second, we are 
finalizing the regulation text in this paragraph with semi-colons 
between each phrase to make it clear that fulfilling one of the listed 
functions as the primary function is sufficient for an item or service 
to be considered primarily health related under this final rule. Third, 
we are adding text to clarity that supplemental benefits must not be 
items and services covered by Parts A, B or D; to further clarify this 
point, we added the words ``Parts A, B, and D'' in parenthesis next to 
the word Medicare in paragraph (c)(2)(ii)(C). The proposal was to 
codify already existing guidance and practices and we stated that it is 
not expected to have additional impact above current operating 
expenses; this final rule is the same on this point.

D. Rewards and Incentives Program Regulations for Part C Enrollees 
(Sec.  422.134 and Subpart V)

    As noted in the February 2020 proposed rule, based on CMS' 
authority under sections 1856(b)(1) and 1857(e)(1) of the Act, CMS, in 
2014, authorized MA organizations, including those offering a Medicare 
Medical Savings Account (MSA) plan option, to offer rewards and 
incentives (R&I) programs (79 FR 29956, May 23, 2014). We adopted this 
regulation that authorized Part C R&I programs for a number of reasons. 
In some cases, MA organizations wished to extend rewards and incentives 
already offered to their commercial members to their Medicare 
enrollees. Many MA organizations wished to sustain their current R&I 
programs as well as stay competitive with other MA organizations with 
comparable offerings. Additionally, there is evidence suggesting that 
health-driven reward and incentive programs may lead to meaningful and 
sustained improvement in enrollee health behaviors and outcomes.
    Our experience has shown that most R&I programs offered by MA plans 
fall into the following four areas:
    (i) Specified use of plan benefits such as rewards provided for 
obtaining preventive benefits at specified intervals;
    (ii) Following a specified program that promotes exercise and/or 
good nutrition;
    (iii) Participating in specified programs that educate on health 
matters and/or self-management of nutrition and exercise;
    (iv) Specified utilization of plan resources such as hotlines, 
patient portals, and similar items that facilitate promotion of health.
    In the February 2020 proposed rule, CMS proposed to amend Sec.  
422.134 to codify the guidance we have given since adopting the 
regulation in 2014, unify principles governing MA rewards and incentive 
programs, clarify the requirements of the regulation, and clarify 
flexibilities available to MA organizations under the regulation. 
Readers are directed to the proposed rule for a detailed discussion of 
the proposal (85 FR 9204 through 9108) as we are not fully repeating 
our proposal here.
    In this final rule, CMS is re-organizing the regulation at 42 CFR 
422.134 to clarify and codify existing guidance that reflects how we 
have addressed inquiries about the R&I program over the past 5 years. 
The reorganization of 42 CFR 422.134 is outlined as follows: (a) 
Definitions, (b) the option for an MA plan to offer an R&I program 
subject to the requirements of this section, (c) the requirements and 
prohibitions for target activities, (d) requirements and prohibitions 
on the offering of reward items, (e) marketing requirements, (f) 
disclosure requirements, and (g) miscellaneous requirements, for 
example, bids, sanctions, and grievances. As finalized, Sec.  422.134 
is substantially reorganized compared to the current regulation. The 
finalized policy presented here differs from the NPRM in the following 
areas: We have:
    (i) Further clarified the definition of qualifying individual at 
paragraph (a),
    (ii) Moved the requirements of uniformity of the target activity 
and provision of accommodations from paragraphs (c)(2)(iii)(A) and (B) 
to paragraphs (c)(1)(iv) and (v),
    (iii) Modified the requirement of providing accommodations (moved 
from paragraph (c)(2)(iii)(B) to paragraph (c)(1)((v)) to respond to 
commenter concerns,
    (iv) Reworded the requirement of uniformity in the reward item at 
paragraph (d)(1)(i),
    (v) Removed the prohibition of midyear changes at paragraph (g)(iv) 
and,
    (vi) Although not changing the regulatory text, clarified in the 
preamble the requirements at paragraph (d)(1)(iii).

[[Page 5975]]

    The details of these changes including comments and responses and 
the rationale for the changes are provided in their respective 
discussions below.
    We are not specifically addressing here those aspects of our 
proposal that were merely moving a provision currently in Sec.  422.134 
to a different paragraph and on which we did not receive substantive 
comments. See Table E6 for a comparison of the current regulation text 
with the regulation text we are finalizing in this rule.
    We now discuss the new requirements proposed in the February 2020 
proposed rule, the comments received, and our decision about 
finalization.
    Definitions. We proposed to codify various definitions at Sec.  
422.134(a), including ``target activity,'' ``reward item,'' ``incentive 
item,'' and ``reward and incentive program.'' Along with a proposed 
definition, we also introduced the term ``qualifying individual'' as a 
way to refer to the individual who could be eligible for or earn a 
reward; we proposed that a qualifying individual, in the context of a 
plan-covered health benefit, means any plan enrollee who would qualify 
for coverage of the benefit and satisfies the plan criteria to 
participate in the target activity; in the context of a non-plan-
covered health benefit, a qualifying individual means any plan enrollee 
who satisfies the plan criteria to participate in the target activity.
    As we considered the proposed rule, we believe that the definition 
of ``qualifying individual'' can and should be refined even though no 
commenter specifically raised the issue. To avoid any confusion about 
the limitations plans may set regarding who may participate in target 
activities, we are finalizing the definition with modifications from 
the proposal. In the context of a plan-covered health benefit (whether 
an Original Medicare benefit, an SSBCI, or other supplemental benefit), 
qualifying individual refers to any individual meeting coverage 
criteria. We introduced this definition to communicate how MA plans 
should offer reward uniformly and without discrimination to all 
enrollees and to avoid problems with uniformity discussed in detail 
below. For example, it is not a violation of uniformity if a plan 
offers rewards and incentives for any qualifying individual who gets a 
mammogram. While it is true that many men and some women do not qualify 
for mammograms, the plan is not violating uniformity in this example 
since we now define uniformity as requiring plans offer R&I to ``all 
qualifying individuals'' which in the case of plan-covered benefits is 
different than ``all enrollees.'' CMS' intention in the proposed rule 
was to codify current CMS reward and incentive policy, not to add new 
criteria for program participants to qualify for participation in an 
R&I program or to earn a reward. The proposed definition, by including 
references to satisfying the MA plan's criteria for participating in 
the activity, suggested that MA plans could limit participation in R&I 
programs in a broader manner than we intended.
    We received no comments on the proposed definitions in paragraph 
(a) itself and are finalizing paragraph (a) substantially as proposed 
for the reasons provided in the proposed rule. We also are finalizing 
edits in the definition of qualifying individual so that it is clearer 
in setting forth how enrollees are to be offered access to reward 
programs: Qualifying individual in the context of a plan-covered health 
benefit means any plan enrollee who would qualify for coverage of the 
benefit. In the context of a non-plan-covered health benefit, 
qualifying individual means any plan enrollee.
    Direct involvement of enrollee. At Sec.  422.134(c)(1)(i), we 
proposed to codify our existing guidance requiring that target 
activities must directly involve the qualifying individual and 
performance by the qualifying individual. Under our proposal, the 
completion of activities by caregivers would not qualify for a reward 
item.
    We received no comments on this provision and are finalizing it as 
proposed for the reasons provided in the proposed rule.
    Level of completion requirements. At Sec.  422.134(c)(1)(ii), we 
proposed to clarify that target activities must be specified (by the MA 
organization) in detail as to the level of completion needed in order 
to qualify for a reward item. We explained in the proposed rule how 
this was based on current Sec.  422.134(c)(1)(i), which requires a 
reward to be offered in connection with an entire service or activity, 
and our current guidance, which provided flexibility for MA 
organizations to identify ``an entire service or activity.'' Our 
proposal was essentially to codify our current guidance, which 
permitted MA organizations to offer and furnish rewards for completion 
of components of a multi-part activity so long as the MA organization 
reasonably defined the scope of the entire activity. For example, an MA 
organization may offer an eight-session weight management class; under 
this example, the MA organization may offer and provide a reward for 
either completion of all eight sessions of this eight-session weight 
management class or for attendance at each individual session of the 
weight loss class that the enrollee attends. Both of these scenarios 
are permissible as long as the plan (or R&I program) defines the target 
activity that will be rewarded.
    Comment: A few commenters requested that CMS allow provision of the 
entire incentive upfront, rather than after the incentivized benefit 
has been utilized, to capitalize on humans' innate tendency toward loss 
aversion.
    Response: We thank the commenters for their interest in 
incentivizing enrollees. We however are not adopting the recommended 
change. The R&I program, although not a benefit, is an expense to the 
Medicare Advantage program. Certain safeguards, such as a requirement 
of actual completion of activities to receive the reward, therefore, 
are necessary to avoid inappropriate use of Medicare dollars. In 
addition, we are mindful of how section 1851(h)(4) of the Act requires 
the adoption of standards that prohibit MA organizations from providing 
for cash, gifts, prizes, or other monetary rebates as an inducement for 
enrollment or otherwise; providing the reward in advance of the 
performance of the health related activity could create the appearance 
that MA plans are providing items of value as a prohibited inducement.
    We are finalizing this provision as proposed for the reasons 
provided in the proposed rule and indicated in the response to 
comments.
    Health related activity requirements. At Sec.  422.134(c)(1)(iii), 
we proposed to move the standard stated in the current regulations that 
R&I programs reward enrollees ``in connection with participation in 
activities that focus on promoting improved health, preventing injuries 
and illness, and promoting efficient use of health care resources.'' We 
proposed to move this requirement to Sec.  422.134(c)(1)(iii) to more 
clearly outline that target activities must be health-related by doing 
at least one of the following: promoting improved health, preventing 
injuries and illness, or promoting the efficient use of health care 
resources.
    Comment: Some commenters praised the clarity in the enumeration at 
Sec.  422.134(c)(1)(iii).
    Response: We thank the commenters for their support. We take this 
opportunity to clarify that we interpret the reference to the efficient 
use of health care resources in the final regulatory text as capable of 
being determined from either the perspective of the plan or the 
beneficiary. We are finalizing this provision as proposed.

[[Page 5976]]

    Uniformity: To achieve greater clarity and to address issues raised 
by commenters, we are finalizing Sec.  422.134(c) with several changes 
from the NPRM in connection with uniformity and non-discrimination 
requirements.
    The requirements of uniformity and provision of accommodations 
(that is, that rewards must be offered uniformly to all qualifying 
individuals and that accommodations must be provided to otherwise 
qualifying individuals who are unable to perform the target activity in 
a manner that satisfies the intended goal of the target activity. for 
target activities) were proposed to be codified at Sec.  
422.134(c)(2)(ii) as standards to ensure that anti-discrimination 
requirements were met. We are finalizing these concepts as part of the 
standards for target activities, at Sec.  422.134(c)(1)(iv) and (v). 
Upon reflection and based on the comments requesting clarification 
related to these concepts, we believe that uniformity and provision of 
accommodations are positive statements and best classified as 
requirements for target activities at Sec.  422.134(c)(1) rather than 
as part of demonstrating compliance with a prohibition against 
discrimination. We believe these standards serve purposes in addition 
to anti-discrimination, such as encouraging participation in health 
related activities in the broadest way possible even if limiting access 
to a reward would not necessarily be based on a prohibited basis like 
health status, race or sex. This reorganization of how these standards 
apply provides greater clarity and transparency for the application of 
Sec.  422.134.
    We now discuss each of these requirements separately by presenting 
the comments we received on them.
    Uniformity: We are finalizing the requirement that a target 
activity must uniformly offer any qualifying individual the opportunity 
to participate in the target activity at Sec.  422.134(c)(1)(iv). This 
means that target activities must be designed so that they are 
uniformly offered to all qualifying individuals, as that term is 
defined in paragraph (a). For example, regarding an R&I program that 
provides a reward for obtaining a mammogram, providing rewards only to 
those enrollees who have never before obtained a mammogram would 
violate the uniformity requirement as it would leave out members who 
have previously obtained a mammogram but are otherwise qualifying 
individuals. We believe that this uniformity requirement is key to 
preventing discrimination against different groups of enrollees and 
consistent with our current guidance in section 100 of Chapter 4 of the 
Medicare Managed Care Manual. This requirement ensures that reward 
programs encourage all enrollees to be actively engaged in their health 
care and activities that ultimately improve and sustain their overall 
health and well-being.
    The purpose of CMS implementing the R&I program requirements this 
way is to incentivize all individuals to engage in target activities 
that will meet one of three health-related goals. Enrollees who have 
previously taken steps to care for their health should be incentivized 
to continue to do so as much as individuals who are taking such steps 
for the first time.
    Comment: Some commenters suggested we allow R&I programs to target 
a beneficiary's clinical status, for example, those who would most 
benefit from the incentivized intervention or those who are not using a 
benefit. Another commenter wanted to reward women who had not had 
mammograms in three years with a higher reward to encourage them to get 
mammograms more regularly by providing a higher reward. These 
commenters noted that recent legislative and regulatory activities have 
permitted Medicare Advantage plans to tailor health benefits to 
targeted populations, ensuring they meet the unique needs of specified 
groups of beneficiaries based on diagnosed conditions or diseases. The 
commenters indicated that, in the same way, CMS should explore 
permitting Medicare Advantage plans to tailor R&I programs for 
beneficiaries to meet the needs of clearly defined groups of 
beneficiaries. The commenters believed this could improve participation 
in care and improve outcomes by incentivizing compliance in clinical 
recommendations such as attending office visits or participating in 
wellness programs tailored to their needs.
    Response: We thank the commenters for raising these issues. In 
response to the suggestion that we allow R&I programs to target those 
who are not using a benefit, we note that this would not be allowed 
because it would not be offered uniformly to all qualifying individuals 
and, as explained above, goes against the goal of R&I programs. In 
response to the suggestion that CMS allow an R&I program to reward 
women who had not had mammograms in three years with a higher reward, 
we note that, as worded by the commenter, this violates the general 
non-discrimination provision at 42 CFR 422.134(g)(1) because the reward 
would only go to women. If the target activity had instead been 
formulated by the commenter as targeting any qualifying individual who 
has not had a mammogram in three years, this would still not be allowed 
since it does not offer the target activity uniformly to all qualifying 
individuals but only to those individuals who have not had a mammogram 
in three years. Providing different rewards to those completing a 
mammogram based on their past history of mammogram services would 
violate the uniformity of reward requirement at 42 CFR 
422.134(d)(1)(i), which is discussed further below.
    We believe the reference to recent legislative and regulatory 
activity refers to Special Supplemental Benefits for the Chronically 
Ill (SSBCI) recently codified in CMS-4190-F1. We are not persuaded that 
the same approach is necessary for R&I programs because SSBCI is a 
benefit but rewards and incentives are not benefits. In the case of 
SSBCI, these special types of benefits are allowed to be targeted to 
enrollees who specifically need them while enrollees who do not need 
SSBCI are not allowed these items; contrastively, R&I is beneficial for 
all enrollees irrespective of their past since both those who are 
currently using benefits as well as those who are not currently using 
benefits can be incentivized to either start using the benefit or 
continue using the benefit. CMS believes the intent of R&I programs to 
incentivize all enrollees to engage in healthy behaviors to improve 
health outcomes applies universally. Maximizing access to R&I programs 
by enrollees will result in broader benefits and broader engagement in 
health related activities. Further, ensuring broad access by any 
qualifying enrollee to the target activity (and therefore access to 
earning the reward) ensures that a beneficiary will not be persuaded to 
enroll in a particular plan based on the reward program and 
subsequently learn that he or she is not able to participate in the 
reward program because the target activity is limited to enrollees who 
have never engaged in it.
    However, an MA plan may design an R&I program that could 
effectively target enrollees with a specific condition or disease state 
and for those who would benefit most from the incentivized 
interventions (as suggested by commenters) without violating the non-
discrimination or uniformity requirements being finalized in Sec.  
422.134. Plans may do this by rewarding qualifying individuals for 
participating in target activities that are covered benefit items and 
services as these benefits must be medically necessary, or for SSBCI 
have a reasonable expectation of improving or maintaining the health or 
overall function of the chronically ill enrollee,

[[Page 5977]]

for an individual to obtain. As finalized, Sec.  422.134 does not 
require a plan to cover an item or service when it is not medically 
necessary, even if getting that particular covered benefit is the 
target activity for an R&I program. Therefore, these types of target 
activities are already tailored to the qualifying individual's needs 
based on a specific condition or disease state and would be available 
to those who would benefit most from the incentivized intervention. For 
example, an R&I program designed to offer rewards to any qualifying 
individual for using glucose test strips would likely help an MA plan 
reach their diabetic enrollee population, as glucose test strips are 
generally only considered medically necessary if an enrollee is 
diabetic, while also allowing other members, in rare instances, who may 
need glucose test strips an opportunity to be rewarded for engaging in 
the healthy behavior as well.
    We are finalizing the uniformity requirement for target activities 
at paragraph (c)(1)(iv) as proposed (with the move from paragraph 
(c)(2)(iii)(A) to paragraph (c)(1)(iv) discussed above) for the reasons 
provided in the proposed rule and our discussion in this final rule.
    Accommodations: We next discuss the requirement of providing 
accommodations at Sec.  422.134(c)(1)(v) (moved from Sec.  
422.134(c)(2)(iii)(B)) and comments received on this requirement. 
Proposed paragraph (c)(1)((v) stated a requirement for an MA 
organization to provide accommodations to otherwise qualifying 
individuals who are unable to perform the target activity in a manner 
that satisfies the intended goal of the target activity.
    Comment: Comments on our proposal that MA organizations provide 
accommodations to qualifying individuals were generally supportive. The 
commenters generally stated that providing accommodations to those who 
wish to participate, but are without the means to do so, will allow the 
benefits of these R&I programs to positively impact the health of a 
broader population of members. However, a commenter pointed out that an 
accommodation should not be permitted if such an accommodation would 
contradict the purpose of the target activity. This commenter agreed 
that as a general matter plans should accommodate members without 
internet access wherever possible to offer an alternative offline 
activity consistent with the purpose of the target activity. For 
example, a plan that rewards members who report their exercise online 
can accommodate a member without internet access by allowing that 
member to verbally report their exercise to a call center. In this 
example, rewarding the alternative activity serves the purpose of the 
original target health activity. However, where the target activity is 
intended to promote the efficient use of resources, such as agreeing to 
electronic delivery of documents, the commenter statutes that it would 
not reasonable to require plans to offer an offline alternative, as an 
offline activity would not promote the efficient use of resources and 
would be directly contrary to the reward's purpose.
    Response: We appreciate the support for the requirement that MA 
organizations provide accommodations. As stated previously, we believe 
that this requirement will ensure that R&I programs are broadly based 
and encourage enrollees to be actively engaged in their health care 
and, ultimately, improve and sustain their overall health and well-
being. We agree with the commenter's concern and are therefore 
finalizing the requirement for accommodations with additional text to 
provide that the required accommodation be consistent with the goal of 
the target activity. We encourage MA organizations to take into account 
the resources, abilities, and characteristics of its enrolled 
population in devising R&I programs and in identifying target 
activities. As noted above, we believe moving the accommodation 
requirements from paragraph (c)(2)(iii)(B) to paragraph (c)(1)(v) 
provides greater clarity and transparency in imposing this as an 
affirmative standard for all target activities. It also removes any 
implied limitation that accommodations are only necessary to ensure 
that a prohibited basis for discrimination (such as race, ethnicity, 
sex or health status) is not being used. As illustrated in our example 
in the proposed rule and our current guidance in section 100.2 of 
Chapter 4 of the Medicare Managed Care Manual, the requirement for 
accommodations is broadly interpreted in order to ensure access for all 
qualifying individuals.
    Part D target activities. We proposed, at Sec.  422.134(c)(2)(i), 
to prohibit target activities that are related to Part D benefits 
because the provisions in Part 422 pertain to Medicare Advantage Part C 
and not to Part D. This is consistent with our subregulatory guidance 
in Chapter 4 of the Managed Care Manual as well as with responses to 
comments in the 2014 rule which initially authorized MA plans to use 
R&I programs (79 FR 29917). Should a Part D R&I program be developed, 
it will be a separate provision from this one, with regulatory language 
added to Part 423. We note that in section IV.F of this final rule, we 
are finalizing a narrow reward program provision for Part D plans.
    Comment: We received several comments from stakeholders urging CMS 
to allow Part D sponsors to offer rewards for target activities related 
to Part D benefits, such as beneficiary adherence to a medication 
regimen(s). Commenters generally believed that such an allowance could 
benefit enrollees by improving compliance. One commenter noted that the 
specific application of R&I for healthy prescription drug behaviors of 
enrollees of MA-PD plans is being tested by CMMI in the MA VBID model. 
An initial evaluation based on the first year of experience found that 
plans were able to drive more appropriate use of medical services by 
providing rewards and incentives. Beginning in plan year 2019, plan 
sponsors were able to include R&I for prescription drugs as well; 
however, these programs have not yet been evaluated. Commenters 
recommended allowing Part D R&I programs for both MA-PD plans as well 
as stand-alone prescription drug plans.
    Response: We thank the commenters for their recommendations and the 
citations of similar programs offered elsewhere. CMS regularly reviews 
the various models being tested by the Center for Medicare and Medicaid 
Services Innovation Center to ascertain what works and what can be 
incorporated into our general programs. An example of CMS's commitment 
to new ideas may be found in Section IV.F of this final rule which 
creates a limited R&I program for the real time benefit tool. We note 
that Section IIIC of this final rule presents a comment similar to the 
comment just cited, requesting that R&I be used to incentivize return 
of unused opioids. However, as noted in Section IIIC and as noted 
above, it is out of scope of Sec.  422.134 to allow a Part D R&I 
program. CMS did not propose a regulation to authorize general Part D 
reward and incentive programs and therefore is not finalizing such a 
new regulation.
    We are therefore finalizing Sec.  422.134(c)(2)(i) as proposed and 
reiterate that it does not authorize rewards or incentives tied to Part 
D benefits, either by MA organizations that offer MA-PD plans or by 
other Part D sponsors that offer stand-alone Part D plans.
    Non-Discrimination and Health Status. R&I programs must not be 
discriminatory; there is a general prohibition about that proposed and 
finalized at Sec.  422.134(g)(1). At Sec.  422.134(c)(2)(ii), we 
proposed to revise

[[Page 5978]]

and clarify the non-discrimination requirements in the current 
regulation and codify our current guidance on those requirements. 
Proposed at paragraph Sec.  422.134(c)(2)(ii)(C) and finalized at Sec.  
422.134(c)(2)(ii), this regulation generally prohibits target 
activities from discriminating against enrollees and requires 
specifically that MA organizations comply with Sec.  422.134(g)(1) and 
not design a reward program that is based on the achievement of a 
health status measurement. Current sub-regulatory guidance provides 
that non-discrimination, which is part of the current regulation at 
Sec.  422.134(c)(1)(ii), requires in part that a target activity not 
consist of the achievement of a specific health status or measurement 
or outcome as this would be discrimination based on health status. For 
example, an MA organization would be prohibited from creating a target 
activity that stipulates achieving a certain weight, or achieving a 
certain Body Mass Index (BMI) score. However, a target activity could 
consist of some combination or all of the following: Maintaining an 
exercise program, eating nutritious meals (with ``nutritious'' being 
further defined by the plan), and taking weight measurements at 
periodic intervals. Similarly, an MA organization would be prohibited 
from creating a target activity that stipulates achieving a blood 
pressure reading in a certain range but a permissible target activity 
could consist of taking blood pressure measurements at periodic 
intervals.
    We did not receive any comments that specifically discussed this 
part of the proposed rule. We are finalizing the provisions at Sec.  
422.134(c)(2)(ii) as proposed for the reasons provided in the proposed 
rule.
    Offered Uniformly. We proposed at new paragraph (d)(1)(i) to 
require reward items to be offered uniformly to any qualifying 
individual who performs the target activity. In the proposed rule, we 
explained that this would codify our current subregulatory guidance, 
which ties the standard to the non-discrimination requirement in the 
current version of Sec.  422.134(b)(2) that reward programs must be 
designed so that all enrollees are able to earn rewards.
    We did not receive any comments specific to the proposed 
requirement proposed in paragraph (d)(1)(i) that reward items be 
offered uniformly to qualifying individuals. However, in order to avoid 
conflating this requirement with the uniformity requirement we are 
finalizing at paragraph (c)(1)(iv) regarding target activities, we are 
finalizing paragraph (d)(1)(i) as a requirement that reward items must 
be offered identically to any qualifying individual who performs the 
target activity. This requirement is to ensure that each enrollee has 
access to the same reward items (or same choice among reward items if 
applicable). While related to the uniformity requirement for target 
activities, it is designed to address the potential that some enrollees 
would receive different, potentially more valuable, reward items 
compared to other enrollees. This requirement is a reflection of the 
non-discrimination principles underlying several other requirements 
being finalized in Sec.  422.134. We believe that this additional 
standard is necessary to ensure that R&I programs are operated in an 
equitable way and that the use of different reward items does not 
result in more incentive being offered by the MA plan to certain 
enrollees. As discussed previously, R&I programs should be broadly 
based and operated for the benefit of all enrollees or as many 
enrollees as possible; using identical rewards for each qualifying 
individual who performs the same target activity contributes to that 
goal.
    Note that throughout Sec.  422.134 we use the term ``perform'' or 
``performance.'' However at paragraph (c)(1)(ii) we refer to the 
``level of completion needed in order to qualify for the reward.'' We 
therefore clarify that our use of ``perform'' refers to the performance 
of the entire health related activity. At paragraph (c)(1)(ii) we refer 
to the ``level of completion needed'' because rewards must be earned by 
completing an entire service or activity (or combination of services/
activities), as established by the MA plan, and may not be offered for 
completion of less than any/all required component(s) of the eligible 
service or activity. This requirement allows CMS and MA plans to 
interpret the value of a reward or incentive in relation to the service 
or activity for which it is being offered. Plans are expected to 
reasonably define the scope of a health related service or activity 
within their RI Program design and assign a value of the reward 
accordingly. For example, a plan may decide to offer rewards and/or 
incentives for participation in a smoking cessation program. The plan 
may decide to give smaller rewards for each class or counseling session 
attended or may offer a single, larger reward for completing a pre-
determined number of classes or counseling sessions.
    We did not receive any comments that specifically discussed this 
part of the proposed rule. We are finalizing the provisions at Sec.  
422.134(d)(2) as proposed for the reasons provided in the proposed rule 
and.
    Direct and Tangible. At Sec.  422.134(d)(1)(ii), we proposed, 
consistent with current guidance, to require that reward items be 
direct and tangible. For example, a reward item cannot consist of a 
charitable donation.
    We received no comments on this provision and are finalizing it as 
proposed for the reasons provided in the proposed rule.
    Transfer of ownership. At Sec.  422.134(d)(1)(iii), we proposed to 
require that the reward item must be provided, such as through transfer 
of ownership or delivery, to the enrollee in the contract year in which 
the activity is completed, regardless if the enrollee is likely to use 
the reward item after the contract year.
    Comment: Several commenters pointed out that this provision may 
pose operational concerns. For example, in late December an enrollee 
may complete a target activity that the plan finds out about at the 
beginning of the next plan year, which is outside of the time the 
enrollee could claim the reward as the guidance currently states.
    Response: We agree with the commenters' concerns. We believe the 
language in the NPRM did not adequately communicate our intent that the 
R&I program be based on activities completed during the contract year. 
As stated in the NPRM, we believe that MA plans should not be able 
erase a gift card provided as a reward or invalidate the reward in the 
next contract year after the enrollee has completed the target 
activity. We believe that this is an important beneficiary protection 
to ensure that rewards are timely provided to the enrollee and that the 
enrollee retain the rights to use the reward whenever he or she wants. 
(85 FR 9107) While we acknowledge that the preamble explanation 
introduced the idea of ``timely provision to the enrollee,'' that was 
not part of the proposed regulation text. Our regulatory text was 
intended to require that the reward item be provided to the enrollee, 
such as through transfer of ownership or delivery, for a target 
activity completed in the contract year during which this R&I program 
was offered, regardless if the enrollee is likely to use the reward 
item after the contract year. The intended criterion was that the 
reward-item be delivered based on a target activity completed in the 
contract year during which this R&I program was offered.
    We are finalizing paragraph (d)(2)(ii) with modifications such that 
the regulation requires delivery based on the completion of the target 
activity during the contract year. Under this final rule, delivery of 
the reward item in

[[Page 5979]]

the next contract year, such as after administrative activities 
associated with the reward program are performed, is permissible. 
However, the qualifying individual cannot be required to continue 
activities into the next contract year to retain or gain the reward 
earned during a prior contract year.
    Reward Items. At Sec.  422.134(d)(2)(i), we proposed to reorganize 
existing provisions and codify existing guidance to set forth clearer 
regulation text about what items could not be offered as rewards. 
Currently, Sec.  422.134(c)(2) prohibits rewards from being offered in 
the form of cash or monetary rebates and our subregulatory guidance 
explains that this includes reductions in cost sharing or premiums and 
gift cards that are redeemable for cash. We proposed regulation text 
explicitly to prohibit reward items from being offered in the form of 
cash, cash equivalent or other monetary rebates (including reduced cost 
sharing or premiums). We also proposed regulation text to set forth 
that an item is considered cash or cash equivalent if it: (A) Is 
convertible to cash (such as a check); or (B) Can be used like cash 
(such as a general purpose debit card). In addition, the proposed rule 
prohibited reward items that involve elements of chance or have a value 
that exceeds the value of the target activity itself.
    We also proposed, at paragraph (d)(3), to list examples of 
permissible reward items for a target activity, specifically that 
reward items may: (i) Consist of ``points'' or ``tokens'' that can be 
used to acquire tangible items; and (ii) be offered in the form of a 
gift card that can be redeemed only at specific retailers or retail 
chains or for a specific category of items or services. Like the 
prohibition on using items that involve an element of chance, the 
examples of permissible reward items were based on our guidance and 
responses to questions since Sec.  422.134 was first adopted.
    Comment: We received many comments on these provisions. Commenters 
advocated for authority to use general debit cards as a reward item, 
specifically arguing that targeted gift cards can be burdensome and 
confusing. A commenter advocated for the provision of incentives in the 
form of monetary credits toward monthly premiums or cost sharing 
requirements.
    Response: Section 1851(h)(4) and 1854(d)(1) of the Act both 
prohibit an MA organization from giving enrollees cash or monetary 
rebates as an inducement for enrollment or otherwise. Since the statute 
prohibits cash or monetary rebates, we proposed, consistent with the 
statute, to prohibit reductions in cost-sharing from being used as a 
reward. Since the statute prohibits cash, we proposed to prohibit 
giving a reward for anything that can be used as cash or cash 
equivalent such as checks or general debit cards. In arriving at this 
conclusion, we saw the primary attribute of cash as its universal use 
to purchase. For this reason, we proposed to prohibit general debit 
cards which can be used universally but to allow, at paragraph 
(d)(3)(ii), a gift card that can be redeemed only at specific retailers 
or retail chains or for a specific category of items or services. We 
similarly prohibited checks which are easily converted to cash and then 
can be used universally.
    As to the suggestion that using that targeted gift cards can be 
burdensome and confusing and therefore CMS should permit the use of 
general debit cards as rewards, we note that the use of any gift card 
as a reward item is optional. If a plan finds that beneficiaries are 
confused or burdened by targeted gift cards, the MA plan may choose to 
use another form of reward. As explained above, we view general debit 
cards as the equivalent of cash and believe that Sec.  422.134 must be 
consistent with the statutory prohibition on MA organizations providing 
cash as an inducement. Our experience with the program suggests that 
many stakeholders implement R&I with multiple gift cards. While it 
would be more convenient to have just one gift card, we do not believe 
it correct to say that multiple gift cards are burdensome and 
cumbersome since in practice plans are already using this vehicle for 
rewards, implying that their enrollees find the benefits of multiple 
gift cards outweigh the burdensomeness. As to the minor inconvenience 
of multiple gift cards, minor inconvenience is not a sufficient reason 
to override a statutory prohibition. Further, we note that providing a 
choice among equal value gift cards, so long as all qualifying 
individuals are offered the identical choice consistent with Sec.  
422.134(d)(1)(i) as finalized here, is also permitted.
    We are finalizing these provisions as proposed for the reasons 
outlined in the proposed rule and our responses to comments.
    Marketing. As part of the reorganization of Sec.  422.134, we 
proposed at paragraph (e) a provision requiring compliance with all 
marketing and communications requirements in Part 422, Subpart V rather 
than specifically adopting marketing and communication requirements for 
reward programs in Sec.  422.134. Section VI.H of the proposed rule and 
section V.E of this final rule discuss the marketing and communications 
requirements for MA organizations, including provisions specific to 
reward programs.
    Comment: Commenters expressed concern that while CMS has proposed 
that R&I programs be subject to the marketing requirements, they are 
only communications and not subject to marketing requirements.
    Response: As proposed (and finalized) in Sec.  422.134(g)(3), and 
as indicated in CMS' subregulatory guidance in Chapter 4, R&I are 
classified as non-benefits. Consequently, R&I are not subject to 
inclusion in the Annual Notice of Change (ANOC) or Evidence of Coverage 
(EOC). Nevertheless, CMS believes treating materials about R&I programs 
offered by MA plans as subject to the marketing and communications 
requirements and standards in Part 422, Subpart V is appropriate. As 
proposed and finalized in Section V.E of this final rule, the 
definition of marketing (Sec. Sec.  422.2260 and 423.2260) includes 
content regarding rewards and incentives; we believe that this is 
appropriate because the availability of R&I programs and rewards may 
influence the decision of a beneficiary to enroll or stay enrolled in a 
particular MA plan. The beneficiary protections, review standards and 
prohibitions that apply to marketing materials and activities (as well 
as those that apply to communications) will apply to materials and 
activities about rewards and incentives when those materials and 
activities are intended to (i) draw a beneficiary's attention to an MA 
plan or plans or (ii) influence a beneficiary's enrollment decision(s). 
We also direct readers to section V.E of this final rule for additional 
discussion of the definition of marketing and the standards and 
requirements that apply to marketing and communications materials.
    We are finalizing paragraph (e) as proposed for the reasons 
outlined in the proposed rule and our responses to comments.
    Reporting requirements. At Sec.  422.134(f), we proposed regulation 
text to require an MA organization to make information available to CMS 
upon request about the form and manner of any rewards and incentives 
programs it offers and any evaluations of the effectiveness of such 
programs.
    Comment: We received comments on this proposal. A commenter 
supported a reporting requirement to ensure that plans are implementing 
any reward programs fairly and without discrimination. Another 
commenter believed it sufficient for the purpose of monitoring and 
oversight that MAOs provide information upon request

[[Page 5980]]

without the additional burden of a specific reporting format.
    Response: We thank the commenters for their interest in oversight 
and fairness and support for a reporting requirement. Currently, Sec.  
422.134(c)(3) includes a reporting requirement in connection with R&I 
programs and our proposal carried over that provision verbatim to the 
proposed revision at 422.134(f). The policy itself was not originally 
proposed in this rulemaking; what is finalized in this rule is the 
change of location from paragraph (c)(3) to paragraph (f). Based on the 
current regulation, CMS has had for several years annual reporting 
requirements for R&I programs. These reporting requirements are 
accessible at https://www.cms.gov/files/document/cy2020-part-c-reporting-requirements04222020.pdf. Thus far, CMS has found these 
reporting requirements sufficient for its oversight needs.
    Miscellaneous. At Sec.  422.134(g)(2), we proposed regulation text 
to clarify that plan failure to comply with R&I program requirements 
may result in a violation of one or more of the bases for imposing 
sanctions at Sec.  422.752(a). At Sec.  422.134(g)(3), we proposed 
regulation text to codify existing guidance that the reward and 
incentive program is classified as a non-benefit expense in the plan 
bid and that disputes on rewards and incentives must be treated as a 
grievance under 422.564.
    Comment: A few commenters supported our codification at paragraph 
(g)(3) that R&I programs are classified as a non-benefit expense.
    Response: We thank the commenters for their supportive comments.
    We received no other comments on these provisions and are 
finalizing as proposed for the reasons provided in the proposed rule.
    Midyear changes. At Sec.  422.134(g)(4), we proposed regulation 
text to prohibit mid-year changes to reward and incentive programs. We 
explained in the proposed rule that this new provision was based on how 
the reward and incentive program must be included in the plan bid each 
year and that we considered it an important beneficiary protection.
    Comment: We received numerous comments with diverse perspectives on 
our proposal to prohibit mid-year changes in R&I programs. Some 
commenters were supportive: They were aware of the issue of the 
integrity of the bid and also believed that mid-year R&I program 
changes would be confusing to enrollees. By contrast, some commenters 
wanted the flexibility to respond mid-year to low utilization of plan 
resources and benefits by designing rewards targeted to those 
populations. Other commenters suggested a compromise: Allow additions 
of R&I mid-year (positive changes) but prohibit negative changes 
(removal of R&I).
    Response: We thank all commenters for their insights. In reviewing 
these comments, we also considered that reward and incentives are not 
classified as benefits and therefore are not subject to the same 
prohibition on mid-year changes in benefits that we adopted in 2008 (73 
FR 43628). Historically, we have permitted changes in administrative 
rules or policies for other things that are not benefits; non-benefit 
changes midyear are governed by the requirements relating to mid-year 
plan rule changes presented at 42 CFR 422.111(d), which ensures that 
enrollees are notified of the changes at least 30 days before the 
effective date of the change. We believe that these considerations 
resolve the concerns underlying our proposal to prohibit mid-year 
changes in reward and incentive programs. Consequently, we are not 
finalizing the proposed regulatory change to prohibit midyear changes 
to R&I.
    After consideration of the comments we received on proposed Sec.  
422.134 and for the reasons outlined in the proposed rule and our 
responses to comments, we are finalizing the proposed regulation with 
some limited changes from the proposal. Specifically, we are finalizing 
minor technical and grammatical changes throughout the regulation and 
several substantive changes. The substantive changes include: (1) 
Changes in the codification and application of the uniformity and 
accommodation policies finalized in paragraphs (c)(1)(iv) and (v) but 
that were proposed in paragraphs (c)(2)(ii)(A) and (B); (2) clarifying 
changes in paragraph (d)(1)(i) regarding how all qualifying individuals 
must be offered the same rewards for the particular target activity; 
(3) clarifying changes in the definition of qualifying individual; and 
(4) clarifying changes in paragraph (d)(1)(iii) to address delivery of 
a reward. In addition, we are not finalizing paragraph (g)(4). Because 
Sec.  422.134 as finalized here substantially reorganizes the existing 
regulation while maintaining most of the current requirements, Table E6 
summarizes where existing provisions have been moved and where we are 
codifying existing guidance.

   Table E6--Comparison of Finalized CFR Regulations With Current CFR
                               Regulations
------------------------------------------------------------------------
 Sec.   422.134, CMS-4190-F2
       (as finalized)             Brief summary       Current provision
------------------------------------------------------------------------
(a) Definitions.............  Provide definitions   Codifies terms and
                               of R&I, reward        concepts used in
                               item, target          the regulation
                               activity etc.         consistent with
                                                     current guidance.
(b) Offering an R&I program.  Plans may offer an    Current 422.134(a).
                               R&I Program.
(c) Target Activities.......  One comprehensive     Requirements and
                               list of all           prohibitions are
                               requirements and      currently scattered
                               prohibitions          throughout current
                               (Details are          Sec.   422.134 and
                               provided in the       codifies existing
                               following rows).      guidance.
(c)(1)......................  Requires that the     Requirements and
                               level of completion   prohibitions are
                               of the target         currently scattered
                               activity be           throughout current
                               specified.            Sec.   422.134 and
                                                     codifies existing
                                                     guidance.
(c)(1)(i)...................  Specifies that the    Codifies existing
                               target activity       guidance.
                               must directly
                               involve the
                               qualifying
                               individual.
(c)(1)(ii)..................  The target activity   Clarification and
                               must be specified,    restatement of
                               in detail, as to      current Sec.
                               the level of          422.134(c)(1)(i)
                               completion needed     and codifies
                               in order to qualify   existing guidance.
                               for the reward item.
(c)(1)(iii).................  The target activity   Currently Sec.
                               must be health        422.134(a) and in
                               related.              existing guidance.
(c)(1)(iv)..................  The target activity   Current Sec.
                               is required to be     422.134(b)(2).
                               uniformly offered
                               to all qualifying
                               enrollees.
(c ) (1) (v)................  Accommodations are    Codifies existing
                               required for those    guidance related to
                               unable to do the      the non-
                               target activity but   discrimination
                               otherwise qualify.    requirement in
                                                     current Sec.
                                                     422.134(1)(1)(ii).

[[Page 5981]]

 
(c)(2)......................  Prohibitions on       Requirements and
                               target activities.    prohibitions are
                                                     currently scattered
                                                     throughout current
                                                     Sec.   422.134 and
                                                     codifies existing
                                                     guidance.
(c)(2)(i)...................  The target activity   Codifies existing
                               shall not be          guidance and the
                               related to Part D     interpretation
                               benefits.             adopted in the 2014
                                                     final rule.
(c)(2)(ii)..................  The target activity   Current Sec.
                               shall not be          422.134(b)(1)
                               discriminatory.       prohibits
                                                     discrimination in
                                                     the R&I program
                                                     generally.
(c)(2)(ii)(A)...............  Not reward a health   Codifies existing
                               status measurement.   guidance related to
                                                     the non-
                                                     discrimination
                                                     requirement in
                                                     current Sec.
                                                     422.134(1)(1)(ii).
(d) Reward items............  List of               Requirements and
                               requirements,         prohibitions are
                               prohibitions, and     currently scattered
                               permissions.          throughout current
                                                     Sec.   422.134 and
                                                     codifies existing
                                                     guidance.
(d)(1)......................  Requirements that     Requirements and
                               must be met for       prohibitions are
                               reward items.         currently scattered
                                                     throughout current
                                                     Sec.   422.134 and
                                                     codifies existing
                                                     guidance.
(d)(1)(i)...................  Reward items must be  Current Sec.
                               identically offered   422.134(b)(2) and
                               to all qualifying     codifies current
                               enrollees             guidance.
                               completing the
                               target activity.
(d)(1)(ii)..................  Reward is direct and  Codifies existing
                               tangible.             guidance.
(d)(1)(iii).................  Ownership transfer    Codifies and
                               of reward items for   clarifies existing
                               target activities     guidance.
                               completed within
                               the contract year
                               during which this
                               R&I program was
                               offered.
(d)(2)......................  Prohibitions on       Requirements and
                               reward items.         prohibitions are
                                                     currently scattered
                                                     throughout current
                                                     Sec.   422.134 and
                                                     codifies existing
                                                     guidance.
(d)(2)(i)...................  Prohibition of cash   Current Sec.
                               and monetary          422.134(c)(2)(i).
                               rebates.
(d)(2)(i)(A) and (B)........  Definition of cash,   New provision to
                               cash equivalents or   clarify terms.
                               other monetary
                               rebates.
(d)(2)(ii)..................  Value of reward item  Current Sec.
                               does not exceed       422.14(c)(1)(iii).
                               value of target
                               activity.
(d)(3)......................  Reward not based on   Codifies existing
                               elements of chance.   guidance.
(d)(3)......................  Allowance of i)       Codifies existing
                               tokens and ii)        guidance.
                               specified gift
                               cards.
(e) Marketing Requirements..  Makes marketing       Current Sec.
                               requirements as       422.134(c)(2)(ii)
                               found in Subpart V    prohibits targeting
                               of 42 CFR 422         new enrollees;
                               applicable to this    marketing
                               section 422.134.      requirements are
                                                     otherwise not in
                                                     current Sec.
                                                     422.134.
(f) R&I Disclosure..........  Disclose information  Current Sec.
                               and provide reports   422.134(c)(3).
                               on request to CMS.
(g) Miscellaneous...........  Items not directly    Requirements and
                               about requirements    prohibitions are
                               of reward item,       currently scattered
                               target activity,      throughout current
                               marketing, or         Sec.   422.134 and
                               disclosure.           codifies existing
                                                     guidance.
(g)(1)......................  Compliance with       Current Sec.
                               other laws (anti-     422.134 (c)(1)(iv).
                               kickback, fraud,
                               etc.).
(g)(2)......................  Possible sanctions    Current Sec.
                               for violation.        422.134(b)(3).
(g)(3)......................  Non-benefit expense   Codifies current
                               in bid.               guidance about
                                                     application of
                                                     bidding regulations
                                                     at Sec.  Sec.
                                                     422.254 and
                                                     422.256.
------------------------------------------------------------------------

E. Requirements for Medicare Communications and Marketing (Sec. Sec.  
422.2260-422.2274; 423.2260-423.2274)

    Sections 1851(h) and (j) of the Act provide a structural framework 
for how Medicare Advantage (MA) organizations may market to 
beneficiaries and direct CMS to adopt standards related to the review 
of marketing materials and limitations on marketing activities. Section 
1860D-1(b)(1)(B)(vi) of the Act directs that the Secretary use rules 
similar to and coordinated with the MA rules at section 1851(h) for 
approval of marketing material and application forms for Part D plan 
sponsors. Section 1860D-4(l) of the Act applies certain prohibitions 
under section 1851(h) to Part D sponsors in the same manner as such 
provisions apply to MA organizations. CMS has adopted regulations 
related to marketing and mandatory disclosures by MA organizations and 
Part D sponsors in Sec.  422.111; 42 CFR part 422, subpart V; Sec.  
423.128; and 42 CFR part 423, subpart V; these regulations include the 
specific standards and prohibitions in the statute as well as standards 
and prohibitions promulgated under the statutory authority granted to 
the agency. Additionally, under Sec.  417.428, most marketing 
requirements in Subpart V of part 422 apply also to section 1876 cost 
plans. CMS has long provided further interpretation and guidance for 
these regulations in the form of a marketing manual titled the Medicare 
Communications & Marketing Guidelines (MCMG), previously known as the 
Medicare Marketing Guidelines. Because the proposal and this final rule 
are applicable to MA organizations, Part D plan sponsors, and cost 
plans, we refer to each of these regulated entities as a ``plan.''
    In the February 2020 proposed rule, CMS proposed to codify guidance 
contained in the MCMG by integrating it with the existing regulations. 
To incorporate the guidance, we proposed to reorganize and redesignate 
the existing and proposed provisions according to the topics included 
in the MCMG; we explained that this order and organization was familiar 
to the Medicare Advantage, cost, and Part D plans that are subject to 
the rules. As a result, the proposed regulatory provisions reflected 
some changes to the current regulations, even though CMS did not 
propose to substantively change much of the policy. To be clear, the 
policies we proposed to codify are not new; they are in the MCMG and 
were

[[Page 5982]]

developed over time in concurrence with stakeholder feedback to 
implement and administer the current regulations.
    The first of the policies that CMS proposed to codify, in 
Sec. Sec.  422.2260 and 423.2260, is the guidance related to the 
definitions of ``marketing'' and ``communications,'' as well as 
additional definitions from the MCMG. As explained in the February 2020 
proposed rule, CMS has amended the marketing regulations for both the 
MA and the Part D programs at 42 CFR parts 422 and 423, subparts V, 
respectively, since their original implementation, and provided sub-
regulatory guidance in the MCMG each time to ensure beneficiaries 
receive the necessary information to make informed choices. Recently, 
in the April 2018 final rule, we established new definitions for 
communications materials and activities and marketing materials and 
activities in 42 CFR 422.2260 and 423.2260, which set out the scope of 
materials and activities subject to the regulations. In the 2019 MCMG, 
we clarified these definitions based on our interpretation of the 
regulatory terms ``intent'' and ``content'' as the deciding factors for 
when a communication activity or material is marketing.
    We proposed to codify the MCMG guidance and revise the regulation 
text at Sec. Sec.  422.2260 and 423.2260 to align more closely with the 
interpretation explained in our guidance. Specifically, we proposed 
that ``marketing'' means communications materials and activities that 
meet certain standards for intent and content that were enumerated in 
the proposed regulation text. For the intent standard, we proposed the 
same intent language that is in the current regulation, with a 
technical change to separately list out two different intent standards 
(paragraphs (1)(i)(B) and (C) in the proposed definition of marketing) 
that are in one paragraph (paragraph (3)) in the current definition of 
marketing at Sec. Sec.  422.2260 and 423.2260. We note that a 
typographical error appeared in the description of this technical 
change in the preamble to the February 2020 proposed rule, which 
incorrectly stated that the two separate intent standards described 
here appeared at paragraphs (1)(ii) and (iii) of the proposed rule's 
definition of marketing (whereas this text actually appeared in 
paragraphs (1)(i)(B) and (C) of the proposed rule), and that these 
standards appear in one paragraph (paragraph (3)) of the current 
definition of marketing materials at Sec. Sec.  422.2260 and 423.2260 
(whereas these standards currently appear in paragraph (3) of the 
current definition of marketing in the same regulations). We explained 
in the February 2020 proposed rule that, when evaluating the intent of 
an activity or material, we intended, consistent with our current 
practice and guidance, to consider objective and contextual information 
(for example, audience, timing, etc.) in applying the proposed 
definition. Under our proposal, CMS would not be limited by the plan's 
statements about its intent.
    In the content standard, we proposed that the regulation state 
affirmatively what must be included for a communications activity or 
material to be a marketing activity or material, rather than stating 
what is excluded (as the current regulation does). We explained that 
the first two types of content listed (paragraphs (2)(i) and (ii)) in 
the proposed definition of marketing are derived from the current 
regulation (although we explained that ``premiums'' was also included, 
consistent with the MCMG). We proposed to codify a third type of 
content in the definition (information on rewards and incentives 
programs), as we wanted to be clear that while rewards and incentives 
themselves are not a benefit, they are used as a means of prompting a 
beneficiary to use a specific benefit, and therefore our policy has 
been that information on rewards and incentives fall within the 
definition of marketing. We explained that our proposal would avoid any 
confusion and ensure that plans continue to be aware that when 
providing any information on rewards and incentives, they must follow 
the same requirements as for other marketing. We also proposed to 
streamline the definitions by removing the list in the current 
regulation of examples of materials (for example, brochures or posters) 
and explained that we did not believe this list of examples is 
necessary, as we evaluate whether a material is marketing based on 
intent and content rather than its particular form. Additionally, we 
proposed to combine the definitions for ``communications'' and 
``communications materials,'' as well as ``marketing'' and ``marketing 
materials'' to streamline the definitions section. We also explained 
that this would be consistent with how we have interpreted the current 
regulations that both activities and materials are subject to the same 
intent and content standards. We also proposed that the regulatory 
definition of ``communications'' state that communications activities 
and use of materials are those ``created or administered by the MA 
organization or any downstream entity.''
    Finally, we proposed to codify at Sec. Sec.  422.2260 and 423.2260 
additional definitions that apply to plan marketing. Specifically, we 
proposed to add definitions of ``advertisement (ad),'' ``alternate 
format,'' ``banner,'' ``banner-like advertisements,'' and ``Outdoor 
Advertising (ODA).'' We explained that these familiar terms have been 
defined and used throughout the MCMG. Our proposed definitions of these 
terms included some technical and clean-up edits but were substantively 
consistent with current policy and guidance. We explained that in 
codifying much of the MCMG, we believed it was paramount that we codify 
these definitions which are used throughout the MCMG and in our 
proposed regulations.
    We next proposed to codify, at Sec. Sec.  422.2261 and 423.2261, 
requirements for plans to submit certain materials to CMS for review, 
the process for CMS review, and the standards by which CMS will perform 
the review. These requirements are currently found in Sec. Sec.  
422.2262, 422.2264, 423.2622, and 423.2264, as well as in section 90 of 
the MCMG, which builds upon those sections and includes detailed 
operational instructions to plans regarding submission, review, and 
distribution of marketing materials (including election forms). In 
particular, we proposed at Sec. Sec.  422.2261(a)(1) and 423.2261(a)(1) 
that the Health Plan Management System (HPMS) would be the primary 
system of record and the mechanism by which CMS would collect and store 
submitted plan materials for review and evaluation. Additionally, we 
proposed to codify, at Sec. Sec.  422.2261(a)(2) and 423.2261(a)(2), 
our current policy that only plans can submit materials to CMS for 
review and approval for use and to specify that this policy prohibits 
third parties/downstream entities from submitting materials directly to 
CMS. Additionally, in new Sec. Sec.  422.2261(d) and 423.2261(d), we 
proposed to codify that CMS would review submitted materials for 
compliance with all applicable requirements in Sec. Sec.  422.2260 
through 422.2267 and Sec. Sec.  423.2260 through 423.2267 and that the 
benefit and cost information accurately reflects the plan's bid. We 
explained the proposed standards are consistent with our current policy 
and how we review marketing materials.
    We next proposed to codify general standards for plan 
communications, including requirements related to product endorsements 
and testimonials and standardization of certain materials 
(specifically, certain telephone numbers and material IDs) at 
Sec. Sec.  422.2262 and 423.2262. These standards are currently found 
in Sec. Sec.  422.2268(a) and 423.2268(a), which also include examples 
of what plans may not do.

[[Page 5983]]

While the proposed regulations included the current general standards 
prohibiting MA plans from misleading, confusing, or providing 
inaccurate information to current or potential enrollees, we proposed 
to include additional examples of what plans may not do (in paragraph 
(a)(1)) and to incorporate examples of what plans may do (in paragraph 
(a)(2)), consistent with section 30 of the MCMG.
    We also proposed to codify, at Sec. Sec.  422.2262(b)(2) and 
423.2262(b)(2), requirements regarding endorsements and testimonials 
that are in the policy currently found in section 30.8 of the MCMG. We 
proposed in Sec. Sec.  422.2262(b)(1) and 423.2262(b)(1) that, 
consistent with our current policy, product endorsements and 
testimonials may take different forms. We also proposed to codify at 
Sec. Sec.  422.2262(c) and 423.2262(c) requirements currently found in 
section 30 of the MCMG related to including telephone numbers 
(specifically, customer service numbers and 1-800-MEDICARE) in 
materials. We explained that these additional parameters for how 
telephone numbers are communicated in communications and marketing 
ensure that beneficiaries get useful and accurate information. Finally, 
we proposed to codify at Sec. Sec.  422.2262(d) and 423.2262(d) 
requirements related to standardized material identification, currently 
found in section 90.1 of the MCMG.
    We proposed to codify at Sec. Sec.  422.2263 and 423.2263 
requirements related to how plans may conduct marketing, which is 
specified as a subset of communications and therefore also subject to 
the requirements proposed in Sec. Sec.  422.2262 and 423.2262. First, 
we proposed to clarify, at Sec. Sec.  422.2263(a) and 423.2263(a), that 
October 1 is the date plans may begin marketing for the upcoming plan 
year. This is consistent with longstanding guidance, but the current 
rule lacks specificity and context. We also proposed to codify at 
Sec. Sec.  422.2263(b) and 423.2263(b) examples of what plans may not 
do in marketing. As explained in the February 2020 proposed rule, this 
list reflects current policy in existing Sec. Sec.  422.2268(b), 
423.2268(b) and section 40.1 of the MCMG, with some technical edits. As 
our proposal was to codify all current requirements and guidance on 
marketing and communications, we explained that a number of the 
prohibitions that are currently stated in Sec. Sec.  422.2268(b) and 
423.2268(b) would be codified elsewhere in our proposed regulations, 
where the provisions would topically belong under the new regulatory 
structure. Although not discussed in the preamble to the February 2020 
proposed rule, Sec. Sec.  422.2263(b)(2) and 423.2263(b)(2) included a 
provision specific to the prohibition on providing gifts unless they 
are of a nominal value; the proposed regulation provided that we would 
defer to guidance from the HHS Office of the Inspector General (OIG) to 
determine what dollar threshold to use to determine if a gift is of 
nominal value. Under current CMS guidance in the MCMG, section 40.4 
applies the current regulation prohibiting gifts other than nominal 
gifts to set a cost threshold of $15 per gift and $75 aggregated, per 
person per year, which are the amounts that the HHS OIG identified as 
nominal amounts in its current applicable guidance, dated December 7, 
2016 and available on-line here: https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/2006053221-hi-oigpolicystatementgiftsofnominalvalue.pdf. Proposed Sec. Sec.  
422.2263(b)(2) and 423.2263(b)(2) provided that a determination of 
nominal value would be governed by guidance published by the HHS OIG in 
order for Sec. Sec.  422.2263(b)(2) and 423.2263(b)(2) to remain in 
alignment with OIG guidance and policy about nominal gifts going 
forward. We note here that achieving alignment on this issue provides 
clearer and more consistent direction from the government to regulated 
plans and provider greater consistency in overall monitoring and 
enforcement. Finally, at Sec.  422.2263(c), we proposed to codify 
requirements related to marketing of Star Ratings currently located in 
section 40.6 of the MCMG.
    We next proposed to codify, at 42 CFR 422.2264 and 423.2264, 
requirements related to plan contact with Medicare beneficiaries and a 
beneficiary's caregivers. Our proposed regulation text used the term 
``beneficiary contact'' to include all outreach activities to a 
beneficiary or a beneficiary's caregivers by the plan or its agents and 
brokers. First, in 42 CFR 422.2264(a)(1) and 423.2264(a)(1), we 
proposed to codify the policy for when unsolicited contact is 
permitted, including direct mail and email which are currently found in 
the MCMG. Under 42 CFR 422.2264(a)(2) and 423.2264(a)(2), we proposed 
to codify the rules for when unsolicited direct contact with 
beneficiaries is and is not permitted. Currently, Sec. Sec.  
422.2268(b)(13) and 423.2268(b)(13) explicitly prohibit plans from 
soliciting door-to-door or engaging in other unsolicited contact and 
our guidance in section 40.2 of the MCMG applies and interprets this 
prohibition in specific contexts, with additional detail about 
activities we consider (and do not consider) unsolicited contact. 
Additionally, under 42 CFR 422.2264(a)(2) and 423.2264(a)(2), we also 
proposed to codify the current policy that unsolicited direct messages 
from social media platforms are also prohibited, as currently addressed 
in section 30.6 of the MCMG. We also proposed to clarify that plans may 
contact their current members (including those individuals enrolled in 
commercial plans who are becoming eligible for Medicare) regarding plan 
business, which is consistent with our current policy in the MCMG in 
section 40.3. Finally, in Sec. Sec.  422.2264(c) and 423.2264(c), we 
proposed to codify requirements regarding events (such as meetings) 
with beneficiaries, currently found in section 50 of the MCMG. As 
explained in the February 2020 proposed rule, the proposed regulation 
text included specific provisions that are consistent with our current 
policies of what plans may do. Our proposed revisions to Sec. Sec.  
422.2267 and 423.2267 would incorporate the policy currently in 
Sec. Sec.  422.2264 and 423.2264, ``Guidelines for CMS Review,'' with 
more detail. We explained that whereas the current Sec. Sec.  422.2264 
and 423.2264 provide general guidance on important information that 
plans must provide to a beneficiary interested in enrolling, proposed 
Sec. Sec.  422.2267 and 423.2267 would include more detailed standards 
and requirements on the specific materials or content that a plan must 
produce. The proposed rule explained that, collectively, the required 
materials and content outlined in proposed Sec. Sec.  422.2267 and 
423.2267 account for the requirements in the current Sec. Sec.  
422.2264 and 423.2264.
    We next proposed to codify requirements for plan websites at new 
Sec. Sec.  422.2265 and 423.2265. As explained in the February 2020 
proposed rule, the current regulations at Sec. Sec.  422.111(h)(2) and 
423.128(d)(2) establish the requirement for Part C and Part D plans to 
have an internet website and include requirements regarding content 
that must be posted on the website and the MCMG has historically 
provided additional detail on required website content, including the 
dates by which plan content was required to be posted annually. 
Proposed Sec. Sec.  422.2265 and 423.2265 would restate the requirement 
to have a website and codify the additional requirements and guidance 
currently in section 70 of the MCMG.
    We next proposed to codify at Sec. Sec.  422.2266 and 423.2266 
requirements plans must follow for activities in a healthcare setting, 
including requirements for provider-initiated

[[Page 5984]]

activities, plan-initiated provider activities, and plan activities. We 
explained that proposed Sec. Sec.  422.2266 and 423.2266 would include 
requirements currently located in Sec. Sec.  422.2268(b)(7) and 
423.2268(b)(7) and codify policies interpreting those requirements in 
section 60 of the MCMG.
    We next proposed to codify, at new Sec. Sec.  422.2267 and 
423.2267, instructions for how plans should submit required materials 
to CMS for review. Specifically, we proposed to codify the guidance for 
standardizing and monitoring the production of required documents, 
including a listing of these required documents, currently found in 
section 100 and Appendices 2, 3, 4, and 5 of the MCMG. As we explained 
in the February 2020 proposed rule, some of these required materials 
are addressed in current regulations (for example, the Annual Notice of 
Change (ANOC) and the Evidence of Coverage (EOC)) while others are only 
described in the MCMG (for example, the Summary of Benefits (SB)). 
Therefore, we proposed to specify all of the required materials and 
content in Sec. Sec.  422.2267(e) and 423.2267(e). In doing so, we 
refer to current established regulatory authority when relevant. We did 
not propose any changes to Sec. Sec.  422.2272 and 423.2272, which 
address licensure of marketing representatives and confirmation of 
marketing resources.
    Finally, we proposed to consolidate, at Sec. Sec.  422.2274 and 
423.2274, requirements related to plan compensation to agents, brokers 
and other third parties currently found at Sec. Sec.  422.2272, 
422.2274, 423.2272, and 423.2274, and section 110 of the MCMG. We 
explained in the February 2020 proposed rule how our proposed revised 
and consolidated text generally would not change the policies currently 
laid out in the existing regulations and guidance, but that significant 
technical and organizational edits were used to improve clarity and 
reduce duplication in the proposed regulation text. We proposed to 
codify our method for calculating fair market value for agent/broker 
compensation, as current regulations limit compensation to fair market 
value but do not further define it or provide the methodology CMS uses 
for calculating it. As we explained in the February 2020 proposed rule, 
CMS first developed the Fair Market Value (FMV) calculation used for 
regulating plan compensation paid to agents and brokers for contract 
year 2009 and published these rates in an HPMS memo on December 24, 
2008. To develop the FMV, we requested that plans submit the fees they 
paid in 2006 and 2007, as well those planned for 2009; plans submitted 
approximately 19,000 records that we analyzed based on geographic 
location and organization type. Following this analysis, we developed 
the FMV for MA plans, 1876 cost plans and Part D plans. The MA FMV 
rates for enrolling a single beneficiary were established at a national 
rate of $400, with exceptions for Connecticut, Pennsylvania, and DC 
($450), and California and New Jersey ($500), based on higher rates 
being reported in those geographic areas. The PDP rate was set at $50 
for a single enrollment nationally. For years after contract year 2009, 
we calculated the FMV based on the National Per Capita MA Growth Rate 
for aged and disabled beneficiaries for Part C and 1876 Cost plans and 
the Annual Percentage Increase for Part D, using the following formula: 
Current Year FMV + (Current Year FMV * National Per Capita MA Growth 
Rate for aged and disabled beneficiaries) for MA and 1876 cost plans 
and Current Year FMV + (Current Year FMV * Annual Percentage Increase 
for Part D) for PDP plans. Our proposal for Sec. Sec.  422.2274 and 
423.2274 would codify a definition of FMV with this formula. Based on 
this formula, the FMV for 2022 would be the FMV for CY 2021 + (CY2021 
FMV * National Per Capita Growth Rate for aged and disabled 
beneficiaries). We issued an HPMS memo on May 29, 2020 with the FMV 
amounts for 2021. For CY2021, the FMV rates for MA and 1876 Cost Plans 
are: National FMV is $539, FMV for Connecticut, Pennsylvania, and the 
District of Columbia is $607, FMV for California and New Jersey is $672 
and the FMV for U.S. Virgin Islands and Puerto Rico is $370. For 
CY2021, the FMV rate for all Prescription Drug Plans is $81.
    Additionally, we noted that section 110.7.1 of the MCMG currently 
clarifies when the regulations at Sec. Sec.  422.2274(b)(2) and 
423.2274(b)(2), which require recovery of agent compensation when a 
newly-enrolled individual disenrolls within the first 3 months of 
enrollment (rapid disenrollment), do not apply. We proposed to codify 
that guidance at Sec. Sec.  422.2274 and 423.2274; although the 
preamble of the February 2020 proposed rule identified this policy as 
being codified in proposed paragraph (g)(2)(ii)(C), our proposed 
regulation text addressed exceptions to the requirement for plans to 
recover agent compensation at paragraph (d)(5)(iii). In addition, we 
refer readers to section IV.C. of this final rule, which addresses our 
proposal regarding referral and finder's fees for agents and brokers.
    In summary, our proposal was for new and revised regulatory 
sections in Subpart V as follows:
     Sections 422.2260 and 423.2260 revise and streamline the 
current definitions of ``communications'' and ``marketing,'' and codify 
definitions for additional key terms from the MCMG used throughout the 
proposed regulations.
     Sections 422.2261 and 423.2261 contain requirements for 
plans to submit certain materials to CMS for review, the process for 
CMS review and the standards by which CMS will perform the review, 
taken from current Sec. Sec.  422.2262, 422.2264, 423.2622, and 
423.2264 and section 90 of the MCMG.
     Sections 422.2262 and 423.2262 specify the general 
standards for plan communications materials and activities, including 
endorsements and testimonials, and examples of what plans may and may 
not do. These sections also contain requirements related to 
standardization of certain key elements of communications materials 
(specifically, telephone numbers and material IDs). These sections 
include policies currently articulated in current Sec. Sec.  422.2268 
and 423.2268, as well as sections 30 and 90.1 of the MCMG.
     Sections 422.2263 and 423.2263 contain requirements for 
how plans must conduct marketing. These sections will incorporate 
requirements currently in Sec. Sec.  422.2268 and 423.2268, as well as 
additional guidance from section 40 of the MCMG.
     Sections 422.2264 and 423.2264 address the rules for plan 
contact with Medicare beneficiaries. These sections include 
requirements and standards currently in Sec. Sec.  422.2268 and 
423.2268, and further expanded upon in sections 40 and 50 of the MCMG.
     Sections 422.2265 and 423.2265 explain the requirements 
for plans to have a website as well as what must, may, and must not be 
on the website. These sections include material currently in section 70 
of the MCMG.
     Sections 422.2266 and 423.2266 contain the requirements 
plans must follow for activities in a healthcare setting. These 
sections include material from current Sec. Sec.  422.2268 and 
423.2268, and from section 60 of the MCMG.
     Sections 422.2267 and 423.2267 provide instructions on 
materials and content that CMS requires plans to deliver or make 
available to beneficiaries, including required disclaimers. These 
sections include material from section 100 and Appendices 2, 3, 4, and 
5 of the MCMG.
     Sections 422.2274 and 423.2274 consolidate requirements 
from Sec. Sec.  422.2272, 422.2274, 423.2272, and

[[Page 5985]]

423.2274, and section 110 of the MCMG regarding agents, brokers, and 
compensation to third parties.
    Finally, we requested comment on how CMS should implement 
prohibitions related to plan marketing during the open enrollment 
period (OEP). Section 1851(e)(2)(G)(iv) of the Act, as added by section 
17005 of the Cures Act, prohibits marketing during the open enrollment 
period (OEP). The current regulations implementing the statutory 
prohibition on plan marketing during the OEP are at Sec. Sec.  
422.2268(b)(10) and 423.2268(b)(10). We explained in the February 2020 
proposed rule that the MCMG includes additional guidance about what 
activities fall within this prohibition including, specifically, that 
plans are prohibited from sending unsolicited materials that call out 
the opportunity afforded by the OEP, using mailing lists or other 
anecdotal information to target individuals who made enrollment 
requests during the annual coordinated enrollment period (AEP), and 
leveraging agent/broker activities that target the OEP as a way to make 
further sales.
    We received the following comments on our proposal and our 
responses follow:
    Comment: Several commenters expressed support for CMS codifying the 
various requirements traditionally found in the MCMG. Many of these 
commenters questioned if CMS still intended to produce an MCMG after 
these regulations are adopted as final. Similarly, other commenters 
specifically requested that CMS continue to produce the MCMG in tandem 
with the requirements found in the final rule.
    Response: CMS appreciates the favorable response to the 
codification of the many requirements typically found in the MCMG. 
While the agency believes it would be duplicative to continue to 
produce the MCMG in its current form, we do intend to continue 
producing sub-regulatory guidance to provide operational instruction to 
plans. We believe that the regulations we are finalizing in parts 422 
and 423, subparts V are clear and succinct.
    Comment: A commenter expressed concern that beneficiaries could be 
negatively impacted by CMS's decision to stop collecting co-branded 
relationship data in the Health Plan Management System (HPMS).
    Response: CMS notes that the decision to no longer collect this 
data through the HPMS Marketing Module predates this rulemaking. 
Although CMS no longer collects co-branding information through the 
HPMS Marketing Module, the co-branding relationship data is collected 
elsewhere in HPMS, making the need to collect it twice in one system 
duplicative. In addition, plans continue to be responsible for all 
materials and activities, including those that they create or carry out 
in conjunction with any co-branded entities. All regulatory 
requirements pertaining to communications and marketing still apply to 
co-branded materials, including the requirement to submit all marketing 
materials to CMS. As a result, we do not believe that the negative 
impact on beneficiaries as contemplated by the commenter is likely.
    Comment: A commenter suggested that CMS eliminate the requirement 
that plans and sponsors prorate agent/broker commissions. The commenter 
noted the amount of work to enroll an individual does not change if the 
enrollment takes place in November or in January, so the requirements 
related to prorating payments do not make sense and are unfair to 
Medicare-certified health insurance agents.
    Response: CMS thanks the commenter for their input. Prorated 
payments of agent/broker commissions are a necessary component of the 
compensation requirements finalized in this rule because we believe 
that providing a full year payment to an agent, rather than a prorated 
amount, might incentivize agents and brokers to encourage beneficiaries 
to switch plans during the coverage year in order for the agent or 
broker to receive a full year of compensation, thus resulting in the 
unnecessary churning of beneficiaries from one plan to another. Section 
1851(j)(2)(D) of the Act specifically directs the Secretary to 
establish limitations on compensation for agents and brokers to ensure 
payments create incentives for agents and brokers to enroll 
beneficiaries into the plan that best meets the beneficiary's needs. 
Providing a prorated amount incentivizes the agent or broker to find 
the plan that is the best fit for the beneficiary so that the 
beneficiary will remain enrolled throughout the year, rather than 
changing plans due to dissatisfaction with the coverage or feeling as 
though they were misled. The prorated compensation also provides an 
incentive for the agent or broker to continue to service the 
beneficiary's needs after the sale.
    Comment: A commenter was in favor of CMS codifying the rules for 
agent/broker compensation, noting that the transparency is helpful for 
plans as well as agents and brokers.
    Response: CMS appreciates the comment.
    Comment: A few comments suggested that CMS provide more examples of 
specific materials that would fall under the definition of 
communication or marketing in Sec. Sec.  422.2260 and 423.2260 of the 
regulation.
    Response: CMS understands that examples can aid plans in better 
understanding the definitions of communications and marketing, but we 
do not believe that including examples in the regulation text are the 
best manner in which to achieve this objective. Given the more static 
structure of regulations as compared to the dynamic nature of 
communications and marketing, we believe that sub-regulatory guidance 
and training is the more appropriate manner by which to apply the 
regulatory definitions and standards to particular facts in order to 
identify and convey our requirements. With the finalization of the 
proposed amendments to Sec. Sec.  422.2260 and 423.2260, CMS will gauge 
need for examples and provide them as required. With that said, we note 
the definitions codified in this final rule are consistent with our 
current practice and the current regulations, as we discussed in the 
February 2020 proposed rule; therefore the examples in section 20.1 of 
the MCMG dated September 5, 2018, and available online here: https://www.cms.gov/Medicare/Health-Plans/ManagedCareMarketing/Downloads/CY2019-Medicare-Communications-and-Marketing-Guidelines_Updated-090518.pdf, remain applicable. In addition, we note that the extensive 
list of standardized and model materials in Sec. Sec.  422.2267(e) and 
423.2267(e) generally specifies which materials are communication 
materials and which are marketing materials.
    Comment: A commenter suggested that definitions in Sec. Sec.  
422.2260 and 423.2260 such as ``alternate format,'' ``banner,'' 
``banner-like advertisements,'' and ``outdoor advertising'' should be 
considered marketing activities because these types of materials are 
also evaluated on intent and content and not on their particular form.
    Response: We agree that ``alternate format,'' ``banner,'' ``banner-
like advertisements,'' and ``outdoor advertising'' are evaluated based 
on their intent and content. We clarify, however, that such materials 
are not automatically considered marketing under the definitions we 
proposed and are finalizing here at Sec. Sec.  422.2260 and 423.2260, 
as specific materials in these formats could meet either the definition 
of communications or of marketing based on their intent and content. 
For example, a billboard (outdoor advertising) that says ``Super 
Medicare Advantage--a new choice in Medicare for 2022'' is not 
marketing as it does not

[[Page 5986]]

include or address the content outlined in paragraph (2) of the 
definition of ``marketing'' under Sec. Sec.  422.2260 and 423.2260. 
Based on the possibility of these items being communications or 
marketing depending on the particular facts or circumstances, CMS is 
not changing the definitions.
    Comment: A commenter suggested that CMS should consider 
establishing a separate pre-release review process for communications, 
given their importance for beneficiaries. The commenter specifically 
cited CMS required materials that are communications. The commenter 
strongly urged that in cases where CMS identifies inaccuracies or 
misleading information through a post-release review, CMS allow 
affected beneficiaries to have a special enrollment period, in order to 
mitigate consequences of decisions based on inaccurate or misleading 
information.
    Response: We agree that appropriate oversight of communication 
materials is an important beneficiary protection. We believe that our 
current oversight processes ensure the appropriate level of beneficiary 
protection. CMS currently collects certain CMS required materials, such 
as the Evidence of Coverage making them subject to retrospective 
reviews. In addition, CMS reviews the accuracy of CMS required 
materials outside of the formal material submission process, for 
example provider directory reviews have been conducted outside of the 
formal HPMS material submission process for several years.
    In this final rule, CMS is also maintaining authority (currently in 
Sec. Sec.  422.2262(d) and 423.2262(d) and codified here at Sec. Sec.  
422.2261(c)(1) and 423.2261(c)(1)) to collect, prior to use by plans, 
certain designated communications materials that are critical to 
beneficiaries and plan enrollees understanding plan options or 
accessing their benefits; the final regulation text provides an example 
of a communications material that meets this standard: The Evidence of 
Coverage (EOC). CMS may also retrospectively collect any communications 
materials for subsequent review under Sec. Sec.  422.504(f)(2)(vii) and 
423.505(f)(2)(viii). In addition, CMS can collect data on 
communications materials through beneficiary complaints, and 
communication and marketing surveillance activities. In this final 
rule, we have included Sec. Sec.  422.2261(c)(2) and 423.2261(c)(2) to 
ensure that CMS has the authority to require additional communications 
materials be submitted, or submitted and reviewed, prior to use based 
identified as a concern based on errors identified through the methods 
outlined above.
    These regulatory authorities allow CMS to focus more closely on 
those materials that have the potential to have the greatest impact on 
beneficiary enrollment decision-making, without the need for a more 
burdensome process of collecting and reviewing all communication 
materials that have little impact on beneficiary choice.
    In addition, in the proposed rule under Sec. Sec.  422.2262(c) and 
423.2262(c), we said that ``CMS does not generally require submission 
and approval of communications materials prior to use . . .'', which 
unintentionally did not accurately depict the current processes for 
material collection through the HPMS Marketing Module. In general, 
there are two ways that designated materials are submitted to CMS 
through the HPMS Marketing Module. The ``path'' a material takes is 
predetermined by CMS. One submission path includes when plans submit 
materials to HPMS, but these materials are not reviewed prospectively 
by CMS, but are subject to a retrospective review. An example of a 
material that would fall under this pathway is the EOC. A second 
submission pathway includes when plans submit materials to HPMS that 
CMS must review and approve prospectively and prior to their 
distribution. To clarify these requirements regarding the submission of 
materials, in this final rule we are editing Sec. Sec.  422.2262(c) and 
423.2262(c) to say that CMS does not generally require submission, or 
submission and approval, of communications materials prior to use.
    With regard to the comment that CMS grant a special enrollment 
period based on receipt of inaccurate or misleading information, CMS 
has the ability to grant SEPs under Sec. Sec.  422.62(b)(3)(ii) and 
423.38(c)(8)(iii) when a plan or its agent, representative, or plan 
provider materially misrepresented the plan's provisions in 
communications as outlined in Subpart V of this part. Such actions are 
made on a case-by-case basis.
    Comment: A commenter offered support of the codification of 
``intent'' and ``content'' standards currently in the Medicare 
Communications and Marketing Guidelines. Specifically, the commenter 
supported CMS' proposal to provide a list of what must be included for 
a communication material or activity to be considered marketing, 
believing it eases the interpretation of the previous definition under 
Sec. Sec.  422.2260 and 423.2260.
    Response: We thank the commenter for their support.
    Comment: A commenter voiced concern regarding the use of the word 
``address'' as part of the definition of marketing under Sec. Sec.  
422.2260(2) and 423.2260(2). The commenter stated that the term was too 
expansive and vague and overly broadens the definition of marketing.
    Response: CMS believes that since we changed the definition of 
marketing in the final rule ``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'' published in the Federal Register on 
April 16, 2018 (the April 2018 final rule), we have gained valuable 
experience through two ``marketing cycles'' applying and using the new 
definition. During this time, we have observed plans using marketing 
tactics that skirted the definition of marketing by addressing 
marketing content, such as benefits, premiums, or plan comparisons, 
without explicitly including the content that are specified in the 
definition of ``marketing'' that we proposed and are finalizing in 
Sec. Sec.  422.2260 and 423.2260. For example, a plan advertisement 
that says ``Plan X monthly premiums are lower than your current 
Medicare Advantage plan'' would be marketing under our new definition 
but is not clearly within the scope of marketing materials in the 
current regulatory definition and guidance. While the advertisement 
doesn't list the premium or a specific ranking standard, it addresses 
both of these concepts and is clearly designed to draw a beneficiary's 
attention to a plan and to influence the beneficiary's enrollment 
decision. By using the term ``address'' in the definition we have 
proposed and are finalizing, we ensure our review of materials such as 
this example would be marketing under the revised definition adopted in 
this final rule. The revised definition that we are finalizing provides 
an important safeguard for Medicare beneficiaries.
    Comment: A commenter expressed displeasure with the ``benefits 
disclaimer'' not being included in Sec. Sec.  422.2267 and 423.2267 of 
the regulation. Prior to August 6, 2019, the MCMG required plans to 
include on marketing materials that list ten or more benefits the 
following disclaimer: ``this is not a complete description of benefits. 
Call [insert customer service phone number/TTY] for more information.''
    Response: We proposed to codify our current policy as the decision 
to no longer require this specific benefits disclaimer predates this 
rulemaking. As plans must provide a Summary of

[[Page 5987]]

Benefits (SB) and the Pre-Enrollment Checklist (PECL) with an 
enrollment form, we believe the benefits disclaimer is no longer 
necessary. The SB outlines key benefits, and also provides information 
on how to access the Evidence of Coverage (EOC) for a comprehensive 
list of all benefits. The PECL prompts the beneficiary to review 
important information before making an enrollment decision, including 
reviewing the EOC. We believe these documents adequately put 
beneficiaries on notice that the EOC is the complete list of benefits 
and that the other documents are merely summaries. Therefore, we did 
not propose and are not finalizing a requirement to use the benefits 
disclaimer used in the past.
    Comment: One commenter noted an error in Sec.  422.2266(b). The 
commenter pointed out that the sentence should be fixed to say ``. . . 
including but not limited to,'' rather than ``. . . including, are not 
limited to . . .''
    Response: We agree with the commenter and are correcting the 
sentence by replacing ``including, are not limited to'' with 
``including'' in Sec.  422.2266(b). However, we are not inserting the 
remainder of the text suggested by the commenter (``but not limited 
to''), as it is an accepted practice to interpret ``including'' as 
meaning ``including but not limited to.'' For consistency, we will 
apply these changes to Sec.  423.2266(b).
    Comment: A commenter expressed concern that we did not include the 
requirement that Plans/Part D Sponsors may only advertise in their 
defined service area, unless unavoidable.
    Response: We note the decision to no longer restrict marketing 
outside of a plan's designated service area predates this rulemaking. 
This decision was made because it is self-policing, as CMS believes 
that MA Plans and Part D sponsors have little incentive to advertise 
outside of their service area since beneficiaries must live in the 
service area to be enrolled in the plan. In addition, CMS believes that 
there is no negative outcome should a beneficiary view marketing for a 
specific plan that is not available in their service area, with the 
exception of marketing about Star Ratings; with Star Ratings, a 
beneficiary might be misled of confused about the rating of specific 
plan availing in one area that is offered by a company with a higher 
rated plan in a different service area. We are finalizing, in 42 CFR 
422.2263(c)(5) and 423.2263(c)(5), the current prohibition on marketing 
Star Ratings outside of a service area that is discussed in the MCMG, 
section 40.6 (applying the prohibition on misleading marketing and 
communications) unless the marketing is conveying overall the 
organization's performance. If the Star Ratings are used in marketing 
that is distributed outside of the specific service area, the plan must 
do so in a way that is not confusing or misleading. CMS's current 
policy is to limit Star Rating marketing to the service area in which 
the rating is applicable. This policy is to ensure that beneficiaries 
are not mislead into believing that a Star Rating earned by ``Plan A'' 
applies to ``Plan B's'' service area. However, we recognize that 
organizations that are expanding into new service areas would not 
necessarily have received Star Ratings. We believe that an organization 
entering a new area should be able to demonstrate the quality of their 
plan when marketing, provided it is not misleading or confusing. 
Therefore, we are modifying our current policy to permit the marketing 
of Star Ratings outside of the service area if done in a way to convey 
overall organization performance without being misleading or confusing. 
This is consistent with the overall policy of permitting marketing to 
occur outside of a plan's service area.
    Comment: A few commenters requested that we expand the Annual 
Notice of Change (ANOC) to include notice to enrollees when providers 
seen by that enrollee during the past year are no longer in the plan's 
network (focusing on Primary Care Providers and specialists).
    Response: The ANOC is a document geared for mass distribution to 
all enrollees. Adding specific beneficiary information of this type to 
the ANOC would not be feasible or advisable given the limitations of 
current technology, the effort such an addition would require, and the 
possibility of inaccurate data being provided to enrollees given the 
fluid nature of provider networks and contracting. Moreover, adding 
this information to the ANOC would duplicate an existing requirement at 
42 CFR 422.111(e) that plans notify their enrollees when a provider the 
enrollee regularly sees will no longer be in the plan's network.
    Comment: A commenter stated that the prohibition on robocalling is 
implied in Sec. Sec.  422.2264 and 423.2264. The commenter requested 
that CMS list robocalling as a prohibited activity.
    Response: We appreciate the comment and agree that the prohibition 
on unsolicited telephone calls includes robocalling. We are finalizing 
the regulation text at Sec. Sec.  422.2264(a)(2)(iv) and 
423.2264(a)(2)(iv) with the addition of robocalls to the list of 
prohibited activities to eliminate any chance of ambiguity when it 
comes to robocalls being considered an unsolicited telephone call. We 
note as well that any other type of telephone solicitation would be 
prohibited even if not specifically listed because the regulation 
prohibits all unsolicited telephone solicitation, not merely calls from 
a live person.
    Comment: A commenter requested that CMS prohibit MA plans and Part 
D sponsors from contacting enrollees based on plan business if the 
enrollee has an external agent of record. The commenter expressed 
concern that plans could reach out to a member who was enrolled by an 
agent, and through a process such as upselling, enroll the member into 
a different plan, which could result in the agent no longer receiving 
renewal compensation.
    Response: We understand the concern, but believe that this concern 
-- regarding changes in enrollment directly solicited by the plan that 
lead to changes in agent compensation -- is a matter that should be 
addressed in the contract between plans and brokers. We reiterate that 
cost plans, in addition to MA organizations and Part D sponsors, must 
comply with the marketing and communications standards that we are 
finalizing here based on existing Sec.  417.428, which requires cost 
plans to comply with part 422, subpart V, with the exception of Sec.  
422.2276. In applying those provisions, references to MA organizations 
should be read as references to HMOs and CMPs, that is cost plans in 
part 417.
    Comment: A commenter noted differences in the wording between the 
February 2020 proposed rule in Sec. Sec.  422.2264(a)(4) and 
423.2264(a)(4) (``MA organizations are responsible for ensuring sales 
staff, including agents and brokers, abide by Federal and state laws 
related to consumer protection, including, but not limited to, do not 
call requirements,'') and section 110.3 of the MCMG (Plan/Part D 
sponsor Oversight) (``Plans/Part D sponsors must oversee downstream 
entities to ensure agents/brokers abide by all applicable state and 
federal laws, regulations, and requirements.''). The commenter 
expressed concern that the wording might result in states requiring 
that MA plans and Part D sponsors be subject to a multiplicity of state 
laws that are expressly preempted by federal law.
    Response: Existing regulations at Sec. Sec.  422.504(i) and 
423.505(i) regulate the relationship between plans and their first 
tier, downstream, and related entities and require plans to maintain 
oversight and monitoring of these entities and that the related entity, 
contractor, or subcontractor must comply with all applicable Medicare

[[Page 5988]]

laws, regulations, and CMS instruction. Therefore, we believe that 
there are adequate standards in place to ensure that the beneficiary 
protections and marketing and communications rules we are adopting here 
will apply to related entities, contractors and subcontractors that 
market on a plan's behalf. In addition, section 1851(h)(7)(A) provides 
that agents and brokers must be licensed and appointed for the states 
where they sell and we believe the regulation is consistent with that 
statutory requirement. Based on this, CMS is not including the 
provision in proposed Sec. Sec.  422.2264(a)(4) and 423.2264(a)(4) in 
the final rule.
    Comment: A commenter requested CMS expand the requirement at 
Sec. Sec.  422.2274(c)(8) and 423.2274(c)(8) to state that plans must 
oversee first tier, downstream, and related entities to ensure agents 
and brokers do not charge beneficiaries a marketing fee.
    Response: CMS shares the commenter's concern about charging 
beneficiaries marketing fees. This final rule governs MA organizations, 
Part D sponsors, and their first tier, downstream, and related entities 
(including agents and brokers). As required under Sec. Sec.  422.504(i) 
and 423.505(i), MA organizations and Part D sponsors are ultimately 
responsible for their downstream entities. Therefore, CMS could take 
compliance action against the MA organization or Part D sponsor for the 
individual's behavior if they are affiliated with, or acting on behalf 
of the organization, plan, or sponsor. To clarify this point further, 
we are finalizing Sec. Sec.  422.2274(c)(8) and 423.2274(c)(8) with 
revisions to prohibit marketing consulting fees from being charged when 
a beneficiary is considering enrollment in a plan. The marketing and 
communications regulations finalized here also apply to cost plans 
based on Sec.  417.428; although there are no explicit regulatory 
provisions in Part 417 regarding the downstream entities and 
subcontractors of cost plans, cost plans must comply with the 
requirement that the plan ensure that beneficiaries are not charged 
marketing consulting fees; we therefore expect that cost plans will 
instruct and contract with their subcontractors accordingly to ensure 
that beneficiaries are not charged these fees.
    Comment: Several commenters suggested that CMS do more to protect 
dually eligible beneficiaries from misleading marketing practices. The 
commenters suggested that CMS require when an agent/broker disenrolls a 
beneficiary from an integrated product that the agent/broker provide 
the beneficiary a clear explanation of the product from which the 
beneficiary is disenrolling, including explaining how the beneficiary's 
disenrollment from an integrated product to a non-integrated product 
might impact their health care service delivery. Commenters also 
suggested that outbound enrollment verification calls by plans and 
sponsors include similar information. Commenters also suggested that 
CMS should require actual contact with the beneficiary during these 
verification calls.
    Response: CMS believes the requirements under Sec.  
422.2262(a)(1)(xv), (xvi), (xvii), and (xviii) (and the parallel 
provisions in Part 423 applicable to Part D plans) function to protect 
dually eligible beneficiaries from misleading marketing practices. 
Before additional requirements are considered, CMS will continue to 
monitor how MA plans and Part D sponsors market to dually eligible 
beneficiaries to determine if additional requirements are needed. CMS 
believes that the general requirements set forth in Subpart V of this 
rule establish the framework necessary for the agency to pursue 
additional oversight activities to apply the standards in this final 
rule to specific factual circumstances without further rulemaking. We 
will also explore changes to agent/broker training and testing to 
address this.
    Regarding outbound enrollment verification, as reflected in the 
requirement in current Sec. Sec.  422.2272(b) and 423.2272(b) (which 
are not being amended in this final rule), plans are no longer limited 
to verifying enrollment by only phone calls. We now permit plans to 
confirm enrollment by letter through the mail because our experience 
has demonstrated that it is virtually impossible for plans to guarantee 
actual beneficiary contact by phone. Moreover, a hardcopy letter gives 
the beneficiary a detailed record that can be saved and provided to 
others, including the State Health Insurance Assistance Program (SHIP), 
for help and guidance, if needed.
    Comment: Several commenters offered support for the requirement at 
Sec. Sec.  422.2262(a)(1)(xv)-(xviii) and 423.2262(a)(1)(xiv)-(xvii) 
prohibiting MA plans marketing non-D-SNPs as if they were designed for 
dually eligible beneficiaries or claiming that they have a relationship 
with the state Medicaid agency.
    Response: We thank the commenters for their support.
    Comment: A commenter voiced concern that the language found in 
Sec. Sec.  422.2262(a)(1)(xvi), stating that plans may not market a 
non-dual eligible special needs plan as if it were a dual eligible 
special needs plan, was too vague and ambiguous. The commenter noted 
that the language goes beyond the language found in the current MCMG 
and that existing objective limitations are already incorporated in the 
other subparagraphs under Sec.  422.2262(a)(1).
    Response: We disagree with the commenter that the language is vague 
and ambiguous. Through our experience of investigating complaints 
concerning D-SNP look-alikes, we have found many examples of plans 
mimicking the look and language used by D-SNPs in a manner that is 
confusing or misleading to the beneficiary. While we agree that other 
provisions in this rule, for example Sec.  422.2262(a)(1)(i), generally 
protect against misleading materials, given the vulnerability of the 
dually eligible population, we believe that the requirements as written 
are warranted and are finalizing these prohibitions as proposed.
    Comment: A commenter noted that the guidance regarding dual look-
alike plans in the MCMG prohibits ``targeting marketing efforts 
exclusively to dual eligible individuals . . .'', whereas, the 
requirement in the February 2020 proposed rule prohibits ``targeting 
marketing efforts primarily to dual eligible individuals . . . .'' The 
commenter suggested that the final rule use the ``exclusively'' 
standard from the MCMG.
    Response: We respectfully disagree. In our experience investigating 
complaints concerning the marketing of D-SNP look-alikes, the current 
MCMG language of ``exclusively'' has allowed look-alike plan materials 
to include content that is targeted almost exclusively towards dually 
eligible beneficiaries with the exception of one or a few sentences 
noting that the plan was open to all Medicare eligible individuals. 
Based on this experience, combined with the vulnerability of the dually 
eligible population, we believe it is important to bolster the language 
to include those materials that are primarily focused at the dually 
eligible individuals. As such, we will finalize the language under 
Sec.  422.2262(a)(1)(xvii) as proposed.
    Comment: A commenter was concerned that the language proposed in 
Sec. Sec.  422.2264(c)(2)(i) and 423.2264(c)(2)(i) was too vague. The 
proposal requires the agent/broker to provide an opportunity for the 
beneficiary to determine if they want to continue to a marketing event 
directly following an educational event. The commenter stated this was 
too vague, resulting in the agent/broker determining if the beneficiary 
has given consent.
    Response: We agree with this concern in part and have strengthened 
the language at Sec. Sec.  422.2264(c)(2)(i) and

[[Page 5989]]

423.2264(c)(2)(i) that requires agents and brokers make the beneficiary 
aware of a change in meeting type from educational to marketing and to 
provide the opportunity for beneficiaries to leave prior to the start 
of the marketing event. With this change from the proposed rule, we do 
not believe that the regulation text is vague or requires the agent, 
broker or other plan representative to guess whether a beneficiary 
wishes to remain for the marketing event. We also note that agents and 
brokers, as downstream entities of plans, must abide by the 
requirements in Subpart V of this rule, including Sec. Sec.  
422.2262(a)(1)(iii) and 423.2262(a)(1)(iii), which prohibits them from 
engaging in activities that could mislead or confuse Medicare 
beneficiaries.
    Comment: A commenter expressed concern that the revisions found in 
Sec. Sec.  422.2264(c)(1)(ii) and 423.2264(c)(1)(ii) of the February 
2020 proposed rule will allow agents or brokers to set up marketing 
appointments directly following educational events. The commenter 
stated that ``it appears that an agent or broker could immediately step 
out of the room, so to speak, and conduct a sales event.'' Similarly, 
another commenter questioned why a previous sub-regulatory requirement 
regarding separation of the time and place of marketing and educational 
events was not included in the February 2020 proposed rule.
    Response: The policy decision to allow marketing and educational 
events to occur in a close physical and time proximity predates this 
rulemaking, as reflected in CMS's August 6, 2019 Medicare 
Communications and Marketing Guidelines Update Memorandum (https://www.cms.gov/Research-Statistics-Data-and-Systems/Computer-Data-and-Systems/HPMS/HPMS-Memos-Archive-Weekly). We made this change because it 
can be burdensome for beneficiaries to travel to events. If the 
beneficiary attends an educational event and wants to hear more plan 
specific information via a sales event, we believe it should be allowed 
to happen around the same time, rather than requiring the beneficiary 
to return on a different day or to a different venue. We, however, 
share the concern regarding the meeting type switching without the 
beneficiary being aware. As such, we are further strengthening the 
language proposed at Sec. Sec.  422.2264(c)(2)(i) and 
423.2264(c)(2)(i), to require that a beneficiary be made aware of a 
change from educational event to marketing event and given the 
opportunity to leave prior to the event beginning.
    In addition, if a beneficiary is attending a personal marketing 
appointment with a plan representative, the representative would need 
to have the beneficiary complete a scope of appointment (SOA) form 
prior to any discussion as required under Sec. Sec.  422.2274(b)(3) and 
423.2274(b)(3). Finally, current beneficiary protections, such as the 
requirements under Sec. Sec.  422.2262 and 423.2262 that plans may not 
engage in activities that could mislead or confuse Medicare 
beneficiaries or misrepresent the plan (or the entity offering the 
plan, such as the MA organization, cost plans, or Part D sponsor), 
remain in place under the regulations we are finalizing here.
    Comment: Several commenters noted that in an HPMS memo released on 
August 6, 2019 titled ``Medicare Communications and Marketing 
Guidelines,'' CMS deleted the requirement to include the hours of 
operations from the MCMG (section 30.4 of the 2019 MCMG) when listing 
the customer service telephone number from materials.
    Response: CMS thanks the commenters for identifying this issue. Our 
intention in the HPMS memo was to eliminate the listing of the hours of 
operation for telesales telephone numbers and not to eliminate the need 
for including the customer service hours of operation when the customer 
service call center is mentioned. CMS inadvertently removed section 
30.4 entirely. We believe enrollees (or prospective enrollees) should 
know when they can reach their plan. As proposed and finalized, the 
substance of Sec. Sec.  422.2262(c)(1)(i) and 423.2262(c)(1)(i) remains 
largely the same: when a plan includes its customer service number, the 
hours of operation for the call center must be prominently included at 
least once. However, we are finalizing changes from the proposed 
regulation text (which addressed the first time the customer service 
number appears) to focus on ensuring that the information is provided 
in a useful way to beneficiaries by finalizing a requirement that the 
hours of operation be prominently included at least once. In addition, 
we note that we are finalizing a similar change in Sec. Sec.  
422.2262(c)(1)(iii) and 423.2262(c)(1)(iii) regarding inclusion of the 
hours of operation for 1-800-MEDICARE; we proposed that the hours of 
operation be included each time the 1-800-MEDICARE telephone number or 
Medicare TTY appears but are finalizing a requirement that the hours of 
operation be prominently included at least once on the material that 
includes the 1-800-MEDICARE telephone number or Medicare TTY. These 
provisions will ensure that beneficiaries have sufficient information 
to know how and when to reach the customer service call center.
    Comment: A commenter requested that CMS consider updating 
Sec. Sec.  422.2262(c)(1)(i) and 423.2262(c)(1)(i) to say that the 
hours of operation must be listed ``at least once'' instead of ``the 
first time'' as it was in the February 2020 proposed rule. The 
commenter stated that changing the requirement would provide 
flexibility regarding where the hours of operation are placed on 
materials, resulting in a more beneficiary-friendly location.
    Response: We agree that allowing flexibility in where the hours of 
operation for the customer service call center is listed could result 
in more beneficiary-friendly materials. We are, however, concerned that 
updating the requirement to say ``listed at least once'' may allow the 
hours of operation to be placed in a way that would obscure this 
information from beneficiary view or make it difficult for 
beneficiaries to find how to contact the plan call center. To address 
this concern, we are finalizing Sec. Sec.  422.2262(c)(1)(i) and 
423.2262(c)(1)(i) with the standard that the plan must prominently 
include the hours of operation at least once when including its 
customer service number.
    Comment: Two commenters suggested that CMS should not include 
rewards and incentives (R&I) as a part of the content that is 
considered marketing in paragraph (2)(iii) of the marketing definition 
in proposed Sec.  422.2260(2)(iii). The commenters claimed that the 
inclusion of reward and incentive (R&I) would consider this to be 
programmatic content and more appropriately treated as Communications, 
not subject to the same submission and review requirements. In 
addition, one commenter said that are two kinds of R&I related content 
that are communicated to beneficiaries. The commenter referred to them 
as promotional and programmatic. The commenter said that information 
plans may include in their open enrollment materials regarding R&I is 
intended to influence a beneficiary's decision-making process when 
making a MA plan selection and would be promotional, and rightly 
characterized as marketing and subject to submission and review 
requirements. The commenter went on to make the distinction that R&I 
program content that does not discuss or mention benefits, does discuss 
and mention healthcare services, but it does not promote or communicate 
cost-sharing,

[[Page 5990]]

available network providers, or other benefit details should not be 
considered marketing. The commenters also noted that a blanket 
classification of R&I materials as marketing materials, subject to 
regulatory requirements, would create additional administrative burden 
and could lead to member confusion.
    Response: We respectfully disagree with these comments. For 
marketing purposes, we view such information as analogous to benefits 
in the beneficiary's view even though R&I are not benefits per se. We 
believe marketing of rewards and incentives or R&I programs could 
influence a beneficiary's decision making process when making a plan 
selection. As such, we believe that its inclusion in the content part 
of the definition of marketing fits with the overall definition of 
marketing. We note to the commenter that, for an activity or material 
to be considered marketing, it must meet both intent and content. To 
that point, an activity or material that includes or addresses content 
about R&I, but does not meet the intent standard specified in the 
definition at Sec.  422.2260 would not be considered marketing under 
this final rule. Instead, this activity or material would be considered 
communications and generally not require submission to CMS. For 
example, a plan sending R&I information to a current member as a means 
of influencing the member to get a flu shot would not be considered 
marketing because the information does not meet the intentions provided 
under paragraph (1) of the definition of ``marketing'' under Sec. Sec.  
422.2260 and 423.2260. Conversely, a plan marketing to a prospective 
member with an advertisement stating ``Members of Plan X receive a $15 
coupon book by simply getting their flu shot'' would be considered 
marketing as the clearly communicated intent is to use the R&I as a 
means of influencing the beneficiary's decision-making process when 
making a plan selection. CMS considers information about Rewards & 
Incentives to be marketing content and therefore, if the intent 
standard in the new definition is met, is subject to all the review and 
requirements applied to communications and marketing content.
    Comment: A commenter expressed concern that CMS did not include 
specific reward and incentives (R&I) communication and marketing 
requirements as was done in section 40.8 of the MCMG. The commenter 
noted this means plans can market such programs independently, without 
context of overall plan benefits to allow individuals to do cost-
benefit analyses regarding whether such incentives are worth it.
    Response: The decision to remove certain marketing requirements 
directly targeting to R&I programs from CMS marketing and communication 
oversight predates this rulemaking. In the MCMG prior to August 6, 
2019, plans were directed to provide R&I information in conjunction 
with information about plan benefits and include information about all 
R&I programs offered by the MA Plan. We determined that these 
requirements were overly prescriptive. For example, if a beneficiary 
requested information about a specific reward or incentive, we 
determined it unnecessary for a plan to include information about all 
rewards and incentives. The additional requirements previously 
addressed in the MCMG, specifically that the rewards not be used in 
exchange for enrollment and be provided to all potential enrollees 
without discrimination, are duplicative of other requirements found in 
this final rule. We direct readers to section D. Rewards and Incentives 
Program Regulations for Part C Enrollees (Sec.  422.134 and Subpart V) 
of this final rule for discussion of requirements for R&I programs. We 
proposed, and are finalizing, inclusion of information about R&I as 
part of the content measure for the definition of marketing under Sec.  
422.2260. This means that the marketing of R&I (and materials that 
discuss R&I) must comply with all, in some cases more stringent, 
marketing requirements set forth in Subpart V, except where otherwise 
noted.
    Comment: A commenter expressed concern that CMS removed the 
language used in the 2019 MCMG that required plans to support any 
comparisons with other plans ``by studies or statistical data.'' The 
commenter acknowledged that the February 2020 proposed rule, at 
Sec. Sec.  422.2263(b)(5) and 423.2263(b)(5), includes the requirement 
that such comparisons be not misleading, which was also in the MCMG.
    Response: CMS believes the final rule addresses the commenter's 
concerns. Under Sec. Sec.  422.2263(b)(5) and 423.2263(b)(5), as 
proposed and finalized, plans may not make plan comparisons unless the 
information is accurate, is not misleading, and can be supported by the 
plan making the comparison. By using the term ``accurate'', CMS expects 
that any plan comparison can be substantiated, including by the use of 
studies or statistical data or other information. In addition, the 
paragraph (2)(ii) of the definition of marketing, at Sec. Sec.  
422.2260 and 423.2260, again as proposed and finalized, makes it clear 
that plan comparisons are content that is considered marketing, and 
thus resulting in a greater level of oversight.
    Comment: A commenter recommended that CMS develop marketing 
materials for beneficiaries and providers to educate them on the 
different types of integrated products and benefits of being in an 
integrated product. The commenter also stated that CMS should consider 
requiring agents and brokers that use CMS developed materials to 
educate all dually-eligible individuals on the availability of highly 
integrated products in their market and to use beneficiary education 
materials that include a description of the benefits of integrated 
product offerings.
    Response: We appreciate the comment, but do not believe that 
additional actions are needed at this time. Extensive information about 
plan options is available to beneficiaries through Medicare.gov, the 
Medicare & You booklet and Medicare Plan Finder website. To date, CMS, 
in partnership with states, has developed standardized, state-specific 
model materials for MMPs that factually describe the benefits received 
from Medicare and Medicaid in one plan. In addition, SHIPs play a non-
biased educational role in providing information to beneficiaries about 
their Medicare choices as well. We also note that states play a role in 
educating beneficiaries regarding integrated products, such as Health 
Care Options (https://www.healthcareoptions.dhcs.ca.gov/need-help-choosing-program) which is a beneficiary-focused website sponsored by 
the state of California. We will continue to evaluate the need for 
additional communications. Finally, we note that plans may continue to 
market how their plan benefits structure and organization are 
beneficial to enrollees, including providing information about access 
to integrated Medicare and Medicaid benefits. We do not believe that 
additional action by CMS is necessary at this time.
    Comment: A commenter requested that the requirement under 
Sec. Sec.  422.2262(a)(1)(x) and 423.2262(a)(1)(x) to include the plan 
type at the end of the plan name should not be required every time the 
plan name is mentioned. The commenter noted that such a requirement is 
not reader-friendly to beneficiaries and seemed unnecessary.
    Response: We agree with this comment and are finalizing the 
regulation at Sec. Sec.  422.2262(a)(1)(x) and 423.2262(a)(1)(x) with 
additional text to clarify that plans are not required to repeat the 
plan type when the plan

[[Page 5991]]

name is used multiple times in a material.
    Comment: A commenter requested that CMS add the word ``materially'' 
in front of ``inaccurate'' in Sec. Sec.  422.2262 and 423.2262 so it 
would read ``MA organizations may not mislead, confuse or provide 
materially inaccurate information to current or potential enrollees.'' 
The commenter noted that doing so would mirror current guidance 
standards (presumably 30.7 of the MCMG and Sec.  422.2264 of the 
current regulation).
    Response: As explained in the February 2020 proposed rule, our 
intent with the revisions to Sec. Sec.  422.2262 and 423.2262 was to 
redesignate and reorganize requirements in the current regulations and 
to codify existing guidance. As current Sec. Sec.  422.2264(d) and 
423.2264(d) and section 30.7 of the MCMG use ``materially'' in setting 
forth the requirement, we agree that the revisions finalized here for 
Sec. Sec.  422.2262 and 423.2262 should preserve that standard. We are 
finalizing Sec. Sec.  422.2262 and 423.2262 to prohibit plans from 
misleading, confusing or providing materially-inaccurate information to 
current or potential enrollees.
    Comment: In addition to the ``mail by'' dates provided for various 
required materials and content under Sec. Sec.  422.2267(e) and 
423.2267(e), one commenter suggested that CMS also codify the earliest 
date health plans may release this information. The commenter suggested 
that doing so would simplify the process and allow health plans to 
prepare for the mailing.
    Response: We agree with this comment and that setting earliest date 
that a plan may begin sending materials for a plan year will help 
minimize potential confusion for beneficiaries. Therefore, we are 
finalizing Sec. Sec.  422.2267(e) and 423.2267(e) with additional text 
to permit plans to send required materials once a fully executed 
contract is in place but no later than the due dates listed in 
Sec. Sec.  422.2267(e) and 423.2267(e) for each material. Use of the 
date that the contract is executed for a particular year ensures that 
enrollees and potential enrollees are not furnished materials for an 
upcoming plan year before both the plan and CMS have committed to the 
plan being offered. We note that only required materials that do not 
meet the definition of marketing may be sent once a fully executed 
contract is in place. Any material that meets the definition of 
marketing, unless otherwise noted or instructed by CMS, may not be 
distributed until October 1 of each year as required under Sec. Sec.  
422.2263(a) and 423.2263(a).
    Comment: A commenter pointed out a typo in Sec. Sec.  422.2267(e) 
and 423.2267(e) with the words ``or perspective.''
    Response: We appreciate the commenter catching the typographical 
error. We are finalizing Sec. Sec.  422.2267(e) and 423.2267(e) with 
corrections, to read, ``. . . must be provided to current and 
prospective enrollees. . . .''
    Comment: A commenter requested that CMS also exclude envelopes, ID 
cards, and call scripts from the requirement to provide the Federal 
Contracting Statement under Sec. Sec.  422.2267(e)(30)(ii) and 
423.2267(e)(32)(ii). The commenter noted that these materials were 
excluded from requiring the Federal Contracting Statement in Appendix 2 
of the MCMG.
    Response: We agree with the commenter in part because, as explained 
in the February 2020 proposed rule, our intent, with a few exceptions, 
with the revisions to Subpart V was to redesignate and reorganize 
requirements in the current regulations and to codify existing 
guidance. We are finalizing Sec. Sec.  422.2267(e)(30)(ii) and 
423.2267(e)(32)(ii) with an additional exclusion for envelopes. We are 
not finalizing an exclusion of this required statement from ID cards or 
call scripts related to sales and enrollment. Sections 1851(d) and 
1860D-1(c) of the Act require CMS to provide for activities to disclose 
the potential for termination of MA and Part D plans to promote 
informed choice by enrollees; requiring plans to include the Federal 
Contracting Statement is consistent with the statute. First, ID cards 
are issued after a beneficiary had made an informed choice and are 
already excluded from the Federal Contracting Statement requirement. 
Second, while appendix 2 of the MCMG did exclude disclaimers (including 
the Federal Contracting Statement) from call scripts, the Federal 
Contracting Statement is only required to be a part of materials and 
information furnished to beneficiaries in connection with information 
promoting informed choice regarding enrollment into a plan. Consistent 
with this, we are requiring that any call scripts which meet the 
definition of marketing, such as sales scripts and enrollment scripts, 
include this statement. Under this final rule, the Federal Contracting 
Statement must be verbally conveyed along with the other content of the 
script.
    Comment: A commenter requested that the exceptions that apply to 
Sec. Sec.  422.2267(e)(30)(ii) and 423.2267(e)(32)(ii), the Federal 
Contracting Statement, apply to all disclaimers specified in Sec. Sec.  
422.2267(e) and 423.2267(e).
    Response: We respectfully disagree with this comment. Unlike the 
Federal Contracting Statement that, with few exceptions, is required on 
all marketing materials, the other disclaimers listed in Sec. Sec.  
422.2267(e) and 423.2267(e), by design, are limited by their 
application (for example, when inviting beneficiaries to an event), or 
are triggered based on specific material content (for example, the Star 
Ratings disclaimer). Therefore, we do not believe that the general 
exclusions in Sec. Sec.  422.2267(e)(30)(ii) and 423.2267(e)(32)(ii) 
are appropriate for the other required disclaimers and notices.
    Comment: A commenter asked if CMS intentionally omitted the 
requirements found in 60.4.1 of the MCMG (Special Guidance for 
Institutional Special Needs Plans (I-SNPs) Serving Long-Term Care 
Facility Residents). The commenter noted that the additional 
flexibility afforded to I-SNPs is important and should either be added 
to the final rule or incorporated into sub-regulatory guidance.
    Response: We appreciate the feedback. As explained in the February 
2020 proposed rule, we intended to redesignate and reorganize 
requirements in the current regulations in Subpart V and to codify 
existing guidance; that included an intent to incorporate 60.4.1 of the 
MCMG into the codified requirements. CMS inadvertently excluded the 
marketing restrictions for I-SNPs from the proposed regulation text; 
the preamble of the proposed rule, 85 FR 9110-9111, however, did make 
clear that we intended to include all of the policies regarding 
marketing in a health care setting in section 60 of the MCMG in these 
updated regulations. We agree with the commenter that this guidance is 
important to plans, beneficiaries, and caregivers. We are finalizing 
Sec.  422.2266 with an additional paragraph (f) to codify the current 
policy addressing how I-SNPs may market in the context of a long term 
care facility. We note that the requirements in Sec.  422.2266(f) apply 
to I-SNPs that are contracted with long term care (LTC) facilities as 
well as those I-SNPs that have an ownership stake in the LTC facility. 
This new regulation text, combined with the other requirements proposed 
and finalized in Sec.  422.2266, includes the substance of our existing 
I-SNP guidance for MA plans. We note that 42 CFR part 423 regulates the 
marketing of Part D and we are not finalizing similar regulation text 
for Part D sponsors. Part D only plans should not be marketing I-SNPs 
because Part D

[[Page 5992]]

plans do not provide the medical services and thus would not have 
contracts with I-SNPs; further, while I-SNPs must be MA-PDs (see Sec.  
422.2 definition of specialized MA plans for special needs 
individuals), compliance with the marketing and communications 
requirements in Sec.  422.2266(f) will necessarily include materials 
and activities related to the I-SNP's Part D coverage.
    In addition, we also finalizing an additional provision at 
Sec. Sec.  422.2264(c)(3)(iv) and 423.2264(c)(3)(iv), to provide that 
plans may schedule appointments with residents of long-term care 
facilities (for example, nursing homes, assisted living facilities, 
board and care homes) upon a resident's request. If a resident did not 
request an appointment, any visit by an agent/broker is considered 
unsolicited door-to-door marketing and therefore prohibited.
    Comment: A commenter expressed strong support of CMS's proposal to 
prohibit marketing activities and distribution of marketing materials 
in dialysis facilities.
    Response: We thank the commenter for the support. Stemming from 
section 1851(j)(1)(D)(i) of the Act, CMS has had a longstanding policy 
and requirements that limit marketing in healthcare settings. We would 
like to clarify that our rules have always allowed for marketing 
activities in common areas. We clarify that the prohibition on 
marketing activities and the provision of materials in treatment areas, 
where patients interact with a provider or the clinical team, does not 
include a prohibition of marketing activities or the provision of 
marketing materials in common areas. We are including an edit in 
sections 422.2266(a)(3) and 423.2266(a)(3) to clarify that, to the 
extent that dialysis facilities actually do have such common areas, 
that the same limitations would apply to them as to other healthcare 
settings. It is not our intent to prohibit marketing for every single 
area in a facility/health care provider's location and this change in 
policy for dialysis facilities would mirror the policy as it has been 
applied previously for all other provider locations.
    Comment: A commenter urged CMS to not include the prohibition on 
providers being compensated for marketing or enrollment activities in 
the final rule. The commenter noted that, the section 70.5.1 of the 
Medicare Marketing Guidelines (MMG) issued on 7/20/17 (available here 
online: https://www.cms.gov/Medicare/Health-Plans/ManagedCareMarketing/Downloads/CY-2018-Medicare-Marketing-Guidelines_Final072017.pdf), only 
restricted compensation based on enrollment activities. The commenter 
stated that the language could be read to prohibit plans and providers 
from sharing the costs of otherwise permissible provider affiliation 
activities and advertising.
    Response: We respectfully disagree with this comment. The steps 
taken by CMS to restrict compensation to providers for marketing 
activities are rooted in ensuring the provider is a neutral party who 
is offering guidance to patients based solely on what is best for the 
patient. We note that the decision to preclude plans from compensating 
providers for marketing activities predates this rulemaking and has 
been in section 60.2 of the MCMG since it was first released on July 
20, 2018. Additionally, the MMG issued in July 2017, under section 
70.5.1, still precluded providers from mailing marketing materials on 
behalf of Plans/Part D sponsors. Under our current policies, 
affiliation announcements (a provider announcing that they are now [or 
continue to be in] a plan's network) are communications if limited to 
that information, and thus would be allowed. However, if a plan is 
using such an announcement as a veiled means of provider-based 
marketing, it would be precluded by this rule, as it would under the 
MCMG since the July 2018 version. For example, an affiliation 
announcement that says Dr. Smith is now accepting Medicare Advantage X, 
then goes on to say that Medicare Advantage X offers $0 copays, and $0 
monthly premiums, and that Dr. Smith thinks Medicare Advantage X is the 
greatest Medicare Advantage Plan would be prohibited by this rule, as 
well as the current rule, as interpreted in the MCMG.
    Comment: Several commenters urged CMS to add specific provisions in 
the marketing and communications regulations regarding MA special 
supplemental benefits for the chronically ill (SSBCI) and how plans may 
market them.
    Response: In general, CMS respectfully disagrees that additional 
regulatory requirements specific to communications and marketing 
related to SSBCI are necessary. The requirements in Subpart V establish 
standards and requirements to address a wide range of issues and 
contexts, rather than having standards for individual benefits, items, 
issues, and services. This allows CMS to be more dynamic with regard to 
the ever changing communications and marketing environment. The 
regulations that we proposed and finalized are as applicable to SSBCI 
as they are to other benefits covered and offered by an MA plan. 
However, we recognize that beneficiaries should be aware that SSBCI are 
not available to all plan enrollees and that the eligibility for these 
benefits is limited by section 1852(a)(3)(D) of the Act and Sec.  
422.102(f); ensuring a clear statement of these limitations guards 
against beneficiary confusion or misunderstanding the scope of these 
new benefits. To that end, a new requirement for a disclaimer to be 
used when SSBCIs are mentioned is being finalized at Sec.  
422.2267(e)(32).
    Comment: A few commenters expressed concern that marketing SSBCI 
would lead to inappropriate steering or targeting of beneficiaries. 
Similar to other comments, the commenters urged CMS to implement 
specific requirements under Subpart V of the regulation to guard 
against such predatory sales tactics. A commenter feared that brokers 
may ask individuals about their health status and use that information 
to steer them toward specific plans in violation of anti-discrimination 
rules.
    Response: CMS respectfully disagrees that additional requirements 
for communications and marketing related to SSBCI should be placed 
under Subpart V. The requirements, as written in this rule, allow CMS 
to pursue any marketing or sales tactics that are misleading or 
confusing to the beneficiary, regardless of whether the violation is 
tied to specific benefits (like SSBCI). In addition, although CMS 
understands the concern expressed about agents and brokers asking 
individuals about their health status, when done appropriately, such 
activities can be an important part to identifying the best plan for a 
beneficiary and addressing eligibility for SNPs that serve individuals 
with severe or disabling chronic conditions. CMS has requirements in 
place in this rule to ensure plans (including agents and brokers, as 
downstream entities of plans) act appropriately when it comes to health 
status, namely Sec. Sec.  422.2262(a)(1)(vi) and 
422.2264(c)(2)(iii)(B).
    Comment: Several commenters requested that CMS provide more 
examples pertaining to the restrictions of marketing during the OEP in 
Sec. Sec.  422.2263(b)(7) and 423.2263(b)(7).
    Response: We agree that providing more examples and illustrations 
of how the regulatory standards apply in specific factual situations 
can be helpful. However, we believe that sub-regulatory guidance is the 
best location for providing additional examples.
    Comment: Another commenter also expressed the need for examples.

[[Page 5993]]

However, the commenter also cited the need for CMS to more closely 
monitor marketing activities during the OEP. The commenter noted that 
if the consequences of marketing during the OEP are not explicit or 
consistent, it defeats the purpose of prohibiting plans to market 
during this time.
    Response: We agree with the commenter that appropriate oversight is 
necessary for effective regulatory guidance. The Medicare Advantage OEP 
was added to section 1851(e)(2)(G) of the Act by the 21st Century Cures 
Act with a prohibition on unsolicited marketing or marketing materials 
being sent to Medicare beneficiaries during the OEP and, in the April 
2018 final rule, we adopted the specific prohibition in current 
Sec. Sec.  422.2268(b)(10) and 423.2268(b)(10) that is being 
redesignated with additional provisions at Sec. Sec.  422.2263(b)(7) 
and 423.2263(b)(7) in this final rule. Since the April 2018 final rule, 
CMS has fielded several questions from plans concerning what can and 
cannot be done during the OEP. In addition, CMS has also investigated 
complaints received concerning plans the complainant felt were not in 
compliance with the prohibitions of marketing during the OEP. CMS has 
used this experience to shape the requirements in this final rule, 
which includes specific provisions regarding prohibited conduct (such 
as sending unsolicited materials that advertise the availability of 
this enrollment period and calling former enrollees to solicit 
reenrollments) and permitted conduct (such as responding to beneficiary 
requests for sales meetings) in addition to the general prohibition on 
knowingly targeting or sending unsolicited materials during the OEP. 
CMS will continue to monitor compliance with the prohibition of 
knowingly marketing to beneficiaries during the opportunity afforded by 
the OEP, and take appropriate compliance or enforcement action when 
necessary. CMS encourages beneficiaries to report any abusive, 
confusing or misleading marketing practices by plans, agents and 
brokers by contacting contact 1-800-Medicare. In addition, we encourage 
reports of potential violations of this requirement.
    Comment: A commenter requested that CMS consider lifting the 
restriction on marketing to beneficiaries during the OEP. The commenter 
believed information about the OEP should be shared proactively with 
beneficiaries so that they are aware of the option to switch MA plans 
if the enrollee's MA plan is not a good fit. The commenter noted that 
beneficiaries may be losing out on an enrollment opportunity and forced 
to stay with their existing plan until the next AEP to make a change 
because CMS prohibits plans from proactively marketing information 
about the OEP.
    Response: The prohibition of marketing during the OEP is 
statutorily required so we do not have authority to eliminate it. 
Further, CMS believes that the intent of Congress was to allow 
beneficiaries to make an enrollment decision during the OEP, without 
creating a second opportunity for plans to proactively persuade or 
attempt to persuade beneficiaries to switch MA plans. Neither the 
statute nor regulation restricts a plan from providing educational 
materials or marketing materials if and when the beneficiary 
proactively reaches out looking for help during or regarding the OEP.
    Comment: A commenter agreed with CMS that marketing and 
advertisements should be restricted during the MA OEP. The commenter 
noted that during the MA OEP, excessive marketing can be confusing to 
seniors and leads people to unnecessarily believe that they need to 
make a plan change. The commenter additionally stated that the OEP 
should be a time to help seniors process necessary changes that are 
based on real issues; not those who have been influenced by excessive 
marketing.
    Response: We agree with the commenter and believe the requirements 
proposed and finalized at Sec. Sec.  422.2263(b)(7) and 423.2263(b)(7) 
implement the statutory prohibition and provide the appropriate 
beneficiary protections.
    Comment: A commenter requested that CMS include language in 
Sec. Sec.  422.2263(b)(7) and 423.2263(b)(7)(i) to allow general 
information on websites, as currently permitted in section 40.7 of the 
MCMG.
    Response: We agree with this comment. We are finalizing the 
Sec. Sec.  422.2263(b)(7)(i) and 423.2263(b)(7)(i) with an additional 
paragraph (E) that permits plans to include educational information, 
excluding marketing, on the plan's website about the existence of the 
OEP.
    Comment: A commenter stated that the language at Sec. Sec.  
422.2263(b)(7)(ii)(C) and 423.2263(b)(7)(ii)(C) stating plans ``must 
not engage in or promote agent/broker activities that intend to target 
the OEP as an opportunity to make further sales . . .'' was vague and 
overbroad, as it suggests the intent of the activity alone may 
determine whether it is compliant.
    Response: We respectfully disagree with the comment. Our goal, as 
when the prohibition on marketing during the OEP was originally 
codified in the April 2018 final rule, is to implement the statute in a 
manner that protects beneficiaries without creating undue burden on 
plans. To accomplish this, we consider the intent of marketing 
materials or activities. If CMS focused only on the content of 
materials or activities, bad actors would be able to evade oversight by 
simply excluding certain words, while using materials or conducting 
activities with the same overall focus and intended outcome. We also 
believe that plans are well equipped to determine if materials or 
activities are intended to be used or are being used to target 
beneficiaries during the OEP.
    Comment: A commenter requested that CMS revise the regulatory text 
pertaining to non-renewal notices at Sec.  422.2267(e)(10) to address 
the earliest date that health plans may release this information. The 
commenter noted that section 100.4 of the MCMG states information about 
non-renewals or service area reductions may not be released to the 
public, including current enrollees, until notice is received from CMS.
    Response: CMS agrees with this comment. Section 100.4 of the MCMG 
provides that information about non-renewals or service area reductions 
may not be released to the public, including current enrollees, until 
notice is received from CMS. As explained in the February 2020 proposed 
rule, we intended to redesignate and reorganize requirements in the 
current regulations in Subpart V and to codify existing guidance. As 
such, we are finalizing Sec. Sec.  422.2267(e)(10)(i) and 
423.2267(e)(13)(i) with additional text to permit release of non-
renewal notices after CMS provides notification to the plan. We note 
that Sec. Sec.  422.506(a)(2)(ii) and 423.507(a)(2)(ii) state the 
beneficiary must receive notice by mail at least 90 calendar days 
before the date on which the nonrenewal is effective; we are not 
changing or limiting that timeframe in this final rule.
    Comment: A commenter suggested that CMS reclassify payments to 
third parties, addressed in Sec. Sec.  422.2274(e) and 423.2274(e), as 
``payments other than compensation.'' The commenter explained that the 
change would not only account for payments to third parties, but also 
for payments to agents/brokers that are not considered compensation. 
The commenter gave the example that payment to an agent for completion 
of health risk assessments is a payment other than compensation because 
the payment is not for the sale or renewal of a policy.
    Response: CMS agrees with the commenter that additional 
clarification

[[Page 5994]]

is necessary. We are finalizing Sec. Sec.  422.2274(e) and 423.2274(e) 
as a provision identifying payments that are not compensation but are 
administrative payments. We are finalizing the scope of these payments 
as proposed, meaning payments for services other than enrollment of 
beneficiaries (for example, training, customer service, agent 
recruitment, operational overhead, assistance with completion of health 
risk assessments), but without the limitation that the payments be made 
to a third party. As proposed and finalized, all payments of this type 
must not exceed the value of those services in the marketplace. This 
standard is intended to ensure that plans do not use these 
administrative payments as a means to circumvent the limits on 
compensation to agents and brokers. Plans must limit these payments to 
the amounts that would be fairly negotiated on the open market for the 
administrative services being performed and should be able to 
demonstrate that the administrative payments were made for actual 
performance when necessary. We are finalizing paragraph (e)(2) as 
proposed but without limiting the provision to payments to third 
parties.
    Comment: A commenter voiced the concern that permitting plans to 
contact beneficiaries in another line of business could lead to an 
onslaught of unsolicited marketing. The commenter was especially 
concerned about unsolicited marketing to dually eligible beneficiaries. 
The commenter urged CMS to limit plan outreach/marketing to once a 
quarter, a limitation that corresponds with the LIS special enrollment 
periods.
    Response: CMS understands the commenter's concern. However, CMS 
does not believe that outreach for plan business has harmed 
beneficiaries. CMS uses the Complaints Tracking Module to log concerns 
from beneficiaries and others who call 1-800-Meducare. We have not 
received complaints related to inappropriate outreach to enrollees 
regarding plan business. In addition, Sec. Sec.  422.564 and 423.564 
provide beneficiaries who feel they are being overly bothered by such 
calls the option of filing a grievance with the plan under the part C 
and D grievance rules. The intent of allowing contact for plan business 
is to ensure CMS's rules are not a barrier to a beneficiary gaining 
access to helpful plan information, rather than exposing the enrollee 
to unsolicited burdensome contact. We do not agree with adopting the 
remedy suggested by commenters of limiting contact to once per quarter 
because doing so may unintentionally limit what could be wanted or 
needed communication for the enrollee. Instead, we are finalizing a 
requirement that the plan offer an opt-out when contacting a 
beneficiary for plan business at Sec. Sec.  422.2264(b)(2) and 
423.2264(b)(2). As a result, plans must respect requests from enrollees 
to cease calls to enrollees about plan business. We encourage plans to 
develop opt-out procedures and policies that provide the enrollees the 
ability to limit calls to particular topics or timeframes as well as 
opting out of all future calls. We believe this remedy, as opposed to 
an arbitrary cap on calls, provides enrollees with the means to stop 
calls should they wish.
    Comment: A commenter offered support to CMS's bifurcation of 
provider activities under Sec. Sec.  422.2266(c)-(d) and 423.2266(c)-
(d). The commenter noted that Sec. Sec.  422.2266(c) and 423.2266(c) 
allowed providers to provide fact-based guidance to their patients on 
MA plans.
    Response: CMS thanks the commenter for the support.
    Comment: A commenter expressed concern that the language used for 
the review of communications materials under Sec. Sec.  422.2261(c) and 
423.2261(c) implies that the EOC would require filing, as well as CMS 
review and approval, before it could be used. The commenter stated that 
it was not feasible for plans to get an EOC completed after annual bid 
approval, printed for member requests by 10/15 and accessibility-
processed for website availability by 10/15, if plans have to wait for 
CMS to review and approve the EOC. The commenter also noted that 
currently CMS requires plans to file the EOC, but it gets ``NM'' status 
and is available for use immediately after filing in HPMS.
    Response: CMS is not changing the process for the submission and 
review of the EOC. The EOC is a standardized material, meaning plans 
must use the language provided by CMS with no modification. As such, 
the potential for a beneficiary to be misled by an EOC is low, and 
therefore, the EOC is not prospectively reviewed. Plans are required to 
submit the EOC to CMS for retrospective review, and plans must provide 
CMS with ready access to the EOC should CMS receive a beneficiary 
complaint about the EOC.
    Comment: A commenter requested that the CMS final rule include the 
qualification under section 30.7 of the MCMG that unsubstantiated 
absolute and/or qualified superlatives may be used in logos and 
taglines.
    Response: CMS agrees with this comment. As explained in the 
February 2020 proposed rule, we intended to redesignate and reorganize 
requirements in the current regulations in Subpart V and to codify 
existing guidance; that included an intent to incorporate 30.7 of the 
MCMG into the codified requirements. This exception to the 
unsubstantiated statement requirement was unintentionally not included 
in the proposed rule. We are finalizing additional text at Sec. Sec.  
422.2262(a)(1)(ii) and 423.2262(a)(1)(ii) to allow unsubstantiated 
statements, which could be in the form of superlatives or pejoratives, 
in logos or taglines. We note that plans are permitted to use 
unsubstantiated statements only in taglines and logos, which means that 
plans may not include unsubstantiated statements in larger or longer 
marketing materials. We further note that it may be possible for some 
superlatives or pejoratives to qualify as substantiated statements.
    Comment: A commenter, citing proposed Sec. Sec.  422.2267(d)(2)(i) 
and 423.2267(d)(2)(i), requested that CMS provide specific guidance in 
one place on the requirements in the notice for electronic delivery of 
materials and requested clarification whether plans would be permitted 
to create their own notice.
    Response: Paragraphs (D) and (E) of Sec. Sec.  422.2267(d)(2)(i) 
and 423.2267(d)(2)(i) outline the content requirements for the notice. 
In addition, paragraphs (A), (B), (C), and (F) provide additional 
requirements for a plan to use the flexibility of notice of electronic 
access to the EOC, Provider and Pharmacy Directories and Formulary 
without prior authorization from the enrollee. Provided the 
requirements under Sec. Sec.  422.2267(d)(2)(i) and 423.2267(d)(2)(i) 
are followed, plans are permitted to create their own notice.
    Comment: A commenter expressed concern that listing the SB as a 
model material in Sec. Sec.  422.2267(e)(5) and 423.2267(e)(4) of the 
February 2020 proposed rule was going to result in the required use of 
a model. The commenter expressed concern that doing so would impact a 
plan's freedom to design the SB and explain benefits as they currently 
can under Appendix 5 of the MCMG.
    Response: As proposed and finalized, the requirements for the SB 
are consistent with the current policy in the MCMG, including Appendix 
5 of the MCMG. We clarify here that the term standardized materials, 
which are specified in Sec. Sec.  422.2267(b) and 423.2267(b) must be 
used in the form and manner provided by CMS. Model materials, which are 
specified in Sec. Sec.  422.2267(c) and 423.2267(c) are created by CMS 
is an example of how to convey beneficiary information. As with current 
policy and practice, plans

[[Page 5995]]

may customize the SB so long as all required content is included and 
are not required to use the CMS model SB without customization.
    Comment: A commenter noted that the MCMG requires the PECL to be 
included with the SB, whereas Sec. Sec.  422.2267(e)(4) and 
423.2267(e)(3) of the February 2020 proposed rule would require the 
PECL be included with the SB and the enrollment form. The commenter 
explained that while typically the SB and an enrollment form are 
provided together in a pre-enrollment packet, if a prospective enrollee 
elects to access plan marketing materials on the plan's website, the 
individual will access the SB and enrollment form separately. The 
commenter recommended that CMS allow the checklist to continue to only 
be included with the SB as required in current guidance.
    Response: We agree with this comment in part. We agree that it is 
unnecessary to require the PECL be included with the SB and the 
enrollment form. However, the PECL was originally developed as a tool 
to help beneficiaries consider important questions about their needs 
and coverage choices and we have always intended it to be reviewed 
prior to making an enrollment decision. As such, we believe it best to 
require the PECL with the enrollment form as opposed to the SB. Plans 
may include the PECL with other materials, if they choose. We are 
finalizing Sec. Sec.  422.2267(e)(4) and 423.2267(e)(3) to require that 
the PECL be provided with the enrollment form. As finalized, these 
regulations do not require the PECL to be included with the SB but we 
encourage plans to do so when it is appropriate and helpful to 
potential enrollees.
    Comment: A commenter pointed out an error to the requirement for 
mailing statements at Sec.  423.2267(e)(36)(i).
    Response: CMS appreciates the commenter bringing this error to its 
attention. CMS is finalizing Sec.  423.2267(e)(35)(i) (proposed Sec.  
423.2267(e)(36)(i)) with a correction to include the same language as 
proposed and finalized at Sec.  422.2267(e)(34)(i). These regulations 
require MA plans, cost plans and Part D plans to include the following 
statement when mailing information about the enrollee's current plan: 
``Important [Insert Plan Name] information.''
    Comment: A commenter requested that CMS clarify that, consistent 
with current policy, the ``Important plan information'' mailing 
statement would only be required for current member mailings, as 
indicated in Appendix 2 of the MCMG.
    Response: CMS confirms that the commenter is correct. Under 
Sec. Sec.  422.2267(e)(34)(i) and 423.2267(e)(35)(i), as finalized, 
plans must include the statement when mailing information about the 
``enrollee's'' current plan, which is synonymous with ``current 
member.''
    Comment: A commenter requested that CMS re-evaluate the HPMS timing 
and submission of the Star Ratings Document to remove the 5-day waiting 
period. The commenter stated that, because the document is 
automatically generated from HPMS, there is no value in requiring plans 
to resubmit the Star Ratings Document back into HPMS as a file and use 
material, which requires a 5-day waiting period before the document can 
be used. The commenter requested that CMS apply the same guidance to 
the Star Ratings document as the Annual Notice of Change (ANOC).
    Response: Based on the regulatory definition of marketing under 
Sec. Sec.  422.2260 and 423.2260, CMS has determined the Star Ratings 
Document is a marketing material. Because the collection of marketing 
materials is required under section 1851(h)(1) of the Act, the Star 
Ratings Document, as a marketing material, must continue to be 
submitted via the HPMS Marketing Module under the defined process. CMS 
is finalizing the requirement that the Star Ratings documents are 
subject to the 5-day waiting period. This period will provide an 
opportunity for CMS to ensure that organizations do not alter the 
document as that document is a key piece required with an enrollment 
form.
    Comment: Two commenters requested that CMS remove the requirement 
for the Availability of Non-English Translations disclaimer under 
proposed Sec. Sec.  422.2267(e)(32) and 423.2267(e)(34). Both 
commenters referenced the requirement tied to section 1557 of the 
Affordable Care Act (ACA) as having duplicative requirements. The 
commenters stated that the Availability of a Non-English Translations 
disclaimer would result in beneficiaries receiving the disclaimer 
language multiple times within the same mailing.
    Response: CMS understands the concern with duplication. As of this 
final regulation, the Office for Civil Rights (OCR) finalized the 
regulations implementing section 1557 of the ACA without requiring 
disclaimers. Acknowledging OCR's finalized regulations did not include 
language-based disclaimers, CMS will not finalize the proposed 
Availability of Non-English Translation disclaimer, proposed Sec. Sec.  
422.2267(e)(32) and 423.2267(e)(34), in this final rule. To clarify, 
there would be no requirement in this regulation for the Availability 
of Non-English Translation disclaimer; however, plans must still abide 
by OCR's current or future requirements on this topic as they have the 
authority to impose such requirements. As such, CMS believes future 
rulemaking regarding non-English disclaimers, if appropriate, is best 
addressed by OCR, as those requirements would be HHS-wide instead of 
limited to CMS. In addition, we note that the other paragraphs in 
Sec. Sec.  422.2267(e) and 423.2267(e) will be renumbered as compared 
to the proposed rule as a result.
    Comment: Several commenters provided support for CMS including non-
English language disclaimers in the proposed regulation.
    Response: CMS appreciates the support but has made the decision not 
to finalize proposed at Sec. Sec.  422.2267(e)(32) and 423.2267(e)(34) 
in this final rule and to defer to OCR for possible future rulemaking. 
CMS has determined that deferring to OCR's oversight and management of 
any requirements related to non-English disclaimers is in the best 
interest of the Medicare program.
    Comment: Several commenters requested that CMS remind plans about 
their obligations to comply with section 1557 notice requirements, 
including ``taglines'' or disclaimers in the top 15 languages and to 
conduct enforcement and oversight when appropriate.
    Response: We appreciate the comments. We believe it is important 
for plans to be cognizant of obligations as they relate to applicable 
rules and regulations that require interpreter services, translation of 
materials, and associated notices or disclaimers and have included the 
requirement in this final rule under Sec. Sec.  422.2267(a)(3) and 
423.2267(a)(3).
    Comment: Two commenters urged CMS to take this opportunity to 
revisit Sec. Sec.  422.2267(a)(2) and 423.2267(a)(2) and require using 
a threshold of five percent or 1,000 people in the service area, 
whichever is lower, of a population speaking a language other than 
English to trigger translations for vital documents.
    Response: CMS respectfully disagrees with this comment. CMS 
previously considered a similar standard when translation requirements 
were first added to Sec. Sec.  422.2264 and 423.2264 in the final rule, 
``Medicare Program; Changes to the Medicare Advantage and the Medicare 
Prescription Drug Benefit Programs for Contract Year 2012 and

[[Page 5996]]

Other Changes,'' published in the Federal Register on April 15, 2011. 
(73 FR 21423, 21512 through 21514) At that time, CMS stated that use of 
a standard of the lesser of 5 percent or 500 people would result in all 
PDPs and nearly all MAOs providing translated materials in all 
languages captured in the ACS data, which would result in a significant 
increase in the number of plans required to translate and the number of 
languages required for translation. Absent definitive evidence to 
support the sharp increase, this would result in insupportable costs 
and burden. Although the commenter was suggesting a five percent or 
1,000 people in the service area, CMS believes the reasons identified 
by final rule cited above still apply and that raising the alternative 
minimum standard to 1,000 people from 500 would not significantly 
reduce the potential burden. As such, CMS will is finalizing as 
proposed the provision at Sec. Sec.  422.2267(a)(2) and 423.2267(a)(c) 
setting the translation standard at five percent of the individuals in 
a plan benefit package (PBP) service area.
    Comment: A commenter requested that CMS allow the Scope of 
Appointment (SOA) provision found at Sec. Sec.  422.2264(c)(3)(i) and 
423.2264(c)(3)(i) to be satisfied by a simple question on the coverage 
application, with additional paperwork only required if the appointment 
topic shifts beyond the scope of Medicare.
    Response: Section 1851(j)(2)(A) of the Act requires the Secretary 
to establish limitations to require advance agreement with a 
prospective enrollee on the scope of the marketing appointment and 
documentation of such agreement, which must be in writing if the 
marketing appointment is in person; section 1860D-4(l) imposes the same 
requirements in the Part D program. The regulations proposed, and 
finalized, at Sec. Sec.  422.2264(c)(3)(i) and 423.2264(c)(3)(i), 
implement these statutory requirements. We believe that using the 
enrollment form, typically a document that is used at the end of a 
personal marketing appointment, would not be consistent with the 
statute. Therefore, we are finalizing these provisions.
    Comment: A commenter requested that CMS clarify what is meant by 
``use of a previous post'' as stated in Sec. Sec.  422.2262(b)(1)(iv) 
and 423.2262(b)(1)(iv). The commenter stated that it is unclear what 
types of social media ads would be considered product endorsements or 
testimonials.
    Response: The phrase ``previous post'' refers to a social media 
post that had been made in the past or prior to its use, sharing, or 
posting by a different user. For example, a plan enrollee tweets that 
they were able to quit smoking thanks to a smoking cessation program 
offered by Super Duper Medicare; if Super Duper Medicare shares (by 
retweeting or otherwise) that tweet with their followers, it would be 
considered a use of a previous post. Under Sec. Sec.  
422.2262(b)(1)(iv) and 423.2262(b)(1)(iv), as proposed and finalized, 
this use of the previous post is a product endorsement or testimonial. 
We will provide additional examples as necessary through sub-regulatory 
guidance and training.
    Comment: A commenter requested that CMS consider changing the 
training and testing standards at Sec. Sec.  422.2274(b)(2) and 
423.2274(b)(2) to relax the requirements for more seasoned (5 years or 
longer) agents and brokers. The commenter stated doing so would 
encourage longevity and stability among private Medicare agents and 
brokers.
    Response: CMS appreciates the comment and will consider this in 
future rulemaking, but believes further analysis and consideration is 
necessary before adopting such a policy. This policy would potentially 
increase the complexity of agent and broker oversight. Further, we 
believe we should analyze the cost implications, including potential 
additional costs (or savings) of implementing a tiered approach to 
agent and broker training and testing.
    Comment: A commenter requested CMS clarify that ``applicable 
disclaimers,'' as used in Sec. Sec.  422.2265(a)(1)(iii) and 
423.2265(a)(1)(iii), are those disclaimers required by CMS.
    Response: Sections 422.2265(a)(1)(iii) and 423.2265(a)(1)(iii) 
refer to notices, statements, disclosures, and disclaimers required for 
plan use under other statutes or regulations, such as (but not 
necessarily limited to) the disclaimers required under Sec. Sec.  
422.2267(e) and 423.2267(e). To clarify this point, we have updated the 
language at 422.2265(a)(1)(iii) and 423.2265(a)(1)(iii) to include 
notices, statements, disclosures in addition to disclaimers.
    Comment: A commenter requested that CMS limit the requirement at 
Sec.  422.2265(a)(1)(iv) regarding the need to update websites with the 
most current information within 30 days to only updates to the website 
that are material changes.
    Response: CMS agrees with this comment as it would be overly 
burdensome to require plans to update non-material changes, such as a 
new company mascot, within 30 days. Moreover, non-materials changes are 
not impactful to a beneficiary's ability to have access to the 
information needed to make an educated enrollment decision. CMS is 
finalizing Sec. Sec.  422.2265(a)(1)(iv) and 423.2265(a)(1)(iv) with 
revisions to limit the requirement to update the website to material 
changes. CMS is finalizing the remaining substance of the regulation as 
proposed.
    Comment: One commenter requested that CMS complete a thorough 
review of the website requirements to ensure consistency with current 
guidance as well as inclusion of any requirements outside of the MCMG. 
The commenter provided two examples. They noted that the Final Rule 
published on February 12, 2015 (CMS-4159) required plans to post their 
disaster and emergency policy annually on the website and the CY 2014 
Final Call Letter required plans to have a dedicated Medication Therapy 
Management MTM program linked from their plan website and it be 
accessible by clicking through a maximum of two links.
    Response: We agree with this commenter and confirm the two 
requirements noted. We are finalizing Sec.  422.2265(b) with a 
modification to include a requirement to post disaster and emergency 
policy annually as outlined under Sec.  422.100(m)(5)(iii). We are 
finalizing Sec.  423.2265(b) with a modification to include the most 
recent MTM program website requirements. While CMS strives to list all 
website requirements under Sec. Sec.  422.2265 and 423.2265, we note 
that the lack of a requirement in these sections does not remove plan 
responsibility for compliance if requirements are adopted elsewhere.
    Comment: A commenter recommended CMS align Provider Directory PDF 
web posting requirements with MCMG section 70.2 (Searchable Formularies 
and Directories), which indicates that a searchable tool (for example, 
search engine/database) may be a substitute for downloadable PDF 
directories as long as all instructions and template information are 
provided.
    Response: CMS respectfully disagrees with this comment. Currently, 
the regulation at Sec.  422.111(h)(2)(ii) requires the MA plan's 
website to have information (names, addresses, phone numbers, and 
specialty) about network providers. Our current guidance, in MCMG 
section 70.2, provides that organizations that have a searchable 
directory on their website are not required to have a downloadable 
directory on their website. However, regulations at Sec. Sec.  
422.111(h)(2)(ii) and 423.128(d)(3) still require organizations

[[Page 5997]]

to provide materials in hard copy when requested. Therefore, the 
provision of hard copies of provider and pharmacy directories is 
currently a requirement for plans. In addition, now that a greater 
number of materials may be made available electronically under 
Sec. Sec.  422.2267(d)(2) and 423.2267(d)(2), we believe that it is 
even more important for beneficiaries to have access to a PDF of the 
compete directory or formulary; this is especially true for the 
provider directories because prior consent from the enrollee is not 
required for a plan to use electronic delivery instead of mailing hard 
copies for provider directories. Our electronic delivery regulations 
permit organizations to notify individuals that certain materials can 
be accessed via a website or other method. These materials, unless 
requested by the beneficiary, will not be mailed in hard copy. As 
proposed and finalized, Sec. Sec.  422.2265(b)(3) and 423.2265(b)(3) 
require plans to post a pdf or copy of a printable version of their 
provider and pharmacy directories on their website. Even though there 
is great value in making available on the website a tool or 
functionality that allows the beneficiary to search for a specific 
provider or drug based on set criteria, searchable formularies or 
directories do not allow a beneficiary the ability to view or download 
the directory or formulary as they would if it had been mailed. For 
that reason, we believe searchable directories and downloadable PDF 
documents are distinctly different and are not equivalent in their 
utility to a beneficiary.
    Comment: A commenter inquired about the elimination of the 
requirement that plans use CMS standard icons when marketing a plan's 
Star Rating. The commenter noted that, previously, plans were not 
permitted to create their own gold star icon or any other icon of 
distinction, however, under the revision of the MCMG, plans could 
create their own gold star icon (or any other icon of distinction) so 
long as the icon is not misleading or confusing to beneficiaries. The 
commenter then stated that it was unclear to them how CMS would 
determine whether a plan-created icon was misleading or confusing.
    Response: As explained in the February 2020 proposed rule, we 
intended to redesignate and reorganize requirements in the current 
regulations in Subpart V and to codify existing guidance; that included 
the ability for plans to create their own star icon, which we proposed 
at Sec. Sec.  422.2263(c)(6)(ii) and 423.2263(c)(6)(ii) and are 
finalizing here. The revision to the MCMG, section 40.6.1, to permit 
such plans to create their own Star Ratings icons was announced in an 
HPMS memo updating the MCMG on August 6, 2019 and predates this 
rulemaking. If warranted, CMS may examine the effects of allowing plans 
to use their own icons to denote CMS 5 Star Ratings. CMS will take 
appropriate action against any plan that uses icons that are misleading 
or confusing to beneficiaries and we intend to use information such as, 
but not limited to, beneficiary complaints, CMS marketing reviews, and 
CMS surveillance activities to identify violations of the prohibitions 
on misleading or confusing beneficiaries. At this time, we believe that 
providing plans with this flexibility, while also continuing to 
prohibit misleading marketing and communications, is appropriate. We 
note that we proposed and are finalizing the longstanding requirement 
that low performing plans use the specific CMS-created Low Performing 
Icon, state what that icon means, and may not attempt to refute or 
minimize their Low Performing Status, as stated in Sec. Sec.  
422.2263(c)(7) and 423.2263(c)(7). In situations where a plan has been 
assigned the Low Performing Icon, there is a greater incentive for a 
plan to mischaracterize its Star Ratings; therefore, by requiring use 
of the CMS-created icon in those situations, we are sufficiently 
guarding against the negative consequences of allowing plans to create 
and use their own Star Ratings icons. Additionally, we will continue to 
rely on the practices we have developed, discussed in prior responses, 
for determining whether marketing language and methods are misleading 
or confusing, including the use of plan-created icons.
    Comment: A commenter was concerned about the limited enforcement in 
the marketplace regarding marketing and referral fees. The commenter 
suggested that instead of making changes to the requirements, CMS 
should improve its coordination with state departments of insurance to 
enforce existing regulations.
    Response: CMS has mechanisms in place to monitor agent and broker 
behavior in the marketplace, including prospective and retrospective 
marketing reviews, CMS regional office account manager oversight, ad 
hoc review by CMS Central Office staff, notification by peers (that is, 
other health plans), and notification through 1-800-MEDICARE (via the 
Complaints Tracking Module (CTM)) on a case-by-case basis. 
Additionally, CMS reviews agent/broker payment data in the HPMS agent/
broker payment database for anomalies. CMS has a memorandum of 
understanding (MOU) with all states to facilitate coordination with 
state Departments of Insurance in order to share information and work 
with these departments as appropriate. CMS also may take compliance or 
enforcement action if it determines plans are not adhering to CMS' 
requirements, including the requirements at Sec. Sec.  422.504(i) and 
423.505(i) for the oversight of first tier, downstream, and related 
entities, which includes for agents and brokers.
    Comment: A commenter suggested that individuals not discuss 
benefits with beneficiaries in any Medicare plan unless they are 
licensed and certified.
    Response: CMS believes beneficiaries need to understand their 
benefits and to require a beneficiary to only speak to a licensed and 
certified agent about the benefits in a plan would be burdensome to 
both the beneficiary as well as the plan. For example, CMS does not 
require a customer service representative (CSR) to be licensed and 
certified to answer a beneficiary calling to determine what the co-pay 
would be for a medical procedure. The requirements in Sec. Sec.  
422.2272 and 423.2272 are designed to ensure that an individual 
conducting marketing activities (that is selling) and enrolling 
individuals into a plan are licensed and certified. CMS also has rules 
in place at Sec. Sec.  422.503(b)(4)(vi)(F), 422.504(i)(3)(iii), 
423.504(b)(4)(vi)(F), and 423.505(i)(3)(iv) requiring that MA 
organizations and Part D plans contractually require downstream and 
first tier entities to comply with Medicare rules when doing Medicare 
business. We believe these requirements appropriately safeguard the 
beneficiary without the need for additional restrictions.
    After careful consideration of all the comments we received, and 
for the reasons set forth in the February 2020 proposed rule and in our 
responses to the comments, we are finalizing the proposed changes to 
amend part 422, Subpart V (Sec. Sec.  422.2260 through 422.2274) and 
part 423, Subpart V (Sec. Sec.  423.2260 through 423.2274), with some 
modifications. Some comments alerted us to typographical errors in 
either the preamble or regulatory text of the proposed rule; we are 
finalizing the regulation text with those necessary corrections. Some 
comments requested immediate clarification of our intentions or 
semantics, which we have provided as appropriate. Some comments were 
ultimately requests for clarifications or for additional guidance and, 
in most cases as noted in our responses to those comments, we intend to 
update our sub-regulatory guidance to clarify those

[[Page 5998]]

instructions. There were some comments that caused us to rethink the 
nature of our proposed changes. We have also made technical and 
grammatical changes to some provisions without changing the substance 
of the proposed policy. Finally, we are finalizing the following 
substantive changes compared to the proposed provisions in addition to 
the substantive changes discussed in our responses to comment (e.g., 
the revision to Sec. Sec.  422.2264(c)(3) and 422.2264(c)(3) regarding 
appointments with residents of long-term care facilities).
    We are making four changes that are not specifically based on 
comments. First is with regard to how required content (disclaimers) 
outlined under Sec. Sec.  422.2267(e) and 422.2267(e) are classified as 
either standardized under Sec. Sec.  422.2267(b) and 423.2267(b), or as 
model under Sec. Sec.  422.2267(c) and 423.2267(c). We have 
reconsidered some of those classifications to provide for more 
flexibility for certain disclaimers by changing them from standardized 
to model content. This change will give plans the option to adjust the 
language used to convey the required message (that is, the disclaimer) 
in a manner that is both understandable and consistent with other plan-
based communications. Aside from providing more flexibility, the 
requirement for when the noted content must be used, as well as the 
beneficiary protections afforded by the substantive message the content 
is conveying, remains the same.
    The following required content is changing from standardized to 
model:

 Sec. Sec.  422.2267(e)(31) and 423.2267(e)(33), Star Ratings 
disclaimer
 Sec. Sec.  422.2267(e)(33) and 423.2267(e)(34), accommodations 
disclaimer
 Sec. Sec.  422.2267(e)(36) and 423.2267(e)(37), provider co-
branding disclaimer
 Sec.  422.2267(e)(37), out of network non-contracted provider 
disclaimer
 Sec.  422.2267(e)(38), NCQA SNP approval statement

    We remind plans that, as required under Sec. Sec.  422.2262 and 
423.2262, the language used for required content may not mislead, 
confuse, or provide materially inaccurate information.
    Second change, we are finalizing Sec. Sec.  422.2261(a)(2) and 
423.2261(a)(2), with the heading Submission, review, and distribution 
of materials, with modifications from the proposal. In the February 
2020 proposed rule, we proposed that materials must be submitted to the 
HPMS directly by the MA organization and that third party and 
downstream entities are not permitted to submit materials directly to 
CMS. This provision was, in part, based on technological limitations of 
the HPMS Marketing Module that did not have a means for third parties 
to submit materials directly to CMS. During the time between publishing 
the NPRM and this final rule, we have begun updating the HPMS Marketing 
Module. As a part of this update, we are considering changes that may 
allow third parties, with the appropriate safeguards, to submit 
materials on behalf of a plan or plans. As such, we are updating the 
final rule to include Sec. Sec.  422.2261(a)(3) and 423.2261(a)(3) 
which state that unless specified by CMS, third party and downstream 
entities are not permitted to submit materials directly to CMS. This 
added flexibility will give the agency the ability to grant third party 
access in the future.
    Third, we are finalizing a change to remove ambiguity from the 
prohibition on providing gifts unless they are of a nominal value under 
Sec. Sec.  422.2263(b)(2) and 423.2263(b)(2) by clearly indicating the 
provision is applicable to all beneficiaries, that is both current and 
potential enrollees. In the February 2020 proposed rule, we proposed 
edits to the language in the existing regulations (Sec. Sec.  
422.2268(b)(2) and 423.2268(b)(2)) to cite the HHS OIG guidance 
governing nominal gifts for Medicare beneficiaries. In doing so, our 
intention was for this requirement to apply to both current and 
potential enrollees (that is those eligible for Medicare), as is the 
case with the OIG's requirements as well as our current requirements 
found under section 40.4 of the MCMG. Sections 1851(j)(2) and 1860D-
04(l)(2) of the Act effectively prohibit gifts unless they are nominal 
gifts to prospective enrollees by requiring that limitation to be 
included in marketing standards established for the Part C and Part D 
programs. In addition, section 1856(b) authorizes CMS to adopt 
standards to implement the statute and section 1857(e)(1) of the Act 
authorizes the adoption of additional contract terms that the agency 
determines are necessary and appropriate and not inconsistent with the 
Medicare statute. Similar authority in connection with the Part D 
program is in section 1860D-12(b)(3) of the Act. Under this authority, 
we are finalizing the prohibition on gifts to any beneficiary, except 
for nominal gifts that are within the value set in the OIG guidance 
that are offered to all beneficiaries. This is consistent with our 
current policy. CMS has historically viewed prohibitions on gift giving 
to apply to both prospective and current plan members and Medicare 
beneficiaries are prospective enrollees. This prohibition protects 
beneficiaries from making an adverse enrollment decision because they 
were influenced by the receipt of a plan gift. It also protects those 
beneficiaries who may have been persuaded to remain enrolled in a 
particular plan based on receiving a plan gift. We are also finalizing 
a change in Sec. Sec.  422.2268(b)(2) and 423.2268(b)(2) of the 
regulation to say that nominal gifts must be provided to ``similarly 
situated'' beneficiaries as opposed to the current wording of ``all 
beneficiaries''. We are making this change to allow plans to provide 
nominal gifts as a part of attending an event without obligating the 
plan to provide that gift to all current and prospective members 
regardless of event attendance.
    Fourth, we failed to list the Part D EOB under Sec.  423.2267(e) 
(CMS required materials and content), even though we did list the Part 
C EOB under Sec.  422.2267(e)(2). (For additional information on the 
Part C EOB, please see Sec.  422.111(k) of this final rule.) This was 
an oversight when we published the proposed rule. It is important to 
note that the Part D EOB is already required under Sec.  423.128(e) and 
its inclusion in the list at Sec.  423.2267(e)(2) is to make it easier 
for users of the regulation to identify the various materials and 
content required as a Part D sponsor. We have also renumbered this 
section accordingly to account for the addition.
    CMS is finalizing these provisions as applicable for coverage 
beginning January 1, 2022, so these regulations will cover marketing 
and mandatory disclosures made in 2021 for enrollments made for 
effective dates in 2022. Additionally, this final rule largely 
reorganizes current regulations and codifies current policies. As such, 
CMS encourages MA organizations to take this final rule into account 
immediately.

F. Past Performance (Sec. Sec.  422.502 and 423.503)

    Since the publication of the first Medicare Advantage (MA) and Part 
D program regulations in 2005, CMS has established, at Sec. Sec.  
422.502(b) and 423.503(b), that we may deny an application submitted by 
an organization seeking an MA or Part D sponsor contract if that 
organization has failed to comply with the requirements of a previous 
MA or Part D contract. In the April 2011 final rule, we completed 
rulemaking that placed limits on the period of contract performance CMS 
would review (that is, 14 months

[[Page 5999]]

preceding the application deadline) and established that CMS would 
evaluate contract compliance through a methodology that would be issued 
periodically through sub-regulatory guidance (75 FR 19684 through 
19686). In the April 2018 final rule, we reduced the review period to 
12 months (83 FR 16638 through 16639).
    In the proposed rule, CMS sought to add clarity and predictability 
to our review of MA and Part D applicants' prior MA or Part D contract 
performance by identifying in the regulation text the criteria we will 
use to make a determination to deny an application based on prior 
contract performance. This approach will replace the past performance 
methodology that CMS developed and issued annually through sub-
regulatory guidance.
    CMS' overall policy with respect to past performance remains the 
same. We have an obligation to make certain that MA organizations and 
Part D sponsors can fully manage their current contracts and books of 
business before further expanding. CMS may deny applications based on 
past contract performance in those instances where the level of 
previous non-compliance is such that granting additional MA or Part D 
business opportunities to the responsible organization would pose a 
high risk to the success and stability of the MA and Part D programs 
and their enrollees. Accordingly, we proposed to adopt three factors, 
each of which, on its own, represents significant non-compliance with 
an MA or Part D contract, as bases for denying an MA or Part D 
application: (A) The imposition of civil money penalties or 
intermediate sanctions, (B) low Star Ratings scores, and (C) the 
failure to maintain a fiscally sound operation. We proposed that the 
presence of any one of these factors in an applicant's record (with the 
exception of intermediate sanctions imposed on dual eligible special 
needs plans (D-SNPs) under Sec.  422.752(d)) during the past 
performance review period could subject it to the denial of its MA or 
Part D application. Once finalized, these three bases would be added to 
our already codified authority and may be used to deny an application 
based on CMS' termination of an applicant's previous contract under 
Sec.  Sec.  422.502(b)(3) and 423.503(b)(3). We note that while in the 
June 2020 (85 FR 33796) final rule we adopted Sec.  422.116(a)(1)(ii), 
which states that CMS will not deny an application on the basis of an 
evaluation of the applicant's contracted provider network, we also 
stated in the preamble to the final rule at 85 FR 33866 that CMS would 
still consider intermediate sanctions or CMPs imposed based on non-
compliance with network requirements as bases for the denial of an 
application based on failure to comply with a current or previous 
contract. Also, we decline to consider an application from an 
organization still covered by the 2-year period during which it had 
agreed, pursuant to Sec.  Sec.  422.508(c) and 423.508(e), not to 
submit applications for new MA or Part D contracts as part of a mutual 
termination agreement entered into with CMS pursuant to Sec.  Sec.  
422.508(a) and 423.508(a).
    For one of these proposed bases for application denial to be 
considered, we proposed that the relevant non-compliance must be 
documented by CMS (through the issuance of a letter, report, or other 
publication) during the 12-month review period established at 
Sec. Sec.  422.502(b)(1) and 423.503(b)(1). Thus, CMS may include in 
our analysis conduct that occurred prior to the 12-month past 
performance review period but either did not come to light, or was not 
documented, until sometime during the review period.
    In evaluating applications submitted by organizations with no 
recent MA or Part D contracting history, we proposed to consider the 
performance of contracts held by the applicant's parent organization or 
another organization controlled by the same parent and ascribe that 
performance to the applicant. Specifically, we proposed to identify 
applying organizations with no recent prior contracting history with 
CMS (that is, a legal entity brand new to the Medicare program, or one 
with prior Medicare contract experience that precedes the 12-month 
review period). We would then determine whether that entity is held by 
a parent of other MA organizations or Part D sponsors or otherwise 
shares common control with another contracting organization. In these 
instances, it is reasonable in the absence of any recent actual 
contract performance by the applicant due to a lack of recent Part C or 
Part D participation, to impute to the applicant the performance of its 
sibling organizations as part of CMS' application evaluation. Should 
one or more of the sibling organizations meet one of the bases for 
denial stated in (b)(1)(i), the application from the new legal entity 
would be denied.
    We proposed to codify the new bases for application denial based on 
past contract performance as paragraphs (b)(1)(i)(A)--low Star Ratings, 
(b)(1)(i)(B)--intermediate sanction or CMP, and (b)(1)(i)(C)--failure 
to maintain fiscally sound operation under Sec. Sec.  422.502 and 
423.503. The provision governing the consideration of applicant's 
parent organizations or sibling entities will be stated at Sec. Sec.  
422.502(b)(1)(ii) and 423.503(b)(1)(ii).
    Comment: A commenter noted that the proposed regulatory provision 
as it applies to Part D is stated in error. The revisions should have 
been made to Sec.  423.503, not Sec.  423.502.
    Response: We have revised the regulation language to be consistent 
with our discussion in the preamble to the proposed rule, so that the 
modification is made to Sec.  423.503.
    Comment: Several commenters objected to the use of CMPs as a sole 
basis for denying an application based on past performance. Some 
commenters noted that CMPs are imposed in a wide range of dollar 
amounts and for a wide range of instances of non-compliance. They 
maintain that often CMPs are not issued based on what could be 
considered substantial failures to meet MA or Part D program 
requirements. Also, CMPs are frequently based on performance 
information resulting from a routine CMS program audit. Commenters 
stated that, since CMS audits only a portion of all MA or Part D 
sponsors in a given year, using CMPs as a basis for evaluating past 
performance is unfair since organizations are not uniformly at risk of 
earning a CMP and thus being subject to an application denial based on 
past performance. As a result, some commenters recommended the 
elimination of CMPs altogether as a basis for denial. Others suggested 
that CMS count only CMPs above a certain threshold dollar amount.
    Response: We appreciate these comments and acknowledge that, while 
all CMPs are based on significant non-compliance, the wide range of 
dollar amounts of CMPs imposed each year reflects a variation in the 
severity of conduct upon which they are based. It is worth considering 
whether all CMPs warrant treatment as a basis for determining that an 
applicant's past Medicare contract performance warrants denial of their 
MA or Part D contract qualification application. Therefore, we will 
strike CMPs from the regulation as a basis for an application denial 
based on past performance. We may consider in a future rule whether we 
should establish thresholds in dollar amounts or types of non-
compliance that would warrant denial.
    Comment: Several commenters expressed opposition to the use of just 
one year of low Star Ratings as a basis for denying an application 
based on poor past performance. Generally, they stated that one year of 
Star Ratings was not necessarily a true reflection of an

[[Page 6000]]

organization's performance and that consideration of a three-year 
period of ratings was a better basis for making a determination of poor 
past performance. Adopting this approach would be consistent with the 
standard used to identify contracts with the low performing icon (LPI) 
on the Medicare Plan Finder (MPF). Commenters also contend that one 
year's performance might be an outlier for an organization that 
otherwise has consistently good ratings. This is a particular concern 
given the uncertainty surrounding the potential impact of the COVID-19 
pandemic on quality measures. Finally, one commenter suggested that we 
adopt overall scores as opposed to summary scores as the Star Ratings 
basis for denial for MA-PD organizations since the overall score 
reflects the full range of operations of those organizations.
    Response: The regulations at Sec. Sec.  422.510(a)(4)(xi) and 
423.509(a)(4)(x) already establish our authority to terminate an MA or 
Part D sponsor contract in the event that it fails for three 
consecutive years to achieve at least one summary rating score of at 
least three stars. Also, for 38 months following such a termination, 
CMS may deny a contract qualification application submitted by the 
terminated organization or one of its related entities, per Sec. Sec.  
422.502(b)(3) and (4) and 423.503(b)(3) and (4).
    After reviewing comments and reconsidering, we are persuaded that 1 
year of low ratings may be considered a contract compliance failure, 
but not a substantial failure on par with the other two denial bases 
being finalized in this rule (that is, sanctions and financial 
solvency). By regulation, we have already established that 3 years of 
low ratings is a substantial failure, justifying termination. In 
comparison, enrollment sanctions are almost always based on substantial 
compliance failures. Also, financial solvency issues by definition pose 
a significant risk to a contracting organization's ability to 
substantially comply with a contract. Therefore, those two topics 
continue to warrant adoption as bases for application denial based on 
poor past contract performance. Accordingly, in the final rule, we are 
removing low Star Ratings from the list of bases for an application 
denial. We note, however, that low Star Ratings remain a basis for the 
denial of an application during the three years following the CMS 
termination of a contract based on three consecutive years of low 
ratings, pursuant to Sec. Sec.  422.52(b)(3) and 423.503(b)(3).
    Comment: Several commenters recommended that a determination to 
deny an application based on past performance should be based on 
multiple factors, not the presence of any one of the bases (that is, 
sanction/CMP, low Star Ratings, or financial risk). This approach would 
be modeled more like our previous approach to making past performance 
determinations, where we used a published methodology that described 11 
elements we would consider, along with point values assigned to each 
and established point total thresholds for denying an application. 
Commenters believe that, by allowing denial based on the presence of 
any one of our three proposed bases, our approach does not allow for a 
comprehensive review of the applicant's true performance.
    Response: The two bases for an application denial that we adopt 
through this rule (enrollment sanctions and financial solvency) each by 
their nature already capture significant and comprehensive information 
about an applicant's past contract performance. Therefore, it is 
appropriate for CMS to rely on the presence of either of the bases to 
support a determination to deny an application.
    CMS may impose enrollment sanctions in instances where it has found 
that an organization has substantially failed to comply with the terms 
of its Medicare contract. In our experience, such a determination may 
be based on a systemic failure of the organization that produces non-
compliance across a range of requirements or a comprehensive failure to 
properly administer a critical MA or Part D plan function. Either way, 
the information that would support an enrollment sanction would in all 
instances paint a detailed enough portrait of the organization's 
performance to warrant the application denial.
    Financial solvency goes to the heart of any organization's ability 
to meet all of its obligations as an MA organization or Part D sponsor. 
For an organization that cannot meet the programs' solvency 
requirements, no further analysis of its capacity to take on additional 
Medicare business is necessary, since this type of non-compliance 
places in jeopardy the organization's ability to even meet its current 
contractual requirements.
    Comment: Several commenters recommended that CMS should afford 
applicants the opportunity to correct the performance that would form 
the basis for a determination that they failed to comply with a current 
contract before CMS makes a final decision to deny the application.
    Response: We believe that a ``curing opportunity'' is inconsistent 
with the purpose of the past performance review. In effect, through the 
past performance denial authority, CMS takes a snapshot of an 
applicant's performance during a specific period of time and uses that 
information as a kind of credit report to evaluate whether the 
applicant should reasonably be entrusted with a new or expanded 
Medicare contract. In that kind of analysis, the only relevant 
information is the actual history of significant non-compliance that 
has occurred during the review period. The fact that the non-compliance 
occurred in the first place speaks to recent gaps in the applicant's 
ability to manage its current Medicare business. An applicant curing 
non-compliance during the review period reassures CMS that the 
organization should continue to administer its current contract, but a 
more sustained period of compliance is appropriate to demonstrate that 
its operations are stable enough to warrant eligibility for new 
Medicare business.
    We also note that the past performance provision has its own built-
in cure period in the form of the 12-month review period. By operation 
of the regulation, CMS reviews a new 12-month period during each annual 
application review cycle. As a result, past non-compliance does not 
stay on an applicant's record for a sustained period of time, and an 
applicant that might have been denied based on past performance in one 
application cycle can find itself eligible for approval in the very 
next cycle if it has taken effective corrective action.
    Comment: Some commenters recommended that the regulation be revised 
to exclude intermediate sanctions as a basis when the organization has 
cured the relevant non-compliance and the sanction has been lifted 
during the review period. The commenters maintain that the lifting of 
the sanction is evidence that the organization has restored its ability 
to successfully manage its current operations and therefore should be 
eligible to apply for additional contracts.
    Response: For the purposes of assessing qualification for a new MA 
or Part D contract, we believe that we should consider all instances of 
failure to comply described in the regulation that occurred throughout 
the twelve-month review period. While, of course, CMS expects all 
sanctioned organizations to move promptly to complete the necessary 
corrective action to have a sanction removed, we believe that in any 
instance, the fact that a sanction had to be imposed at all speaks to 
the stability of the organization and is relevant to whether it should 
be approved for a new contract. The

[[Page 6001]]

applying organization will receive credit for resolving the non-
compliance that warranted the sanction during the next past performance 
review period, when, presumably, the organization will not have an 
active sanction in place at any time during the applicable 12-month 
review period.
    Comment: A commenter advocated that our past performance authority 
should not be applied to applications where the purpose is not for the 
applicant to qualify for a new contract or a current contract with an 
expanded service area, but for a parent organization to restructure 
their existing set of MA or Part D sponsor contracts. The commenter 
noted that parent organizations periodically restructure their Medicare 
managed care business without taking on new Medicare business. Often 
this is done through one affiliate of the parent applying to qualify as 
an MA organization so that it may assume responsibility, through 
novation, of a contract held by another of the parent's affiliates or 
through consolidation of two current contracts. The commenter is 
concerned that our proposed policy would preclude parent organizations 
from making legitimate reorganizations of their business arrangements. 
Therefore, the commenter urges us to adopt an exception to our use of 
poor past performance as a basis for denying MA and Part D applications 
when they are part of a parent organization's plan to reorganize its 
contracting arrangements
    Response: We note that under the regulation, parent organizations 
are not precluded from reorganizing their business arrangements. CMS 
conducts the past performance analysis at the level of the contracting 
entity. Parent organizations looking to have other entities take over 
one of their subsidiary's Medicare contracts can select an entity that 
already has an MA or Part D sponsor contract for that purpose. Assuming 
that the experienced entity does not meet any of the bases for a past 
performance-based denial, the entity would be eligible for approval to 
take over the contract held by its sibling company.
    The only instance where CMS considers the past performance of an 
entity other than the applicant is when the applicant does not 
currently hold an MA or Part D sponsor contract but is related to a 
parent organization that has at least one subsidiary that is an MAO or 
Part D sponsor. In that instance, if one of the parent's subsidiaries 
met the criteria for a past performance-based application denial, we 
would deny the application from the ``inexperienced'' entity. While the 
application approval would not necessarily result in additional or 
expanded Medicare business for the parent organization, allowing 
another contracting entity with no Medicare experience of its own but 
related to an entity with demonstrated compliance issues does not 
promote the effective administration of the Medicare program. Even if 
the parent organization is seeking only to rearrange the contracting 
entities holding its Medicare contracts, and not to expand its number 
of contracts, plan offerings, or enrollees, it still would be looking 
to add to its roster of qualified contracting entities at a time when 
its efforts should be focused on bringing all of its current 
contracting entities into compliance with their contracts. In effect, 
the parent organization would be attempting to expand its Medicare 
business capability without focusing attention on resolving existing 
weaknesses in its operations. We do not believe that parent 
organizations should be permitted to evade our past performance review 
authority in that manner.
    Comment: A commenter stated that organizations that acquire poor 
performing contracts should not have the performance of the acquired 
contract counted as part of the parent organization's past performance. 
The commenter noted that the acquiring organization should have time to 
focus on improving the performance of the newly acquired contract, for 
which it had no responsibility, without having to jeopardize its 
opportunity to pursue other MA or Part D lines of business.
    Response: We agree with this comment. The commenter is in effect 
requesting that we codify the ``grace period'' policy we had previously 
included in the Past Performance Methodology. Specifically, when an 
organization acquired a contract with a record of issues related to 
non-compliance, under the Methodology, the purchasing parent was 
afforded a two-year period, calculated from the date of closing, before 
any negative performance by the purchased entity or contract would be 
imputed to the parent's existing entities. We adopted this policy in 
recognition of the fact that the enrollees in the non-compliant plans, 
as well as CMS, can benefit from a stronger organization taking over 
responsibility for a poor performing contract. The acquisition of a 
Medicare contract by a competent contracting organization is much less 
disruptive to plan enrollees than termination or non-renewal, which 
would require enrollees to obtain different Medicare coverage, often 
resulting in different benefit plans and providers. We believe, in the 
context of the evaluation of contract qualification applications, that 
it is important to the administration of the MA and Part D programs 
that qualified organizations not be discouraged from pursuing 
acquisitions that could resolve issues created by non-compliant 
contracting organizations and result in uninterrupted access to 
benefits and providers for the affected enrollees. To ensure that our 
past performance policy supports that goal, we are amending the 
regulation to exempt organizations for two years following the 
completion of an acquisition from the provision that applies the past 
performance record of other subsidiaries of a parent to an applicant 
from the same parent with no Medicare contracts. This provision will 
remove any concerns an acquiring organization might have that taking on 
a poor performing contract would compromise its ability to submit a 
successful contract qualification application.
    Comment: A commenter recommends that we provide clarification 
regarding our use of the term, ``may'' in the regulation text for this 
provision. Specifically, the commenter notes that language at Sec.  
422.502(b)(1)(i) stating that, ``An applicant may be considered to have 
failed to comply with a contract . . .'' [emphasis added] conveys the 
message that CMS may or may not deny an application from an 
organization that meets at least one of the proposed criteria. The 
commenter also states that such an interpretation means that applicants 
meeting the criteria should have the opportunity to present information 
about extenuating circumstances. The commenter asks that if CMS intends 
that there be no flexibility in the application of our denial 
authority, we should make that explicit in the regulation text.
    Response: As we stated in the preamble to the proposed rule, by 
adopting these new past performance review criteria, we sought to ``add 
clarity and predictability to our review of MA and Part D applicants' 
prior MA or Part D contract performance.'' Accordingly, we proposed to 
establish three clear bases for denial, each of which on its own is 
sufficient to establish conclusively that an applicant has failed in a 
significant way to comply with MA or Part D requirements. This 
streamlined approach differed from our previous approach of publishing 
an annual Past Performance Methodology, through which we would announce 
the scoring of the multiple performance elements we would consider and 
how we would score applicants' past performance, including setting 
point thresholds to identify those whose application would be denied. 
In

[[Page 6002]]

establishing all of our review criteria in regulation and streamlining 
the number of factors to be considered, we intended to convey to 
applicants that CMS will deny any applicant that meets any of the new 
bases for a denial based on past performance. Therefore, organizations 
should expect that we will not consider requests that we exercise 
flexibility in the application of the new criteria and grant an 
approval to an application that meets the denial criteria.
    With respect to requesting an opportunity to provide information 
about extenuating circumstances to CMS for consideration, we note that 
our regulations still provide the opportunity for denied applicants to 
request a review by a CMS hearing officer, and if unsuccessful there, 
by the Administrator. More significantly, enrollment sanctions have 
their own reconsideration process through which an organization may 
assert that extenuating circumstances justify a CMS decision to decline 
to impose the sanction.
    Comment: A commenter urged that the past performance review should 
not include contracts that the applicant has already non-renewed or 
terminated for the upcoming contract year.
    Response: We believe that the past performance analysis must be 
based on an applicant's actual performance history, which should not be 
subject to revision after the fact. An organization that non-renews a 
particular contract for an upcoming contract year has already 
established its performance history through its operation of that 
contract. The non-renewal does not change the fact that there is record 
of performance for CMS to review and consider in evaluating whether 
that entity deserves a new or expanded MA or Part D contract. Moreover, 
we would be concerned that adopting the commenter's policy would create 
the wrong set of incentives for contracting organizations. They should 
be encouraged to improve the performance of their existing contract 
rather than abandon the contract, and its enrollees, for the 
opportunity to seek to operate a new set of plans under a new contract.
    Comment: A commenter questioned us to clarify that the analysis of 
past performance under this provision is to be done of the contracting 
organization and not of all contracts controlled by its parent 
organization. The commenter believed that our previous application of 
the past performance authority was done at the parent organization 
level and unfairly punished large parent organizations that controlled 
an extensive number of Medicare contracts.
    Response: The new provisions we adopt in this rule continue our 
general policy of evaluating the past performance of the contracting 
organizations that have submitted applications, not their parent 
organizations. We have codified here the exception to that policy that 
we established under the previous Past Performance Methodology. That 
is, when an organization that does not hold an MA or Part D sponsor 
contract but is related to a parent organization that does hold at 
least one contract itself or through another subsidiary, we do apply 
the past performance record of the experienced subsidiary to the new 
applicant.
    Comment: A commenter expressed support for our decision to exclude 
enrollment sanctions imposed against D-SNP organizations from 
consideration as a sanction that would form the basis for a past 
performance-based application denial.
    Response: We appreciate the commenter's expression of support.
    Comment: One commenter agreed with our proposal not to penalize an 
MA organization based on non-compliance with integration standards at 
the plan level. They suggested that CMS provide an initial enforcement 
safe harbor from enrollment sanctions for D-SNPs who have made a good 
faith effort to negotiate SMAC contracts with states. They stated that 
imposing these sanctions on D-SNPs while implementing look-alike 
standards could mean that beneficiaries could lack access to transition 
into otherwise compliant D-SNPs.
    Response: We appreciate the support for excluding D-SNP 
intermediate sanctions for failure to implement the BBA of 2018 D-SNP 
requirements from past performance. However, changes to the D-SNP 
intermediate sanction policy are out of scope for this regulation.
    Comment: A commenter questioned CMS to clarify whether an 
enrollment prohibition imposed pursuant to Sec. Sec.  422.2410(c) and 
423.2410(c) against an organization that failed for three consecutive 
years to meet the minimum medical loss ratio (MLR) threshold would 
count as an enrollment sanction for the purposes of a past performance-
based application denial.
    Response: We intended to include all enrollment sanctions, 
including those based on the failure to meet the minimum MLR, as a 
basis for application denial based on past performance, with the 
exception of those related to the failure of D-SNPs to integrate 
Medicare and Medicaid benefits, which we specifically excluded. The 
failure to reference the MLR sanctions in the proposed rule was simply 
a drafting oversight since that sanction authority resides in a 
different part of the MA and Part D regulations than Subpart O of Parts 
422 and 423 where the general enrollment sanction authority resides. 
Accordingly, we are revising Sec.  422.502(b)(1)(A) to add, ``an 
enrollment sanction imposed pursuant to Sec.  422.2410(c)'' and Sec.  
423.503(b)(1)(A) to add ``an enrollment sanction imposed pursuant to 
Sec.  423.2410(c)'' to the statement of enforcement-related bases for 
CMS to deny an application based on poor past performance to make 
explicit the imposition of an MLR sanction as a basis for application 
denial.
    Congress established the significance of the MLR requirement by 
mandating as part of the MA statute at section 1857(e)(4)(B) of the Act 
and incorporating by reference into the Part D statute through1860D-
12(b)(3)(D) of the Act that organizations that consistently fail to 
meet the 85 percent threshold should be prohibited from accepting new 
enrollments until they can demonstrate that they comply with the MLR 
requirement. Since the failure to meet the MLR requirement for three 
consecutive years is subject to the same penalty that may be applied to 
all other forms of substantial compliance failures, it follows that we 
include the MLR failure among the bases for an application denial based 
on poor past performance.
    Comment: A commenter maintained that contracts with low enrollment 
or a large portion of plan enrollees of low socioeconomic status (SES) 
should not be subject to application denials based on poor past 
performance.
    Response: The commenter provided no explanation of why, 
specifically, organizations that operate plans with low enrollment or 
with a large portion of beneficiaries with low SES should be excluded 
from the past performance review standard. These characteristics should 
have no bearing at all on two of the new bases for denial, financial 
solvency and intermediate sanctions.
    No matter the level of a Medicare plan sponsor's enrollment or its 
proportion of beneficiaries with low SES, it must have sufficient 
financial resources to meet adequately its obligations to provide 
health care and prescription drug benefits to its members. Also, the 
required level of financial resources varies at least in part based on 
an organization's enrollment, so those with low enrollment should not 
be uniquely adversely affected by the financial solvency bases for 
application denial.
    An MA organization or Part D sponsor must comply with the 
requirements of

[[Page 6003]]

the Part C and D programs, regardless of their level of enrollment or 
proportion of beneficiaries with low SES. Enrollees in low enrollment 
plans are not entitled to any lesser level of access to Medicare 
services, nor should CMS expect weaker Medicare contract administration 
from organizations offering such plans. Therefore, again, organizations 
with low enrollment are not uniquely in jeopardy of being unfairly 
subject to an intermediate sanction. Also, as with any sanctioned 
organization, a low enrollment organization may always challenge the 
imposition of the sanction through the appeals process stated in 
subpart O of Part D 422 and 423. Similarly, enrollees with low SES 
should receive the same level of Medicare services as all other 
enrollees, and should receive these services from organizations with 
sufficient resources to provide them.
    Comment: A commenter questioned that CMS continue to produce the 
Past Performance Outlier report that CMS previously issued every six 
months to provide contracting organizations information concerning 
their past performance record.
    Response: We will discontinue publishing the Past Performance 
Outlier report. CMS had adopted the report as a tool to assist 
organizations in tracking their scores as it was calculated under the 
multi-factor Past Performance Methodology. Such a report was useful 
when an organization's performance was assessed various point values 
and denial was based on those points meeting certain thresholds. 
However, given the simplicity of the new method for determining whether 
an applicant will be denied based on past performance, all 
organizations can track their past performance status for themselves, 
and no CMS report is needed.
    After consideration of these comments, we are finalizing the 
proposal with the following modifications:
    (1) We are removing from Sec. Sec.  422.502(b)(1)(i)(A) and 
423.503(b)(1)(i)(A) references to CMPs as a basis for a determination 
that an applicant has failed to comply with a previous Medicare 
contract;
    (2) We are removing the references to Star Ratings as a basis for 
denial at paragraph (B) of Sec. Sec.  422.502(b)(1)(i) and 
423.503(b)(1)(i) and re-labeling the proposed paragraph (C) concerning 
fiscal solvency as the new paragraph (B).
    (3) We are adding language to Sec. Sec.  422.502(b)(1)(ii) and 
423.503(b)(1)(ii) to provide parent organizations that acquire poor 
performing contracts a two-year grace period during which the 
performance of the acquired contract will not be considered as part of 
our evaluation of an application submitted by a new subsidiary of the 
parent;
    (4) We are adding language to Sec. Sec.  422.502(b)(1)(i)(A) and 
423.503(b)(1)(i)(A) clarifying that enrollment sanctions imposed for 
failure to comply with MLR requirements for three consecutive years 
will be considered among the sanctions that qualify for a determination 
that the applicant failed to comply with a previous Medicare contract; 
and
    (5) We are making the technical correction to make the relevant 
Part D modifications at Sec.  423.503, not Sec.  423.502.

G. Prescription Drug Plan Limits (Sec.  423.265)

    Section 1857(e)(1) of the Act, incorporated for Part D by section 
1860D-12(b)(3)(D) of the Act, provides CMS with the authority to 
establish additional contract terms, not inconsistent with Part D, that 
CMS finds ``necessary and appropriate.'' Section 1860D-11(d)(2)(B) of 
the Act provides CMS with the authority to negotiate bids and benefits 
that is ``similar to'' the statutory authority given to the Office of 
Personnel Management (OPM) in negotiating health benefit plans. We 
interpreted this authority to mean that we can negotiate a plan's 
administrative costs, aggregate costs, benefit structure and plan 
management (70 FR 4296). CMS regulations at Sec. Sec.  423.272(a) and 
423.272(b) require Part D sponsors to submit bids and benefit plans for 
CMS approval. As stated in Sec.  423.272(b), CMS approves the plan only 
if the plan's offerings comply with all applicable Part D requirements. 
Similarly, regulations at Sec.  423.265(b)(2) require that multiple 
plan offerings by Part D sponsors represent meaningful differences to 
beneficiaries with respect to beneficiary out-of-pocket costs or 
formulary structures.
    As we have gained experience with the Part D program, we have made 
consistent efforts to ensure that the number and type of plans that PDP 
sponsors may market to beneficiaries are no more numerous than 
necessary to afford beneficiaries choices from among meaningfully 
different plan options. CMS has declined to approve more than three 
stand-alone prescription drug plans offered by a Part D sponsor in a 
PDP region--one basic plan and (at most) two enhanced plans. A basic 
plan consists of the following: (1) Standard deductible and cost-
sharing amounts (or actuarial equivalents), (2) an initial coverage 
limit based on a set dollar amount of claims paid on the beneficiary's 
behalf during the plan year, (3) a coverage gap phase, and (4) a 
catastrophic coverage phase that applies once a beneficiary's out-of-
pocket expenditures for the year have reached a certain threshold. An 
enhanced plan is an optional plan offering, which provides additional 
value to beneficiaries in the form of reduced deductibles, reduced cost 
sharing, additional coverage of some or all drugs while the beneficiary 
is in the gap phase of the benefit, coverage of drugs that are 
specifically excluded as Part D drugs under paragraph (2)(ii) of the 
definition of Part D drug under Sec.  423.100, or some combination of 
those features. Section 423.104(f)(2) prohibits a Part D sponsor (as 
defined in Sec.  423.4) from offering enhanced alternative coverage in 
a service area unless the sponsor also offers a prescription drug plan 
in that service area that provides basic prescription drug coverage.
    Prior to adopting regulations requiring meaningful differences 
between each plan sponsor's plan offerings in a PDP Region, our 
guidance allowed sponsors to offer additional basic plans in the same 
region as long as they were actuarially equivalent to the basic plan 
structure described in statute. However, under Sec.  423.265(b)(2), PDP 
sponsors are no longer permitted to offer two basic plans in a PDP 
Region because Part D sponsors cannot demonstrate a meaningful 
difference between two basic plans and still satisfy statutory 
actuarial equivalence requirements. In addition, we believe that 
allowing more than one basic plan could result in sponsor behaviors 
that adversely affect the program, such as the creation of plan options 
designed solely to engage in risk segmentation whereby one basic plan 
would target enrollment of the LIS beneficiaries and the second basic 
plan would target a lower risk population. As it stands, healthier 
beneficiaries are increasingly being incentivized to enroll in low 
premium enhanced plans, leading to a higher risk pool in the basic 
plans. Permitting a sponsor to offer two basic plans in a region could 
ultimately result in increasing bids and premiums for basic plans, 
given that LIS auto-enrollment is limited to basic plans. Total 
government costs would likely increase because CMS pays most of the 
premium for LIS beneficiaries.
    Since the beginning of the Part D program, CMS has consistently 
tried to ensure that Part D sponsors only market the number and type of 
PBPs necessary to offer beneficiaries meaningfully different plan 
options and allow them to carefully examine all of the plan offerings. 
However, we were persuaded

[[Page 6004]]

by the argument that allowing sponsors to offer enhanced prescription 
drug plan offerings that are not meaningfully different with respect to 
beneficiary out-of-pocket costs could lead to more innovation and 
provide sponsors with added flexibility to offer health care options 
that can be tailored to different beneficiary choices with a portfolio 
of plan options with different benefits, pharmacy networks, and 
premiums. As such CMS eliminated the meaningful difference requirement 
between a plan sponsor's enhanced alternative benefit offerings 
effective for contract year 2019. As a result of eliminating this 
requirement, we have seen a greater number of enhanced plan offerings.
    CMS has examined Part D plan payment data in cases and markets with 
different numbers of enhanced plans. When looking at this data, we 
noted that markets with a greater number of enhanced plans have higher 
costs than basic plans. This was true even when controlling for other 
factors, such as population health and age. In these cases, the basic 
component of enhanced plans' bids was found to trend higher than basic 
plan bids themselves. Given the upward impact to program costs, CMS 
proposed to codify our policy of limiting the total number of allowed 
plan offerings by a Part D sponsor in a PDP region to offering no more 
than three prescription drug plans (one basic and up to two enhanced) 
per PDP region by adding a new paragraph at Sec.  423.265(b)(2). Since 
this change would codify our existing practice, this change would not 
alter any existing processes or procedures within the Part D bid 
submission and approval process.
    We solicited stakeholder input as to the impact of limiting the 
number of enhanced plan offerings to two. In addition, we sought 
information on what type of impact expanding the number of enhanced 
plan alternatives would have and whether there is any need for more 
than two standalone enhanced plan options per PDP sponsor per PDP 
region.
    We received 15 comments on this proposal, which we have summarized 
below, and our responses follow:
    Comment: Most commenters supported our proposal, citing the benefit 
of helping ensure that beneficiaries are able to choose from among 
meaningfully different plan offerings and the harm of risk 
segmentation. The few commenters that disagreed with the proposal 
stated their belief that the plan limit unnecessarily hinders sponsors 
from offering a broader range of more innovative plan designs.
    Response: We appreciate commenters support for this proposal as 
well as the concern that was raised by the commenters that opposed it. 
Based on our annual review of Part D sponsors plan benefit packages, we 
believe that the current policy gives plans sufficient ability to 
innovate. In addition, we believe that the potential negative 
consequences of permitting sponsors to offer more than one basic plan 
and two enhanced plans per PDP region, those consequences including 
risk segmentation leading to additional costs to the government coupled 
with the risk that there may not be meaningful differences between 
plans offerings, outweigh any minimal benefit that may occur from 
allowing Part D sponsors the ability to administer additional plan 
offerings.
    After careful consideration of all comments received, and for the 
reasons set forth in the proposed rule and in this response to 
comments, we are finalizing the proposed changes to Sec.  423.265(b)(2) 
without modification. However, we recognize that this regulatory 
provision is closely intertwined with our policy for crosswalking of 
enrollees, under varying circumstances, within a plan sponsor's benefit 
offerings. In the event that we decide to reexamine that policy, we may 
revisit this limitation on the number of PDP plans offered in a region. 
Although we are finalizing this provision as applicable beginning 
January 1, 2022, it codifies current policies so we encourage Part D 
sponsors to take this final rule into account immediately.

H. Definition of a Parent Organization (Sec. Sec.  422.2 and 423.4)

    Pursuant to our authority under sections 1856(b) and 1860D-12(f)(1) 
of the Act, we proposed to codify our definition of parent organization 
for purposes of the MA and Part D programs as the legal entity 
exercising controlling interest in an MA organization or Part D 
sponsor. We proposed adding a definition for the term ``parent 
organization'' to Sec.  422.2 in part 422, subpart A, and Sec.  423.4 
in part 423, subpart A, to reflect this understanding.
    We proposed the codification to ensure that the MA and Part D 
programs apply a consistent definition of parent organization. CMS uses 
the identity of an MA organization's or Part D sponsor's parent 
organization in a variety of operational contexts, including, but not 
limited to:

--Determining whether an individual can be deemed to have elected 
enrollment in a D-SNP based in part on his enrollment in an affiliated 
Medicaid managed care plan (Sec.  422.66(c)(2));
--Accounting for contract consolidations in assigning Star Ratings 
under the Quality Rating System for health and/or drug services of the 
same plan type under the same parent organization (Sec. Sec.  422.162 
and 423.182);
--Determining whether a new MA contract constitutes a new MA plan for 
calculation of Star Ratings, benchmarks, quality bonus payments, and 
beneficiary rebates, (Sec.  422.252).
--Recognizing an individual's appointment as an MA organization's or 
Part D sponsor's compliance officer based on his or her status as an 
employee of the organization, its parent organization, or a corporate 
affiliate (Sec. Sec.  422.503(b)(4)(vi)(B)(1) and 
423.504(b)(4)(vi)(B)(1));
--Determining whether an applicant for a new PDP contract is eligible 
to receive a contract in a particular service area (Sec.  
423.503(a)(3)) after evaluating whether the approval of an application 
would result in a parent organization, directly or through its 
subsidiaries, holding more than one PDP contract in a PDP region;
--Determining whether to administer an essential operations test to a 
Part D contract applicant new to the Part D program (Sec. Sec.  
423.503(c)(4) and 423.505(b)(27), taking into account the exemption 
from the essential operations test for subsidiaries of parent 
organizations that have existing Part D business;
--Releasing summary Part D reconciliation payment data at the parent 
organization level (Sec.  423.505(o)); and
--Determining whether CMS will recognize the sale or transfer of an 
organization's PDP line of business, where CMS regulations require the 
transfer of all PDP contracts held by the selling or transferring 
sponsor unless the sale or transfer is between wholly owned 
subsidiaries of the same parent organization (Sec.  423.551(g)).

    We currently define the term ``parent organization'' for purposes 
of applying the prohibition against approving an application that would 
result in a parent organization holding more than one PDP sponsor 
contract in a region as an entity that exercises a controlling interest 
in the sponsor. (See Sec.  423.503(a)(3)). In conjunction with the 
proposal to codify a more detailed definition that would apply 
throughout the MA and Part D programs, we proposed to delete that 
language in Sec.  423.503(a)(3).
    Under the proposed definition, a parent organization is the legal 
entity that holds a controlling interest in the

[[Page 6005]]

MA organization or Part D sponsor, whether it holds that interest 
directly or through other subsidiaries. The controlling interest can be 
represented by share ownership, the power to appoint voting board 
members, or other means. Control of the appointment of board members is 
particularly relevant with respect to not-for-profit organizations, 
where there is often no direct corollary to the ownership of corporate 
shares in for-profit organizations. We recognize that the many ways 
that one legal entity may have a controlling interest in another legal 
entity are varied and could take many forms too numerous for us to 
create an exhaustive list. Therefore, we proposed a definition that 
includes the ability for us to look at other means of control to be 
exercised or established.
    We further specified that the parent organization cannot itself be 
a subsidiary of another entity. This ensures that each MA organization 
or Part D sponsor has a single parent organization for purposes of the 
MA and Part D programs. For example, if Company A owns 80 percent of 
Company B, which in turn owns 100 percent of an MA organization, 
Company A would be the parent organization of the MA organization under 
the proposed definition.
    We explained that the proposed definition codifies current policy 
and ensures continued consistency throughout the MA and Part D 
programs. We note that this definition of parent organization will 
apply in implementing the proposed change to Sec.  422.550 regarding 
the type of change of ownership that CMS would permit for MA contracts; 
we discuss that proposal in section V.D. of this final rule.
    Comment: A commenter suggested that we further clarify what we mean 
by ``controlling interest'' by specifying that it means ownership of a 
``majority'' of shares, appointment of a ``majority'' of voting board 
members, and/or by being a sole member.
    Response: We do not believe this clarification is necessary or 
appropriate. We also believe it may unnecessarily narrow the definition 
of ``controlling interest'' to one that simply counts shares of stock 
when organizations may adopt other criteria for allocating board 
membership and voting rights. For example, two organizations may own 
equal shares in a legal entity, so that neither holds a majority of 
shares, but the articles of incorporation or other organizational 
documents may specify that one of them has the power to cast the 
deciding vote when they disagree. In such a situation, CMS may 
determine that the organization with the power to make decisions in 
case of dispute is the parent despite there not being a single majority 
shareholder. Conversely, if two organizations owned equal shares of a 
legal entity and appointed equal numbers of board members and the 
organizational documents specified that decisions must be made jointly, 
CMS might determine that neither organization is the parent; additional 
factual information might be necessary to identify the organization 
that owns a controlling interest in the particular entity.
    After consideration of the comments and for the reasons outlined in 
the proposed rule and our response to comments, we are finalizing the 
provision as proposed without modification. Although we are finalizing 
this provision as applicable to coverage beginning January 1, 2022, it 
codifies current policies so we anticipate that there will be no change 
in operations or administration of the MA and Part D programs and 
encourage MA organizations and Part D sponsors to take this final rule 
into account immediately.

I. Call Center Requirements (Sec. Sec.  422.111 and 423.128)

    In implementing sections 1851(d) and 1860D-4(a)(3) of the Act, CMS 
established, at Sec. Sec.  422.111(h) and 423.128(d), that MA 
organizations and Part D sponsors are required to have in place a 
mechanism for providing, on a timely basis, specific information to 
current and prospective enrollees, and, for a Part D plan, to 
pharmacies in the plan network, upon request. One of these enumerated 
mechanisms includes operating a toll-free customer service call center.
    In this final rule, CMS is adding greater specificity and clarity 
to our requirements for MA and Part D plans by delineating more 
explicit minimum performance standards for MA and Part D customer 
service call centers, as well as ensuring greater protections for 
beneficiaries. We proposed changes to Sec. Sec.  422.111(h) and 
423.128(d) for this purpose and explained in the proposed rule our 
goals of providing plans clear standards under which to operate their 
customer service call centers and eliminating uncertainty with regard 
to CMS's expectations. Customer service call centers include call 
centers operated for current enrollees, prospective enrollees, and for 
pharmacies in plans' networks that are seeking information on drug 
coverage for customers enrolled in a particular plan. For the most 
part, we proposed, and are finalizing, amendments to Sec. Sec.  
422.111(h) and 423.128(d) to codify existing guidance and CMS's overall 
policy with respect to operating a toll-free customer service call 
center remains largely the same. We have always expected MA 
organizations and Part D sponsors to operate customer service call 
centers in a way that ensures beneficiaries and pharmacies have timely 
and accurate access to information about benefits in a manner that they 
can understand and use. Providing specific performance standards in 
regulation text clearly lays out the performance requirements and our 
expectations for customer service call centers. Additionally, 
beneficiaries will benefit from CMS holding plans to clearly defined 
call center standards. As we explained in the proposed rule, failure to 
comply with the more specific minimum requirements finalized in this 
rule would represent significant deviation from acceptable call center 
operational practices and a significant risk to beneficiaries' well-
being under our enforcement policies and applicable regulations.
    In Sec. Sec.  422.111(h)(1)(i) and 423.128(d)(1)(i), we proposed 
that customer service call centers must be open from at least 8:00 a.m. 
to 8:00 p.m., local time, in all service areas and regions served by 
the MA or Part D plan, and for Part D plans, that any call center 
serving network pharmacies or pharmacists employed by those pharmacies 
must be open any time a pharmacy in the plan service area is open. We 
reminded stakeholders that MA-PD plans are Part D plans that must 
comply with Part 423 requirements. We proposed these timeframe 
standards to lend greater specificity to the current regulation text, 
which only requires a call center to be open during ``normal business 
hours.'' We explained that 8:00 a.m.-8:00 p.m. constitutes normal 
business hours for beneficiary access, based both on our knowledge of 
industry-wide practices and our experience with MA and Part D plans' 
call center operations in particular. Codifying the requirement for 
call centers serving network pharmacies to be open any time a pharmacy 
in that network in the plan's service area is open reflects the need to 
resolve questions about benefits and coverage promptly at the point of 
sale. The vast majority of current MA and Part D plans meet these 
standards. We explained that by requiring plans to be open for calls 
from current and prospective enrollees from 8:00 a.m. to 8:00 p.m. in 
all service areas or regions served by that Part C or D plan, our 
proposal would ensure that in instances in which plans operate in

[[Page 6006]]

service areas that straddle multiple time zones, all beneficiaries and 
pharmacists have equal access to call center services.
    We proposed in Sec. Sec.  422.111(h)(1)(ii) and 423.128(d)(1)(ii) a 
series of minimum requirements that define specific operational 
requirements for customer service call centers. In Sec. Sec.  
422.111(h)(1)(ii)(A) and 423.128(d)(1)(ii)(A), we proposed to codify 
the requirement that the average hold time be 2 minutes or less, with 
specific text to explain when the two-minute count starts to ensure 
consistent application of the metric by defining the hold time as the 
time spent on hold by callers following the interactive voice response 
(IVR) system, touch-tone response system, or recorded greeting, before 
reaching a live person. In Sec. Sec.  422.111(h)(1)(ii)(B) and 
423.128(d)(1)ii)(B), we proposed to codify the requirements that the 
call center answer 80 percent of incoming calls within 30 seconds after 
the Interactive Voice Response (IVR), touch-tone response system, or 
recorded greeting interaction. In Sec. Sec.  422.111(h)(1)(ii)(C) and 
423.128(d)(i)(ii)(C), CMS proposed to codify the requirement that 5 
percent or less of incoming call calls be disconnected or unexpectedly 
dropped by the plan customer call center. These standards both ensure 
that beneficiaries can consistently access call centers in a timely 
manner and set thresholds that plans can reasonably attain. We 
explained that data gathered from our call center monitoring studies 
indicates that 90 percent of MA organizations and Part D sponsors have 
average hold times of less than 2 minutes, 87 percent answer 80 percent 
incoming calls within 30 seconds, and 82 percent have disconnect rates 
of less than 5 percent. As we further explained, longstanding CMS 
policy interpreting the current regulatory requirement for the call 
center to meet standard business practices requires call centers to 
answer calls within 30 seconds and plans overwhelmingly comply with 
this requirement.
    CMS also proposed to amend Sec. Sec.  422.111(h)(1)(iii) and 
423.128(d)(1)(iii) to further delineate accessibility requirements for 
non-English speaking and limited English proficient (LEP) individuals. 
Plans have always been required to provide interpreters when necessary 
to ensure meaningful access to limited English proficient individuals, 
as that is consistent with existing civil rights laws. In addition, it 
ensures meaningful access to Medicare beneficiaries to Medicare-covered 
benefits. We proposed to further require that interpreters be available 
within 8 minutes of reaching the customer service representative and 
that the interpreter be available at no cost to the caller. These 
requirements are consistent with our interpretation of the requirement 
for call centers to meet standard business practices and performance is 
measured against this standard in our current monitoring and oversight 
activities. We explained that data from our call center monitoring 
indicates that 95% of plans already meet this standard.
    CMS proposed to add Sec. Sec.  422.111(h)(1)(iv) and 
423.128(d)(1)(v), explicitly requiring that call centers respond to 
TTY-to-TTY calls, consistent with standards established under existing 
law governing access for individuals with disabilities at 47 CFR part 
604, subpart F. Section 504 of the Rehabilitation Act, Section 1557 of 
the Affordable Care Act, and the Americans with Disabilities Act 
already require the provision of appropriate auxiliary aids and 
services for individuals with disabilities, such as deaf or hard-of-
hearing individuals. We also proposed, at Sec. Sec.  422.111(h)(1)(v) 
and 423.128(d)(1)(v), that when using automated-attendant systems, MA 
and Part D plans must provide effective real-time communication with 
individuals using auxiliary aids and services, including TTYs and all 
forms of FCC-approved telecommunications relay systems. See 28 CFR 
35.161, 36.303(d). We explicitly clarified that the requirements 
proposed at Sec. Sec.  422.111(h)(1)(ii) and 423.128(d)(1)(ii)--
regarding the average hold time, average answer time, and disconnect 
rate--also apply to TTY calls. CMS will hold plans accountable for 
complying with the requirements of Sec. Sec.  422.111(h)(1)(ii) and 
423.128(d)(1)(ii) when receiving TTY calls. We explained in the 
proposed rule how the proposed standards are consistent with current 
CMS interpretation and implementation of the requirement that plans 
have a call center that meets standard business practices and how. We 
explained that CMS data shows that 91 percent of plans currently 
respond to TTY calls within 7 minutes. We solicited comments on 
adopting the 7-minute response time as a TTY standard.
    We proposed to codify our existing interpretations and policies 
regarding MA and Part D plan call centers as explicit requirements for 
operating a toll-free customer service call center in Sec. Sec.  
422.111(h) and 423.128(d). We proposed this codification to ensure 
transparency and stability for plans about the performance standards 
they must meet.
    In this section of this rule, we summarize the comments we received 
and provide our responses and final decisions.
    Comment: Several commenters requested that we clarify whether the 
requirements for customer service call centers apply to call centers 
operated primarily for sales and marketing to prospective enrollees. 
The August 6, 2019 HPMS memo issuing the updated Medicare Communication 
and Marketing Guidelines permitted plans to operate telephone lines 
designated solely for marketing activities, such as sales and 
enrollment, under different business hours than customer service call 
centers for current and prospective enrollees. The guidelines required 
that sales lines adhere to all other requirements for customer service 
call centers. Some commenters requested that CMS revise the proposed 
rule to reflect that guidance permitting sales and enrollment telephone 
lines to operate during different business hours than customer service 
call centers for current and prospective enrollees.
    Response: Once applicable, the provisions of this final rule will 
supersede prior, inconsistent call center guidance in the Medicare 
Communications and Marketing Guidelines. While we proposed to codify 
existing guidance, we did not include a provision permitting call 
centers operated for the MA plan to have different business hours based 
on specific functions. Sections 422.111(h) and 423.128(d) require the 
call centers to be a mechanism for providing the information described 
in those regulations to current and prospective enrollees. Using a 
separate call center for prospective enrollees is not consistent with 
the current regulation or the proposed revisions. We have therefore 
reconsidered that prior guidance and will not be using it going 
forward. Specifically, the policies included in this final rule apply 
the same requirements applicable to all customer service call centers 
for current and prospective enrollees, including those used for sales 
and enrollment. This includes the requirements related to hours of 
operation.
    The guidance issued in in August 2019 to permit separate standards 
for a sales-only call center has proved difficult for CMS to enforce 
and confusing for some plans to adhere to. Specifically, plans have 
expressed confusion about the distinction between sales call centers 
and customer service call centers for prospective enrollees. CMS 
discovered that some plans were inappropriately using their automated 
answering system to direct calls from

[[Page 6007]]

numbers not known to be associated with plan enrollees to sales lines, 
making it difficult for both current enrollees and prospective 
enrollees to reach the customer service call center they were 
attempting to call and compromising the ability of current and 
prospective enrollees to get access to the information specified in 
Sec. Sec.  422.111 and 423.128. That information addresses topics and 
specifics that beneficiaries should have, such as information about 
benefits (including cost sharing and out of network coverage), access, 
and enrollment procedures, to make an enrollment election. Returning to 
a clearer and uniform approach to interpreting and implementing the 
call center requirements is important to ensure consistency and 
clarity. We also do not believe that this increases burden on plans, as 
even after the August 2019 guidance plans were required to continue 
operating call centers for current and prospective enrollees from 8 
a.m. to 8 p.m. Under this final rule, all plan call centers must comply 
with the regulation standards.
    Comment: Some commenters wrote in approval of what they perceived 
to be stricter requirements for customer service call centers than CMS 
previously applied. For example, a commenter noted that the proposed 
rule would require call centers to connect callers with LEP to an 
interpreter within 8 minutes 100 percent of the time. A few requested 
that CMS apply more stringent standards than proposed and currently 
used, including requiring that all customer service call centers be 
open 24 hours a day, 7 days a week.
    Response: CMS appreciates the support. Our intention in codifying 
the current policy on customer service call center is to provide a 
uniform standard for customer service call centers, including call 
centers for current and prospective enrollees. We were explicit that 
under our proposal, CMS's overall policy with respect to operating a 
toll-free customer service call center would remain largely the same 
and did not describe our proposals as creating more stringent specific 
standards. We do not believe that the requirements of the final rule 
represent a significantly more stringent standard than that which we 
expected under earlier guidance. In particular, it was not our 
intention to apply a stricter standard for interpreter availability or 
call center hours of operation than is described in current guidance. 
To clarify this, we are finalizing Sec. Sec.  422.111(h)(1)(iii)(B) and 
423.128(d)(1)(iii)(B) with a change from the proposal to reflect the 
current compliance standard we used evaluating interpreter 
availability--80 percent of calls being connected to an interpreter 
within 8 minutes. We note that plans already largely comply with this 
requirement of the final rule because 95 percent of plans already meet 
this standard and, in addition, the 80 percent threshold is consistent 
with the thresholds codified with respect to the speed of answer.
    We are also finalizing, at Sec. Sec.  422.111(h)(1)(i)(B) and 
423.128(d)(1)(i)(A), the proposed standards for operating hours, with a 
change to clarify that we are not expanding the hours of operation 
required for customer call centers compared to current practice (except 
to the extent we are discontinuing the allowance for sales and 
enrollment call centers to be open for shorter hours than customer 
service call centers for current and prospective enrollees). Not only 
do we not believe that customer service call centers for current and 
prospective enrollees need to be open 24 hours a day, 7 days a week 
without exception to ensure adequate service to Medicare beneficiaries, 
we do not believe it is necessary to expand the current policy in 
section 80 of the Medicare Communications and Marketing Guidelines, 
which permits call centers to be closed most Federal holidays and on 
weekends from April 1 through September 30. Therefore, we are 
finalizing our proposal for hours of operation with the addition of the 
same exceptions that have been outlined in the Medicare Communication 
and Marketing Guidelines for several years:

--From October 1 through March 31 of the following year, call centers 
may be closed on Thanksgiving Day and Christmas Day, so long as the 
interactive voice response system or similar technology records 
messages from incoming callers on those holidays and such messages are 
returned in one (1) business day. This time period encompasses both the 
MA and Part D Annual Enrollment Period and the MA Open Enrollment 
period. Plans must not close their call centers for any other days 
during this period because of the need for both current and prospective 
enrollees to reach plans during these generally applicable enrollment 
periods in order to make informed decisions about their plan choices.
--From April 1 through September 30, call centers may be closed on any 
Federal Holiday and on any Saturday or Sunday, so long as the 
interactive voice response system or similar technology records 
messages from incoming callers and such messages are returned in one 
(1) business day.

These exceptions have been in place for many years and that there has 
been no indication that allowing call centers to close on these days 
has negatively impacted beneficiaries' ability to reach and obtain 
services and information from plans.
    Comment: Some commenters expressed approval of CMS codifying 
performance standards in the regulation.
    Response: CMS appreciates commenters' support for the proposed 
rule. In this final rule, we are organizing and structuring the 
addition of these more specific, minimum standards for plan call 
centers to Sec. Sec.  422.111(h)(1) and 423.128(d)(1) in a different 
way than proposed. Instead of replacing the existing regulation text 
with the more specific standards, we are maintaining the current 
regulation text that requires plan call centers to be open during usual 
business hours, provide customer telephone service in accordance with 
standard business practices, and provide interpreters for non-English 
speaking and limited English proficient (LEP) individuals. These 
general performance requirements remain applicable to plan call centers 
and are not changed by this final rule. Rather, this final rule adds 
the new specific standards with additional language to clarify how 
these specific standards will be applicable for coverage beginning on 
and after January 1, 2022. This means that these standards will apply 
to call center operations made in 2021 for enrollments made for 
contract year 2022 (e.g., for call center activities during the Annual 
Election Period for 2022 that takes place in fall 2021). This clarifies 
how these specific standards are minimum performance thresholds for 
plan call centers and illustrates CMS' expectation that plan call 
centers operate consistent with standard business practices to provide 
information and assistance to current and prospective enrollees. 
Regardless of whether there is a specific, minimum quantitative 
standard in our regulations, plans should ensure that their call 
centers provide high quality customer service, at a minimum consistent 
with usual and standard business practices. The regulations at 
Sec. Sec.  422.111(h) and 423.128(d) are clear that call centers are 
one of several mechanisms by which plans must provide specific 
information on a timely basis to current and prospective enrollees upon 
request. By adding certain specific minimum standards, we do not intend 
to dilute or lower that requirement.
    Comment: A few commenters requested that CMS apply the standards 
for pharmacy call centers to call centers for other health care 
providers, such as

[[Page 6008]]

physicians and hospitals. The commenter explained that health care 
providers also operate 24 hours, 7 days a week and may therefore need 
real time access to plan representatives to determine coverage for 
services.
    Response: CMS appreciates the suggestion. We understand that 
hospitals, physicians, and other non-pharmacy providers often operate 
24 hours a day, 7 days a week and may wish to have real time access to 
plan representatives at all times. However, unlike pharmacies, 
physicians and hospitals do not administer a point of sale benefit. 
Rather, they bill retrospectively. Therefore, immediate access to the 
plan through the call center does not appear to be necessary to ensure 
access to medically necessary covered health care. While CMS is open to 
considering future rulemaking in this area, we need to gather more 
evidence and stakeholder input to determine whether it is appropriate 
or necessary to require plans to operate 24-hour, 7-day-a-week call 
centers for non-pharmacy providers.
    After consideration of the comments and for the reasons outlined in 
the proposed rule and our response to comments, we are finalizing the 
amendments to Sec. Sec.  422.111(h) and 423.128(d) regarding call 
centers as proposed, with five modifications.
    Two of the modifications address concerns explicitly raised by 
commenters. We are finalizing the proposed standards for interpreter 
availability with the addition that 80 percent of calls requiring an 
interpreter must be connected to an interpreter within the proposed 8 
minutes, rather than simply requiring all such calls to be connected 
within 8 minutes. In addition, CMS is finalizing the proposed hours of 
operation requirements with modifications to provide exceptions for 
certain federal holidays and on certain weekends so long as callers can 
leave messages and those messages are returned within one business day. 
These modifications reflect CMS's intention to largely codify existing 
policy in this rule.
    The third modification that we are finalizing is similar to these 
two changes. CMS requested comment on whether to adopt the 7-minute TTY 
response time in the regulation. We received no comments on this issue 
and have decided to finalize the rule with a requirement that 80 
percent of TTY calls be connected to an operator within 7 minutes. As 
discussed in the February 2020 proposed rule, this reflects current 
performance by plans (91 percent connect calls within the required time 
frame) and is consistent with the thresholds codified with respect to 
speed of answer and interpreter availability.
    Fourth, it has come to CMS's attention that 47 CFR, part 64, 
subpart F applies to state-operated TTY relay systems and not to plan 
call centers. The proposed rule would have, at 42 CFR 422.111(h)(1)(iv) 
and 423.128(d)(1)(v)(A), required plan call centers to comply with 
these standards. However, neither CMS nor plans have authority over 
state-operated relay systems and Medicare plan call centers do not 
perform the same function as state relay systems. Therefore, CMS is not 
finalizing those provisions and is designating the remaining regulation 
text accordingly.
    Finally, we are finalizing the proposed additions to Sec. Sec.  
422.111(h) and 423.128(d) with a slightly different structure to be 
consistent with how this final rule is adding specific minimum 
standards and is generally applicable beginning with coverage for 2022.
    Although we are finalizing these changes to Sec. Sec.  
422.111(h)(1) and 423.128(d)(1) regarding call centers, with the 
modifications described above, as applicable with coverage beginning on 
and after January 1, 2022, it codifies current policies so we encourage 
MA organizations and Part D sponsors to take this final rule into 
account immediately.

VI. Changes to the Programs of All-Inclusive Care for the Elderly 
(PACE)

    The intent of this final rule is to revise and update the 
requirements for the Programs of All-Inclusive Care for the Elderly 
(PACE) under the Medicare and Medicaid programs. The PACE program is a 
unique model of managed care service delivery for the frail elderly, 
most of whom are dually-eligible for Medicare and Medicaid benefits, 
and all of whom are assessed as being eligible for nursing home 
placement according to the Medicaid standards established by their 
respective states. The proposals addressed reassessments, service 
delivery requests, appeals, participant rights, required services, 
excluded services, interdisciplinary team requirements, medical record 
documentation, access to data and records, safeguarding communications, 
and service delivery requirements. The finalized changes would reduce 
unnecessary burden on PACE organizations, provide more detail about CMS 
expectations and provide more transparent guidance.

A. Service Determination Request Processes Under PACE (Sec. Sec.  
460.104 and 460.121)

    Sections 1894(b)(2)(B) and 1934(b)(2)(B) of the Act specify that 
PACE organizations must have in effect written safeguards of the rights 
of enrolled participants, including procedures for grievances and 
appeals. We issued regulations on grievances at Sec.  460.120, and we 
issued regulations on appeals at Sec.  460.122. Additionally, CMS 
created a process under Sec.  460.104(d)(2) to allow participants or 
their designated representatives to request that the interdisciplinary 
team (IDT) conduct a reassessment, when the participant or designated 
representative believes the participant needs to initiate, eliminate or 
continue a service. The process under Sec.  460.104(d)(2) is commonly 
referred to by CMS and industry as the service delivery request 
process. This process serves as an important participant protection, as 
it allows a participant to advocate for services. As we stated in the 
Medicare and Medicaid Programs; Programs of All-Inclusive Care for the 
Elderly (PACE); Program Revisions final rule (hereinafter referred to 
as the 2006 PACE final rule), ``[t]he provisions for reassessment at 
the request of a participant [were] intended to serve as the first 
stage of the appeals process.'' (71 FR 71292). Section 460.104(d)(2) 
currently sets out the responsibilities of a PACE organization in 
processing each request. Currently, a participant or their designated 
representative initiates a service delivery request when they request 
to initiate, eliminate, or continue a service. Once the IDT receives 
the request, the appropriate members of the IDT, as identified by the 
IDT, must conduct a reassessment. The IDT member(s) may conduct the 
reassessment via remote technology when the IDT determines that the use 
of remote technology is appropriate and the service request will likely 
be deemed necessary to improve or maintain the participant's overall 
health status and the participant or their designated representative 
agrees to the use of remote technology. However, the appropriate 
member(s) of the IDT must perform an in-person reassessment when the 
participant or their designated representative declines the use of 
remote technology, or before a PACE organization can deny a service 
request. Following the reassessment, the IDT must notify the 
participant or designated representative of its decision to approve or 
deny the request as expeditiously as the participant's condition 
requires, but generally no later than 72 hours from the date of the

[[Page 6009]]

request for reassessment. If the request is denied, the PACE 
organization is responsible for explaining the denial to the 
participant or the participant's designated representative both orally 
and in writing. The PACE organization is also responsible for informing 
the participant of his or her right to appeal the decision, including 
the right to request an expedited appeal, as specified in Sec.  
460.122. If the IDT fails to provide the participant with timely notice 
of the resolution of the request, or does not furnish the services 
required by the revised plan of care, the failure constitutes an 
adverse decision and the participant's request must be automatically 
processed as an appeal in accordance with Sec.  460.122.
    While this section provides an important participant protection, we 
have heard from stakeholders that the language in Sec.  460.104(d)(2) 
is overly broad as written, and that even simple requests to initiate a 
service require a reassessment and a full review of the request by the 
PACE organization's IDT. Stakeholders have also noted that addressing 
the service delivery request process in the section of the regulation 
governing participant assessments undercuts the importance of the 
requirements for processing these requests. Additionally, through CMS 
oversight and monitoring, we have identified a need to better define 
what constitutes a service delivery request and create clearer guidance 
on how PACE organizations must identify and process these requests.
    We proposed moving the requirements for service delivery requests 
at Sec.  460.104(d)(2) to a new section of the regulations at Sec.  
460.121, titled ``Service Delivery Requests.'' We used the term 
``service delivery request'' because that is the term typically used by 
industry and CMS to describe these actions, however, we solicited 
comments on whether we should utilize this term or consider something 
different. For example, the initial decision to cover a drug in Part D 
is a coverage determination (Sec.  423.566), and the initial decision 
to cover an item or service in Part C is an organization determination 
(Sec.  422.566). We requested feedback on whether a term other than 
``Service Delivery Request,'' such as ``PACE Organization 
Determination,'' ``Coverage Determination,'' or ``Service 
Determination,'' would be preferable.
    In addition to proposing that the requirements for processing 
service delivery requests would be moved from Sec.  460.104(d)(2) into 
a new section, we also proposed to modify these requirements based on 
industry feedback and lessons learned through our experience operating 
the PACE program and monitoring PACE organizations. First, we proposed 
to reorganize the requirements for clarity and to better align them 
with the appeals regulations in subpart M of parts 422 and 423, for 
Medicare Advantage (MA) and Part D respectively, while also ensuring 
the requirements address the specific features of the PACE program, 
which is a unique combination of payer and direct care provider. We 
believe aligning the layout of the regulation and the notification 
requirements of the initial determination processes in PACE, MA, and 
Part D would allow us to minimize confusion for participants, who are 
often familiar with the initial determination and appeals processes in 
the Parts C and D programs, and would also increase transparency for 
PACE organizations regarding CMS' expectations.
    While the current regulation at Sec.  460.104(d)(2) begins with the 
requirements for processing a request for reassessment, we added Sec.  
460.121(a) to require that a PACE organization must have formal written 
procedures for identifying and processing service delivery requests in 
accordance with the requirements of Sec.  460.121. We believe it is 
important to ensure that PACE organizations develop internal processes 
and procedures to properly implement this process.
    At Sec.  460.121(b), we define what constitutes a service delivery 
request and what does not. We define what constitutes a service 
delivery request at Sec.  460.121(b)(1). Currently, the process in 
Sec.  460.104(d)(2) is triggered if the participant (or his or her 
designated representative) believes the participant needs to initiate, 
eliminate, or continue a particular service. At Sec.  460.121(b)(1), we 
specify that the process for service delivery requests would apply to 3 
distinct types of service delivery requests, specifically, a request to 
(1) initiate, (2) modify, or (3) continue a service.
    We note that the term ``services'' is already defined at 460.6 to 
include ``items,'' and we proposed, as discussed in section VI.I. of 
this final rule, to make explicit that this definition is meant to 
reflect the full scope of the PACE benefit package, and thus also 
includes ``items'' and ``drugs.'' Therefore, our use of ``service'' or 
``services'' throughout Sec.  460.121 always includes any type of PACE-
covered services, items, or drugs, and participants have the right to 
advocate with respect to all types of PACE-covered services, items, or 
drugs that they believe may be necessary. The language at Sec.  
460.121(b)(1) would retain the existing concepts of ``initiating'' and 
``continuing'' services but would replace the term ``eliminate'' with 
the term ``modify.''
    In Sec.  460.121(b)(1)(i) that the first type of service delivery 
request would be a request to initiate a service. This first type of 
request is based on the existing language at Sec.  460.104(d)(2). In 
Sec.  460.121(b)(1)(ii) that the second type of service delivery 
request would be a request to modify an existing service. We specify 
that requests to modify an existing service include requests to 
increase, reduce, eliminate, or otherwise change a particular service. 
We believe that defining service delivery requests to include requests 
to modify an existing service is an important protection, as 
participants may believe that the services they are currently receiving 
are not sufficient to meet their needs. For example, a participant may 
request to increase their home care from 3 hours a week to 6 hours a 
week because they believe that they are becoming less steady in their 
gait and they are afraid to be alone for long periods.
    The third type of service delivery request at Sec.  
460.121(b)(1)(iii), is a request to continue a service that the PACE 
organization is recommending be discontinued or reduced. This type of 
request would apply to circumstances where the PACE organization is 
recommending to discontinue or reduce a service that the participant is 
already receiving, and the participant wishes to continue receiving 
that service. An example of this type of request would be a participant 
that is attending the PACE center 5 days a week and the PACE 
organization decides to reduce attendance to 4 days a week. If the 
participant requests to continue attending the center 5 days a week, 
this request must be processed as a service delivery request under our 
proposal. Another example would be if a participant is receiving a 
specific drug, and the IDT makes a decision to stop providing that 
drug. Under the proposal, the participant's request to continue 
receiving the drug would be processed as a service delivery request. 
Through our monitoring of PACE organizations, we have identified 
instances where a participant requests to continue receiving a service 
that has been reduced or discontinued, and the PACE organization 
provides the participant appeal rights under Sec.  460.122 instead of 
conducting a reassessment as required under the current Sec.  
460.104(d)(2). We would include requests to continue coverage of a 
service in part to ensure that PACE organizations understand that they 
must process a service delivery request for these situations before

[[Page 6010]]

processing an appeal under Sec.  460.122. Our revisions to this 
section, as well as our revisions to the appeals regulation discussed 
in section VI.B. of this final rule, would establish that the service 
delivery request process is the first level of the appeals process, and 
requests to continue a service must first be processed under the 
service delivery request process prior to an appeal being initiated 
under Sec.  460.122. We discuss the scope of the appeals process in 
greater depth in our discussion of the updates to the appeals process 
in section VI.B. of this final rule. We also proposed that participants 
would be allowed to make this type of service delivery request before a 
service was actually discontinued, to permit the participant to 
advocate for a continuation of the service. This requirement is 
reflected in the language we proposed for Sec.  460.121(b)(1)(iii), 
where we emphasize that this provision relates to a service that the 
PACE organization is recommending be discontinued or reduced. We 
believe by wording this requirement in this way, we would make clear 
that the participant could make a service delivery request as soon as a 
PACE organization recommends reducing or discontinuing a service. For 
example, if the IDT was recommending reducing center attendance from 
three days a week to two days a week, and the participant wanted to 
continue coming to the center three days a week, the participant could 
request a service delivery request once the IDT recommended the 
reduction, even if the reduction in days had not yet been implemented.
    We recognize that our proposal defined what constitutes a service 
delivery request broadly. We also understand that there are 
circumstances that are unique to PACE where a request may not 
constitute a service delivery request based on the role of a PACE 
organization as a direct care provider that is responsible for 
coordinating and delivering care. Therefore, we proposed an exception 
to the definition of a service delivery request. In paragraph (b)(2) we 
specify that certain requests to initiate, modify, or continue a 
service would not constitute a service delivery request, even if the 
request would otherwise meet the definition of a service delivery 
request under (b)(1). Specifically, at Sec.  460.121(b)(2) if a request 
is made prior to the development of the initial care plan the request 
would not constitute a service delivery request. This exemption would 
apply any time before the initial care plan was finalized (and 
discussions amongst the IDT ceased). We believe this approach would be 
beneficial to the participant and the PACE organization as the IDT and 
the participant or caregiver continue to discuss the comprehensive plan 
of care taking into account all aspects of the participant's condition 
as well as the participant's wishes. For example, if the PACE 
organization is developing the initial plan of care and actively 
considering how many home care hours the participant should receive, 
and the participant makes a request for a particular number of home 
care hours, that request would not be a service delivery request 
because the IDT was actively considering that question in developing 
the plan of care. Once the initial plan of care is developed, if a 
service was not incorporated into the plan of care in a way that 
satisfies the participant, the participant would always have the right 
to make a service delivery request at that time.
    While drafting the proposal, we considered other ways to 
potentially limit the application of the service delivery request 
process to account for situations where it is possible to adequately 
address a request without undertaking the full service delivery request 
process. First, we considered excluding requests for services made 
during the course of a treatment discussion with a member of the IDT 
from the service delivery request process, so long as the IDT member is 
able to immediately approve the service. Ultimately we decided these 
situations should constitute service delivery requests, in order to 
avoid confusion by requiring PACE organizations to distinguish between 
requests for services that constitute service delivery requests and 
those that do not. However, in an effort to reduce burden, we 
determined that it would be appropriate to process service delivery 
requests that an IDT member is able to approve in full at the time the 
request is made in a more streamlined manner than other service 
delivery requests. We discuss our proposals on this point in more 
detail in the section relating to Sec.  460.121(e)(2) in this final 
rule.
    We also considered whether we could exclude other types of requests 
from the service delivery request process. For example, we have 
received questions from PACE organizations about requests that do not 
relate to health care or to a participant's medical, physical, 
emotional, and social needs, such as a participant requesting lemons in 
their water, or a participant requesting a particular condiment at 
lunch. We considered proposing to exclude requests that are not related 
to health care or to the participant's medical, physical, emotional, 
and social needs, and therefore would not constitute a service delivery 
request. We strongly believe that any time a service may be necessary 
to maintain or improve the participant's overall health status, taking 
into account the participant's medical, physical, emotional, and social 
needs, that request should be processed as a service delivery request. 
We similarly understand that some requests are completely unrelated to 
the participant's health care or condition. However, we believe that 
adding a provision to address this relatively insignificant issue would 
potentially cause confusion for PACE organizations and participants and 
therefore we did not propose such a provision at this time. We 
solicited comments on whether specifying that requests unrelated to a 
participant's medical, physical, emotional, and social needs need not 
be processed using the service delivery request process would benefit 
PACE organizations without restricting participants' ability to 
advocate for any service they believe may be necessary, regardless of 
whether that is meals, transportation, drugs, home care, or other 
services provided as part of the PACE benefit, and if so, how we should 
word such a provision.
    We also proposed at Sec.  460.121(c) to specify the individuals who 
can make a service delivery request. Under the current requirements in 
Sec.  460.104(d)(2), only the participant or the participant's 
designated representative may request to initiate, eliminate, or 
continue a particular service. This proposal would expand the number of 
individuals who can make a service delivery request on behalf of a PACE 
participant to include the participant, the participant's designated 
representative, or the participant's caregivers. We believe that the 
proposal would be consistent with the current practice of most PACE 
organizations, in part because caregivers are often also participants' 
designated representatives; however, it would affirmatively state in 
regulation that these individuals may make service delivery requests. 
We believe this would provide an important safeguard for participants, 
as caregivers are usually aware of the participant's situation and have 
valuable insight into what services would be beneficial. For example, 
if a PACE participant's wife believes that the participant needs more 
home care to assist with toileting, bathing and dressing, she would be 
able to make a service delivery request to the PACE organization and 
advocate for that service delivery request, regardless of

[[Page 6011]]

whether she is her spouse's designated representative. The proposal 
also aligned with current care plan regulations (Sec.  460.106(e)) 
which state that the IDT must develop, review, and reevaluate the plan 
of care in collaboration with the participant or caregiver or both. 
Because caregivers are involved in the care planning process and 
determining what care may be necessary, we believe that it is also 
appropriate for these individuals to be able to advocate for services 
as necessary on behalf of a participant, regardless of whether these 
service delivery requests result in changes to the plan of care. While 
a designated representative or caregiver such as a family member may 
initiate the service delivery request process, the PACE organization 
remains responsible for issuing a decision based on the individual 
needs of the participant regardless of the party that initiated the 
request. We solicited comments on this proposal to expand the number of 
individuals who can make a service delivery request on behalf of a PACE 
participant. In addition, we solicited comment regarding whether or not 
there are other individuals that should be allowed to make service 
delivery requests on behalf of a participant. For example, in MA and 
Part D, providers or prescribers can initiate a request for coverage 
(either coverage determination or organization determination) on behalf 
of a beneficiary, which allows prescribers or other providers to 
advocate for drugs or services that are unique to their discipline or 
scope of practice. In PACE, this would mean that if a participant went 
to a contracted specialist, that specialist would be allowed to 
advocate or request a service specific to their discipline. We 
specifically solicited comments on whether we should specify that 
prescribers or providers, outside of the IDT, can make a service 
delivery request on behalf of a participant in PACE.
    We also proposed at Sec.  460.121(d) to specify how a service 
delivery request may be made. The current regulation at Sec.  
460.104(d)(2) is silent regarding how a participant or his or her 
designated representative may request to initiate, eliminate, or 
continue a particular service. We proposed at Sec.  460.121(d)(1) to 
permit service delivery requests to be made either orally or in 
writing. We believe this is consistent with current practice for all 
PACE organizations. The right to request an initial determination 
either orally or in writing is provided as an enrollee safeguard in 
both MA and Part D (see Sec. Sec.  422.568(a)(1), 422.570(b), 
423.568(a)(1), and 423.570(b)), and given the vulnerability of the PACE 
population, we believe it is important that PACE participants also have 
the ability to submit service delivery requests in either form. We also 
proposed at Sec.  460.121(d)(2) that service delivery requests may be 
made to any individual who provides direct care to a participant on 
behalf of the PACE organization, whether as an employee or a 
contractor. All employees and contractors that provide direct 
participant care should be trained to recognize and document these 
requests when they are made by a participant pursuant to Sec.  460.71. 
Because of the comprehensive nature of the PACE program and the 
requirement that PACE organizations provide care across all care 
settings, participants may not know whom they should communicate with 
when making a service delivery request. For example, certain 
participants may not attend the PACE center on a routine basis and a 
home care aide may be the only representative of the PACE organization 
the participant has contact with frequently. Under this proposal, the 
participant could make service delivery requests to the home care aide, 
and those requests would be considered to have been made to the PACE 
organization. All individuals providing direct care to participants, 
whether contractors or employees, should be trained to recognize 
service delivery requests and ensure such requests are documented 
appropriately and brought to the IDT as part of the training employees 
and contractors receive under Sec.  460.71(a)(1). While we require that 
all contractors and employees that provide direct care be able to 
receive service delivery requests from participants, we solicited 
comment on whether this requirement should be limited to a smaller 
subset of individuals. For example, we solicited comment on whether we 
should instead require only those contractors or employees who provide 
direct participant care in the participant's residence, the PACE 
center, or while transporting participants to receive service delivery 
requests.
    We would establish new requirements at Sec.  460.121(e) specifying 
how service delivery requests must be processed. In Sec.  460.121(e)(1) 
all service delivery requests must be brought to the IDT as 
expeditiously as the participant's condition requires, but no later 
than 3 calendar days after the date the request was made. The existing 
requirement at Sec.  460.104(d)(2)(iii) specifies that the IDT must 
generally notify the participant or designated representative of its 
decision in regard to a request to initiate, eliminate, or continue a 
particular service no later than 72 hours after the date the IDT 
receives the request for reassessment. Stakeholders have requested that 
CMS explain if the current 72-hour timeframe begins when any member of 
the IDT receives the service delivery request, or when the full IDT 
receives the request. In order to avoid similar questions about the new 
service delivery request process we proposed, we also established two 
distinct timeframes. Specifically, an initial timeframe for the PACE 
organization to bring a service delivery request to the IDT, and a 
second timeframe for the IDT to make a decision and provide notice of 
the decision to the participant. We would include this second timeframe 
at Sec.  460.121(i), and discuss in more detail later in this section. 
We believe that creating these distinct timeframes would benefit both 
PACE organizations and participants. We also believe it is necessary to 
ensure that once a service delivery request is made, it is brought to 
the IDT for processing as expeditiously as the participant's condition 
requires but no later than 3 calendar days from when the request was 
actually made. In monitoring PACE organizations, we have seen 
organizations take a week or longer after a request was first made to 
bring the request to the IDT for consideration. By establishing a 
requirement that service delivery requests must be brought to the IDT 
as expeditiously as the participant's condition requires but no later 
than 3 calendar days from the time the request is made, we believe this 
would ensure participant requests are handled expeditiously while still 
ensuring the IDT has sufficient time to process the service delivery 
request and consider all relevant information when making a decision. 
We solicited comments on this proposal to establish a new timeframe for 
PACE organizations to bring service delivery requests to the IDT.
    We also proposed at Sec.  460.121(e)(2) to specify an exception to 
the processing requirements for service delivery requests. 
Specifically, if a member of the IDT receives a service delivery 
request and is able to approve the request in full at the time the 
request is made, the PACE organization would not be required to follow 
certain processing requirements. We understand that PACE organizations, 
as direct care providers, routinely interact with participants when 
providing care and services. These interactions often include treatment 
discussions between an IDT member and a participant about what care may 
or may not be appropriate for

[[Page 6012]]

the participant to receive. During these discussions, a participant may 
request a service that the IDT member receiving the request is able to 
immediately approve as requested based on their knowledge of the 
participant and the participant's condition. For example, during a 
physical therapy session, a participant may request a walker to assist 
in his or her daily activities. If the physical therapist, who is a 
member of the IDT, determines that the item is necessary and can 
approve the walker at the time the participant requests it, then the 
request would not need to be processed as a normal service delivery 
request. The exception would not apply if the IDT member cannot approve 
exactly what is requested. For example, if a participant requested 20 
hours per week of home care but the IDT member is only willing to 
approve 15 hours per week, the exception would not apply because the 
participant's request would be partially denied. Specifically, at Sec.  
460.121(e)(2)(i) would require that when a member of the IDT can 
approve a service delivery request in full at the time the request is 
made, the PACE organization must fulfill only the requirements in 
paragraphs (j)(1), (k), and (m). These paragraphs are discussed in more 
detail later in this section, and generally relate to notice of a 
decision to approve a service delivery request, effectuation 
requirements, and record keeping. We also proposed at Sec.  
460.121(e)(2)(ii) that PACE organizations would not be required to 
process these particular service delivery request in accordance with 
paragraphs (f) through (i), paragraph (j)(2), or paragraph (l) of this 
new section, all of which are discussed in more detail in this section 
of this final rule.
    This exception to how a service delivery request is processed based 
on feedback from stakeholders that IDT members often have treatment 
discussions with participants about modifying services and make 
decisions to accommodate the participants' requests in full at the time 
the requests are made. Additionally, we have seen situations where a 
caregiver requests an item or service that an IDT member is able to 
immediately approve at the time the request is made. In these 
situations, it is important that the decision to approve the service is 
communicated to the participant or the requestor at the time the 
request is made so that the participant/requestor understands the 
outcome of their request. If a decision to approve a requested service 
cannot be made in full at the time of the request, the PACE 
organization must fully process the service delivery request in 
accordance with all relevant paragraphs of this new section. If an IDT 
member can quickly approve a service as being necessary for the 
participant, we do not believe that it would benefit the participant or 
the organization to have to fully process a service delivery request, 
since the participant or requestor has already been successful in 
advocating for the service. Instead, the participant would be better 
served by the IDT member quickly communicating the approval, and 
working to provide the requested service as expeditiously as the 
participant's condition requires. We want to note that pursuant to our 
proposal in Sec.  460.121(d)(2), a service delivery request may be made 
to any contractor or employee who provides direct care to a 
participant, and that all individuals providing direct care to 
participants, whether contractors or employees, should be trained to 
recognize and receive service delivery requests pursuant to Sec.  
460.71(a)(1). However, to specifically limit the exception in Sec.  
460.121(e)(2) to requests made to IDT members, where the receiving 
member of the IDT is able to approve the service delivery request in 
full at the time the request is made. This will ensure that the IDT 
remains responsible for determining the benefits a participant should 
receive, and that contractors or employees, such as a home care aide, 
are not authorizing services without the IDT's review.
    We also believe this exception at Sec.  460.121(e)(2) would reduce 
the current burden on PACE organizations in three primary ways. First, 
PACE organizations would not have to bring requests that can be quickly 
approved by one IDT member to the full IDT for consideration and 
discussion, which would allow the IDT to use that time for other 
purposes, including to focus on requests that require in-depth 
consideration. Second, because the IDT would not have to conduct a 
reassessment in each case, we expect that this change would improve the 
overall speed with which PACE organizations are able to provide 
necessary services. Third, the IDT would not have to provide separate 
notification to the participant because the IDT member would inform the 
participant or requestor that the request was approved in the initial 
discussion.
    Currently the IDT is required to process requests for reassessments 
from participants and/or designated representatives under Sec.  
460.104(d)(2). The IDT is responsible for selecting the appropriate IDT 
members to conduct the reassessment under Sec.  460.104(d)(2), and for 
issuing a decision to approve or deny a request under Sec.  
460.104(d)(2)(iii). At Sec.  460.121(f), we would require that all 
service delivery requests, other than those under Sec.  460.121(e)(2), 
must be brought to the full IDT for review and discussion before the 
IDT makes a determination to approve, deny or partially deny the 
request. As required by Sec.  460.102(b), each PACE organization's IDT 
must, at a minimum, be composed of members qualified to fill the roles 
of 11 disciplines, each of which offers a unique perspective on the 
participant's condition. CMS commonly refers to this group as the full 
IDT. Because service delivery requests not processed under Sec.  
460.121(e)(2) are processed only for services that cannot be approved 
in full at the time the request is received, we believe that it is 
important that the IDT, as a whole, discuss the service delivery 
request in order to determine whether the request should be approved or 
denied. A discussion by the full IDT would allow each discipline to 
offer their perspective on the participant's condition as it relates to 
the requested service, and ensure that the IDT is best equipped to 
determine what services are necessary to improve or maintain the 
participant's health status. As previously discussed, service delivery 
requests that are approved in full by a member of the IDT at the time 
the request is made would not have to be brought to the full IDT for 
review.
    In Sec.  460.121(g) we would require that the IDT must consider all 
relevant information when evaluating a service delivery request. 
Currently, the regulation is silent on what the IDT must consider when 
making a decision under Sec.  460.104(d)(2). The IDT must consider, at 
a minimum, the findings and results of any reassessment(s) conducted in 
response to a service delivery request, as well as the criteria used to 
determine required services specified in Sec.  460.92(b), as discussed 
in section VI.C. of this final rule. We have seen through our 
monitoring efforts that certain IDTs do not always consider the 
reassessments conducted in response to a service delivery request when 
making a decision. For example, a physical therapist and occupational 
therapist may both indicate in their discipline-specific reassessments 
that a participant would benefit from additional home care hours, but 
the IDT might deny the request without explaining why the 
recommendations resulting from those reassessments were not followed. 
We believe it is important that an IDT is able to demonstrate that it 
took any reassessments performed in the process of reviewing a service 
delivery request into consideration when making a decision on that 
service delivery

[[Page 6013]]

request. Additionally, we believe that IDT decision making for service 
delivery requests should be aligned with the IDT's decision making for 
what constitutes a required service under Sec.  460.92(b). 
Specifically, we believe that a decision by the IDT to provide or deny 
services must be based on an evaluation of the participant that takes 
into account the participant's medical, physical, emotional and social 
needs. We have encountered situations where the IDT made its decision 
based on one aspect of the participant's condition, for example, their 
physical health related to their ability to perform activities of daily 
living, but disregarded other aspects of the participant's condition, 
such as their medical, emotional, and social needs. We believe that the 
IDT must consider all aspects of the participant's condition in order 
to make an appropriate decision. For example, if the participant is 
requesting to attend the PACE center on additional days due to feelings 
of social isolation and depression, it would be inappropriate for the 
IDT to make a decision based on the participant's physical needs 
without considering their emotional and social needs. Additionally, 
under the modifications in Sec.  460.92, we would also expect PACE 
organizations to utilize current clinical practice guidelines and 
professional standards of care when rendering decisions, as applicable 
to a requested service. We discuss this decision making process and use 
of these guidelines in more detail in section VI.C. of this final rule.
    Based on feedback from PACE organizations and advocacy groups, at 
Sec.  460.121(h) we proposed to require an in-person reassessment only 
prior to an IDT's decision to deny or partially deny a service delivery 
request. Currently, the IDT must perform a reassessment as part of its 
consideration of any request to initiate, eliminate, or continue a 
service under Sec.  460.104(d)(2), regardless of whether the request is 
approved or denied. We modified the requirements related to conducting 
reassessments in response to a participant or designated 
representative's request to initiate, eliminate, or continue a service 
in the 2019 PACE Final Rule (84 FR 25644 through 25646). The 
regulations now permit the IDT to conduct that reassessment via remote 
technology if certain requirements are met, but the IDT must conduct an 
in-person reassessment prior to denying a request. However, since that 
rule was published on June 3, 2019, we have continued to receive 
feedback from PACE organizations requesting further action to address 
the burden of conducting reassessments in response to service delivery 
requests, specifically when the IDT can approve a request without 
performing a reassessment. Under our proposal, if a service delivery 
request is brought to the full IDT and the IDT determines that it can 
approve the request based on the information available, the IDT would 
not be required to conduct a reassessment of the participant prior to 
making a decision to approve the service delivery request. We 
understand that many IDTs have frequent interactions with PACE 
participants and may be able to make a decision to approve a request 
without having to conduct another reassessment based on internal 
consultation and knowledge of the participant. As we indicated in our 
discussion for Sec.  460.121(e)(2), we do not believe that delaying the 
provision of a requested service the IDT has determined is necessary, 
in order to conduct a reassessment, benefits the PACE organization or 
the participant. We believe the IDT, with its knowledge of the 
participant, is in the best position to determine if a reassessment is 
necessary prior to approving a service delivery request. Therefore, CMS 
would only require a reassessment prior to the IDT denying or partially 
denying a request under this proposal.
    If, after consideration of all available information, the full IDT 
expects to make a decision to deny or partially deny a service delivery 
request, the IDT would be required to perform an unscheduled in-person 
reassessment pursuant to Sec.  460.121(h)(1), prior to making a final 
decision. We would consider a request denied or partially denied 
whenever the IDT makes a decision that does not fully approve the 
service delivery request as originally requested. For example, if a 
participant requested 3 hours of home care a week, and the IDT made a 
decision that the participant only required 2.5 hours of home care each 
week, such a decision by the IDT would constitute a partial denial 
because the request was not fully approved as requested by the 
participant. In other words, any decision to offer a compromise, an 
alternative service, or to grant only a portion of the request would 
constitute a partial denial. The in-person reassessment must be 
conducted by the appropriate members of the IDT, as identified by the 
IDT, in order to align with the current requirement under Sec.  
460.104(d)(2) that the IDT is responsible for identifying the 
appropriate members to conduct the reassessment. We believe this change 
would strike an appropriate balance between protecting participants and 
ensuring that the process for handling service delivery requests is not 
overly burdensome for PACE organizations.
    We also proposed in Sec.  460.121(h)(1) to require that any 
reassessment conducted for a service delivery request must evaluate 
whether the requested service is necessary to meet the participant's 
medical, physical, emotional, and social needs in a manner consistent 
with Sec.  460.92, and the revisions we proposed to those provisions. 
We have seen through our monitoring efforts that in conducting 
reassessments as a result of requests to initiate, eliminate or 
continue particular services, the IDTs are not always evaluating 
whether the requested service would actually improve or maintain the 
participant's condition, taking into account all relevant aspects of 
the participant's condition, including assessing the participant's 
medical, physical, emotional and/or social needs as applicable. We 
believe this information is vital, and must be considered by the full 
IDT in making its decision. For example, if a participant is requesting 
more days at the PACE center for social reasons, the IDT should ensure 
that the appropriate members of the IDT conduct the reassessment in 
order to evaluate the participant's social needs, and whether 
additional center days are necessary to meet the participant's needs, 
including improving the participant's social condition. We discuss our 
proposed modifications for Sec.  460.92 in greater detail in section 
VI.C. of this final rule.
    In accordance with our belief that the IDT is in the best position 
to determine if a reassessment is necessary prior to approving a 
service delivery request, at Sec.  460.121(h)(2) we proposed that the 
IDT may choose to conduct a reassessment (via either remote technology 
or in-person) before approving a service delivery request, but we do 
not believe we should require one as part of the process for approving 
service delivery requests. If the IDT determines a reassessment should 
be conducted prior to approving the request, the IDT would still be 
responsible for processing the service delivery request, and notifying 
the participant, in the timeframe specified at Sec.  460.121(i).
    In paragraph (i) we would establish a time frame in which the IDT 
must make its determinations regarding service delivery requests and 
provide notification of its decisions. The current requirement under 
Sec.  460.104(d)(2)(iii) states that the IDT must notify the 
participant or designated representative of its decision to approve or 
deny a service delivery request as expeditiously

[[Page 6014]]

as the participant's condition requires, but no later than 72 hours 
after the date the IDT receives the request, unless the IDT extends the 
timeframe. CMS has interpreted this language as requiring that the IDT 
must notify the participant or their designated representative within 3 
calendar days of receiving a request, based on the wording of the 
requirement which states ``72 hours from the date'' and thus requires 
that the timeframe starts on the day received. We proposed a similar 
timeframe at Sec.  460.121(i), to require that the IDT make its 
determination and notify the participant or their designated 
representative of the determination as expeditiously as the 
participant's health condition requires, but no later than 3 calendar 
days after the date the IDT receives the request. We continue to 
believe this is a reasonable timeframe for the IDT to discuss the 
request, conduct reassessments when required, and make a decision.
    The IDT is currently allowed to extend the timeframe for notifying 
a participant or their designated representative by no more than 5 
additional days under Sec.  460.104(d)(2)(iv). Extensions are currently 
permitted when the participant or designated representative requests an 
extension, or when the IDT documents its need for additional 
information and how the delay is in the interest of the participant. In 
Sec.  460.121(i)(1) we proposed to include a similar provision for 
extensions, which would allow the IDT to extend the timeframe for 
review by up to 5 calendar days beyond the original deadline in certain 
circumstances. In Sec.  460.121(i)(1)(i) we proposed that the IDT may 
extend the timeline for review and notification if the participant or 
other requestor listed in Sec.  460.121(c)(2) or (3) requests the 
extension. We would change designated representative to requestor to 
account for the change we made in Sec.  460.121(c) regarding who can 
make a service delivery request, and including caregivers in situations 
where that person may not already be a designated representative. We 
believe that the participant or other requestor should be able to 
request an extension. For example, the participant may be out of town 
and the caregiver may request the IDT to take an extension in order for 
the participant to be in-person for the reassessment related to the 
request. Under proposed Sec.  460.121(i)(1)(ii) the IDT could extend 
the timeframe for review and notification when the extension is in the 
best interest of the participant due to the IDT's need to obtain 
additional information from an individual who is not directly employed 
by the PACE organization, and that information may change the IDT's 
decision to deny a service. We believe it is important that the IDT 
does not routinely take extensions when the participant or other 
requestor has not asked for an extension. We understand that when the 
IDT has to obtain information from individuals not employed directly by 
the organization, it may be difficult to get timely responses. We also 
understand that obtaining this information is beneficial for the IDT 
and the participant in order to ensure that the IDT has sufficient 
information to make a decision on whether or not a service should be 
approved. For example, if the IDT is considering a request for 
dentures, information from the participant's dentist would be relevant 
to the review, and the IDT may need to take an extension if the dentist 
does not respond within the initial 3 calendar days. However, we 
believe it is important that PACE organizations develop processes to 
ensure prompt decisions about service delivery requests, and that IDTs 
do not routinely or unnecessarily rely on extensions of the 
notification timeframe, such as when information can be obtained from 
an employee of the PACE organization. We also proposed, for extensions 
based on the need for additional information, to apply the requirements 
currently in Sec.  460.104(d)(2)(iv)(B) which require the IDT to 
document the circumstances that led to the extension and to demonstrate 
why the extension is in the participant's interest. We would add a new 
requirement at Sec.  460.121(i)(2) to require the IDT to notify the 
participant or the designated representative in writing, as 
expeditiously as the participant's condition requires but no later than 
24 hours after the IDT extends the timeframe, and to explain the 
reason(s) for the delay. We would require that the notification of the 
extension must occur within 24 hours from the time the IDT makes the 
decision to extend the timeframe because we believe it is important 
that participants or their designated representatives understand that a 
decision may be delayed and why, especially if the extension was taken 
by the IDT.
    In addition, we proposed adding requirements at Sec.  460.121(j) 
related to notifying the participant or the designated representative 
of the IDT's decision to approve, deny, or partially deny a service 
delivery request. Currently, IDTs are required to notify the 
participant or their designated representative of the decision to 
approve or deny a request under Sec.  460.104(d)(2)(iii). As we 
previously discussed, in relation to our proposals under Sec.  
460.121(c), we proposed to expand the number of individuals who can 
make a service delivery request. However, we did not change the 
individuals whom the IDT would notify of its decision to approve or 
deny the service delivery request. We believe that in all 
circumstances, the participant (or designated representative) should 
receive the notification of the IDT's decision to approve or deny the 
service delivery request. In the rare situation where a caregiver, such 
as a family member, is not the designated representative, notification 
of the service delivery request would be sent to either the participant 
or designated representative, and not the family member. As always, 
under current Sec.  460.102(f), the PACE organization remains 
responsible for establishing, implementing and maintaining documented 
internal procedures that govern the exchange of information between 
participants and their caregivers consistent with the requirements for 
confidentiality in Sec.  460.200(e). We would expect that PACE 
organizations, as a part of that documented process, have a method for 
determining when notification should go to the participant versus a 
representative (including a caregiver).
    In paragraph (j)(1) we would specify the notification requirements 
when the IDT approves a service delivery request. Specifically, we 
would require the IDT to notify the participant or the designated 
representative of that decision either orally or in writing. We 
proposed that the notification must explain any conditions for the 
approval in understandable language, including when the participant may 
expect to receive the approved service. We believe it is important that 
the IDT explain to the participant or their designated representative 
any conditions that may apply whenever the IDT approves a service 
delivery request. For example, if the IDT is approving a service 
delivery request for home care, the IDT should indicate the days and 
hours that are being approved and when the home care would start.
    For service delivery requests that can be approved in full at the 
time the request is made under Sec.  460.121(e)(2), the IDT member who 
approves the request would be responsible for ensuring that the 
notification satisfies the requirements in new Sec.  460.121(j)(1). 
Because a request must be able to be approved in full at the time the 
participant makes the request under this provision, the IDT member who

[[Page 6015]]

approves the service would be responsible for providing notification, 
and ensuring that the conditions of the approval (if any) are explained 
to the participant. While we allow for the IDT to provide approval 
notification either orally or in writing, because decisions under Sec.  
460.121(e)(2) are made in real time, and communicated to the 
participant at the time the request is made, we do not believe written 
notification would be necessary in these instances; however, a PACE 
organization may always choose to send written notification following 
the oral notification in order to memorialize any conditions of the 
approval.
    We also proposed at Sec.  460.121(j)(2) provisions similar to those 
currently set forth in Sec.  460.104(d)(2)(v), to require that PACE 
organizations must notify participants or the designated representative 
of a decision to deny or partially deny a service delivery request both 
orally and in writing. We believe that the requirement to notify the 
participant or their designated representative both orally and in 
writing should be maintained to ensure participants or their designated 
representatives receive and understand the denial. We also proposed to 
expand upon the specific requirements for what a denial notice must 
contain. At Sec.  460.121(j)(2)(i) we require that the IDT state the 
specific reasons for the denial, including an explanation of why the 
service is not necessary to improve or maintain the participant's 
overall health status. Under what we proposed, the rationale for the 
denial would have to be specific to the participant, taking the 
participant's medical, physical, emotional, and social needs into 
account, and it would include the results of any reassessment(s) 
conducted by the PACE organization. The rationale would have to be 
stated in understandable language so that the participant or designated 
representative can comprehend why the request was denied. We believe 
that it is important to continue to require that the IDT provide the 
specific reasons for a denial. However, based on our experiences 
monitoring PACE organizations, we believe we needed to propose more 
detailed requirements about what the explanation of the specific 
reason(s) for the denial should include. Providing this explanation for 
a denial would allow the participant or their designated representative 
to more fully understand why the IDT determined a requested service was 
not necessary. This would also allow a participant or designated 
representative to better understand what information they may need to 
provide if they appeal the denial.
    At Sec.  460.121(j)(2)(ii) and (iii), we would retain the 
requirements currently codified in Sec.  460.104(d)(2)(v)(A) and (B) 
that the PACE organization inform the participant or designated 
representative of the right to appeal any denied service delivery 
request as specified in Sec.  460.122; and that the PACE organization 
must also describe the process for both standard and expedited appeals, 
and the conditions for obtaining an expedited appeal. Additionally, 
with minor modifications, we would retain a requirement similar to 
current Sec.  460.104(d)(2)(v)(C): the PACE organization would be 
required to notify Medicaid participants about their right to, and the 
conditions for, continuing to receive a disputed service through the 
duration of the appeal. Medicaid participants include all participants 
that are enrolled in Medicaid only or both Medicaid and Medicare 
(dually eligible). Currently, Sec.  460.104(d)(2)(v)(C) cross-
references all of Sec.  460.122(e), but we believe that a more tailored 
reference to Sec.  460.122(e) would be preferable. Therefore, we 
proposed to cross-reference only Sec.  460.122(e)(1) at Sec.  
460.121(j)(2)(iv), because the information provided in Sec.  
460.122(e)(2) relates to the PACE organization's continued 
responsibility to continue to furnish to participants all required 
services other than the disputed service, and is not specifically about 
continuing to receive the disputed service. We do not believe we need 
to require that the IDT include information from Sec.  460.122(e)(2) in 
a service delivery request denial notification because this concept is 
widely understood and could potentially confuse participants if they 
received notification of that requirement. However, we solicited 
comments on whether it would be preferable to retain a cross-reference 
to all of Sec.  460.122(e).
    In Sec.  460.121(k) we proposed to specify the timeframe in which 
the PACE organization must provide services approved, in whole or in 
part, through the service delivery request process. We would require 
the PACE organization to provide the requested service as expeditiously 
as the participant's condition requires, taking into account the 
participant's medical, physical, emotional, and social needs. We did 
not propose a specific timeframe due to the many varying types of 
services that PACE organizations provide. However, we expect PACE 
organizations to develop processes to help them identify how quickly 
they need to provide a service based on the participant's condition. 
For example, we would generally expect that a drug used to treat a 
participant's diabetes would be provided much more quickly than we 
would expect a dental cleaning to be provided. That is because a 
treatment for diabetes may require a more immediate response, whereas a 
dental cleaning may not be as urgent. We recognize that not all 
services can be physically provided in a rapid timeframe, however, we 
do expect that the PACE organization take prompt action to ensure the 
approved service is provided as expeditiously as needed. Additionally, 
for services that can be approved under Sec.  460.121(e)(2), while we 
require that the IDT member be able to approve the request in full at 
the time the request is made, we do not require that the approved 
service be physically provided at the time the request is made. 
Instead, those approved service delivery requests must also be 
effectuated under the requirements in this section.
    The current requirement at Sec.  460.104(d)(2)(vi) states that the 
PACE organization must automatically process a participant's request as 
an appeal when the IDT fails to provide the participant with timely 
notice of the resolution of the request or does not furnish the 
services required by the revised plan of care. We would retain this 
requirement, unaltered, at Sec.  460.121(l). We continue to believe 
that this is an important safeguard for participants to ensure they 
have access to the appeals process, even when a PACE organization does 
not adhere to the processing requirements under the rules of this part.
    In paragraph (m) we would add requirements that would address 
record keeping for service delivery requests. While PACE organizations 
are currently required to document all assessments under Sec.  
460.104(f), we believe that it would be important to have a separate 
section in the new Sec.  460.121 that more specifically addresses the 
record keeping requirements, to help ensure that PACE organizations 
accurately document and track all service delivery requests and have a 
complete and accurate record of each request and how it was resolved. 
In Sec.  460.121(m) PACE organizations must establish and implement a 
process to document, track, and maintain records related to all 
processing requirements for service delivery requests. We would specify 
that PACE organizations must account for, and document, requests 
received both orally and in writing. PACE participants often call PACE 
organizations and request a service over the phone, and it is important 
for the PACE organization to have an

[[Page 6016]]

established process to accurately document and track those verbal 
requests, along with requests submitted to the organization in writing. 
Once a PACE organization receives a service delivery request, the PACE 
organization would be responsible for documenting, tracking and 
maintaining all records that relate to the processing of the service 
delivery request, including but not limited to, the IDT discussion, any 
reassessments conducted, all notification that was provided to the 
participant or designated representative, and the provision of the 
approved service, when applicable. These documentation requirements 
would apply to all service delivery requests, including service 
delivery requests that can be approved in full at the time the request 
is made per Sec.  460.121(e)(2). Additionally, as we mention in our 
discussion of Sec.  460.200(d) at section VI.E. of this final rule, we 
would require that documentation be safeguarded against alteration, and 
that written requests for services must be maintained in their original 
form. We also proposed to require that these records must be available 
to the IDT to ensure that all members remain alert to pertinent 
participant information.
    Because we proposed toe define the requirements for service 
delivery requests in the new Sec.  460.121, we also proposed to remove 
all requirements relating to service delivery requests from the current 
Sec.  460.104(d)(2). Specifically, we are removing Sec.  
460.104(d)(2)(i) through (v) and we would modify the existing language 
in Sec.  460.104(d)(2) to reiterate that the PACE organization must 
conduct an in-person reassessment if it expects to deny or partially 
deny a service delivery request. Additionally, as we discussed in Sec.  
460.121(h)(2), the IDT may conduct a reassessment as determined 
necessary for services it intends to approve. We would modify language 
in Sec.  460.104(d)(2) to direct readers to the new Sec.  460.121(h) 
for the requirements regarding conducting reassessments in response to 
service delivery requests.
    We summarize the comments received on the proposals related to 
service delivery requests and provide our responses to those comments 
below.
    Comment: All commenters that addressed this proposal were 
supportive of moving the requirements for service delivery requests 
from Sec.  460.104(d)(2) to a new section of the regulations in Sec.  
460.121. A few commenters were generally supportive of the provisions 
related to service delivery requests.
    Response: We thank the commenters for their support of the 
provisions related to service delivery requests.
    Comment: A few commenters offered suggestions related to the 
proposed use of the term ``service delivery request''. Most suggested 
that CMS use ``service determinations'' rather than ``service delivery 
request'' because it is more consistent with the objective of this 
process which is to determine whether a PACE organization should 
initiate, modify, or continue a service in response to a request from a 
participant, designated representative, or caregiver. Another commenter 
recommended using the term ``service request'' as it is consistent with 
past practice and suggested that it was easier for participants to 
understand.
    Response: We appreciate the commenters' response to our request for 
feedback and we are persuaded to make changes to the regulation text 
and incorporate both of the recommended terms to use the term ``service 
determination request'' rather than ``service delivery request'' for 
requests that are processed under proposed Sec.  460.121. We anticipate 
that such a change will help participants and PACE organizations to 
understand that this process is ultimately about the determination of 
whether to initiate, modify, or continue a service. After consideration 
of the comments received, we recognize that there are two actions that 
largely make up the proposed service delivery request process; the 
request itself and the determination made by the PACE organization. In 
order to maximize clarity regarding the process, we are revising the 
title of new section Sec.  460.121 from ``Service delivery requests'' 
to ``Service determination process.'' We believe that this modified 
title better reflects the process in its entirety and better 
encompasses the nature of these actions. We are also revising the 
remainder of the proposed regulatory text for part 460, where 
applicable, to reflect this change in terminology. In addition, we will 
use the terms ``service determination request'' and ``service 
determination process'' when referring to the requirements under Sec.  
460.121 in the remainder of this final rule.
    Comment: All commenters that addressed the proposal at Sec.  
460.121(a) were supportive of the requirement that PACE organizations 
must have formal written procedures for identifying and processing 
service determination requests.
    Response: We thank the commenters for their support of this 
provision and are finalizing this requirement as proposed.
    Comment: The majority of commenters expressed concern with the 
proposal at Sec.  460.121(b)(1)(ii) to require PACE organizations to 
process a request to ``otherwise change'' an existing service as a 
service determination request. These commenters agreed with CMS's 
position that PACE organizations should be responsible for processing 
requests to change existing services, but believed that requests to 
change an existing service were more comparable to a grievance that 
should be addressed under Sec.  460.120, rather than a service 
determination request because requests of this sort suggest that a 
participant is dissatisfied with the characteristics of the service. 
The same commenters also recommended that CMS modify the proposed 
language at Sec.  460.121(b)(1)(ii) by limiting requests to modify an 
existing service to include requests to increase, reduce, or eliminate 
a service.
    Response: We thank the commenters for their feedback and 
recommendations. We disagree that requests to otherwise change an 
existing service under Sec.  460.121(b)(1)(ii) are better classified as 
a grievance. A grievance for purposes of the PACE program, is defined 
in regulation at Sec.  460.120 as a complaint, either written or oral, 
expressing dissatisfaction with service delivery or the quality of care 
furnished. Requests that otherwise change an existing service would not 
be considered a grievance under the current definition. For example, if 
a participant is currently receiving two hours of home care a day in 
the morning, but requests to instead receive those hours in the evening 
because the participant is physically weaker in the evening and needs 
more assistance at that time, we would not consider this request a 
grievance and would expect the organization to process such a request 
as a service determination request. However, it's possible that a 
request to modify a service would be both a service determination 
request and a grievance. For example, if the participant requests their 
home care hours to be modified but also expresses dissatisfaction with 
the quality of home care being provided, we would expect the 
organization to process both a service determination request and a 
grievance. In addition, there are no regulatory timeframes for 
processing grievances under Sec.  460.120, and the participant is not 
afforded appeal rights if a grievance is not fully resolved in their 
favor. As noted in the proposed rule, we believe that defining service 
determination requests to include requests to modify an existing 
service, which includes requests to increase, reduce, eliminate, or 
otherwise change a particular service, is an important safeguard, as 
participants may believe

[[Page 6017]]

that the services they are currently receiving are not sufficient to 
meet their needs (85 FR 9125). We continue to believe that this is the 
best way to capture and provide resolution for such requests and 
therefore we are finalizing this provision as proposed. As a reminder, 
pursuant to the requirements we are finalizing at Sec.  460.121(e)(2), 
if a service determination request can be approved in full by a member 
of the IDT at the time the request is made, the full IDT does not need 
to consider it, and the PACE organization would not need to conduct a 
reassessment.
    Comment: A commenter agreed with CMS' proposal to limit service 
determination requests to requests made after the development of the 
initial care plan. Several commenters recommended that CMS expand the 
scope of requests that do not constitute a service determination 
request under proposed Sec.  460.121(b)(2), to include services 
requested during the semi-annual and change in participant status 
reassessment and care planning processes, services requested in the 
course of participants' treatment discussions with PACE IDT members, 
both during and outside the assessment and care planning processes, and 
requests for services that are not appropriate for the treatment of the 
participants' conditions. Another commenter agreed with expanding the 
scope of exclusions and suggested that requests made during a semi-
annual or unscheduled assessment would necessitate pausing the 
reassessment and care planning process currently underway and beginning 
a separate service determination request process. Another commenter 
recommended limiting requests processed as service determination 
requests to those requests that occur after the completion of a 
required initial, semi-annual, or change in status assessment and 
requests that a participant or designated representative makes when 
they are not in agreement with the care plan at the end of any 
individual encounter with an IDT member.
    Response: We agree that routine treatment discussions and 
discussions that occur during the assessment and care planning process 
are instrumental in determining the services necessary to meet a 
participant's needs. However, we also strongly believe that the 
recording, processing, and tracking of service determination requests 
is an essential beneficiary protection which ensures PACE participants' 
access to necessary care and services, and provides participants an 
avenue to appeal adverse decisions. As proposed, there is an exception 
at Sec.  460.121(b)(2) for requests to initiate, modify or continue a 
service, made prior to the development of the initial care plan. We 
continue to believe that this is appropriate and are not expanding the 
scope of this exclusion. We do not believe that it would be in a 
participant's best interest to exempt requests for services made during 
semiannual or unscheduled reassessments required under Sec. Sec.  
460.104(c) and (d)(1) or during the care planning processes described 
in Sec. Sec.  460.104(e) and 460.106(d) from the service determination 
process because the relevant regulations do not specify timeframes for 
these processes. Absent regulatory timeframes, these processes 
frequently take a long time to resolve and if a service determination 
request made as part of those processes were exempted from the proposed 
requirements for service determination requests, these requests could 
take an unacceptably long time to resolve. For the same reason, we also 
believe that requests for services made during treatment discussions 
with PACE staff, including members of the IDT and others, should be 
processed as service determination requests. Through CMS monitoring and 
oversight, we have noted cases of non-compliance with the existing 
requirements at Sec.  460.104(d)(2) governing the documentation and 
processing of participant requests, and the provision of approved 
services. We believe it is important that all requests that satisfy the 
definition of a service determination request be processed using the 
process we proposed. As stated in the proposed rule (85 FR 9126), we 
decided that requests made during the course of treatment discussions 
should constitute service determination requests in order to avoid 
confusion by requiring PACE organizations to distinguish between 
requests for services that constitute service determination requests 
and those that do not.
    CMS would like to clarify that the exception to the definition of 
``service determination request'' for requests made prior to the 
development of the initial care plan at Sec.  460.121(b)(2) includes 
requests made during the initial care planning process under Sec. Sec.  
460.104(b) and 460.106(a). We recognize that the regulation text as 
proposed, which permits this exception ``if the request is made prior 
to development of the initial care plan'', may have caused confusion 
because this could be interpreted to mean that a participant or other 
requestor could make a service determination request during the 
development of the initial plan of care but prior to the completion of 
the initial plan of care. This was not our intent. As noted in the 
proposed rule (85 FR 9125), this exception would apply any time before 
the initial care plan was finalized (and discussions amongst the IDT 
ceased), and we continue to believe that this approach would be 
beneficial to the participant and the PACE organization as it is during 
this process that the IDT and the participant or caregiver continue to 
discuss the comprehensive plan of care taking into account all aspects 
of the participant's condition as well as the participant's wishes. In 
order to avoid confusion regarding when this exception would apply, we 
are modifying the proposed regulatory text at Sec.  460.121(b)(2) in a 
manner consistent with our proposal, to emphasize our intent that this 
exception would apply to all requests for services made prior to 
completion of the development of the initial plan of care. As revised, 
the text of Sec.  460.121(b)(2) will state ``Requests to initiate, 
modify or continue a service do not constitute a service determination 
request if the request is made prior to completing the development of 
the initial plan of care''.
    Comment: Comments on CMS' proposal to allow caregivers to make 
service determination requests at Sec.  460.121(c)(3) were varied. A 
few commenters agreed with the proposal at Sec.  460.121(c)(3) to allow 
caregivers to make service determination requests, and one commenter 
noted that allowing caregivers to request services on behalf of a 
participant may increase the involvement of caregivers and distribute 
the burden of transmitting provider or prescriber recommendations to 
the IDT. However, the majority of commenters expressed concern with 
this proposal, which would expand the individuals who can make a 
service determination request to include caregivers. These commenters 
suggested that this may result in requests from a large number of 
individuals who do not have legal authority to speak on behalf of the 
participant, requests that are inconsistent with the wishes of the 
participant and designated representative, requests that may be 
motivated by financial or personal gain, and increased administrative 
burden on PACE organizations in processing these requests. These 
commenters suggested that the involvement of multiple caregivers could 
negatively impact PACE organizations' ability to respond to the wishes 
of the participant or their designated representative(s), for example 
in regard to end-of-life care decisions. These commenters noted that

[[Page 6018]]

it is important that the PACE organization and the IDT remain focused 
on the wishes of the participant, either expressed directly or through 
their designated representative. These commenters also stated that 
including caregivers, which is not a term defined in regulation text, 
among the individuals who are able to request service determinations on 
behalf of participants may have unintended, negative consequences. The 
commenters noted that although a caregiver or family member who has not 
been identified as a designated representative would not be able to 
make service determination requests under the existing regulatory 
framework, they would not be prevented from providing input related to 
a participant's care under Sec.  460.102(d)(2)(ii) and Sec.  
460.106(c)(2). With regard to requests that are personally motivated, 
the commenters suggested that this change would permit an individual 
living in a participant's home who might lose housing if the 
participant moved to a nursing home to request home modifications or 
additional in-home services to permit the participant to remain at home 
despite the fact that those requests could be inconsistent with the 
wishes of the participant or their designated representative and prior 
determinations by the IDT that the participant cannot remain safe in 
the home. These commenters strongly recommended that requests for 
service determinations could only be made by participants or their 
designated representatives, stating that the term designated 
representative has been interpreted by PACE organizations to be either 
a legal representative or a representative identified according to the 
PACE organization's policy who is authorized to act on behalf of the 
participant. Additionally, all of these commenters recommended 
modifying the plan of care requirements in Sec.  460.106(e) to replace 
the term caregiver with the term designated representative.
    Response: We thank commenters who supported this provision and 
appreciate the feedback related to permitting caregivers to make 
service determination requests. While we believe the designation of a 
representative is important, the PACE regulations do not require or 
describe any specific formal process for designating a representative, 
nor do they require PACE organizations to develop such a process. As 
discussed further, in section VI.D. of this final rule related to 
service delivery, in response to comments, CMS confirms that the IDT 
may take into consideration informal support when developing the 
participant's plan of care. Specifically, the IDT may consider care 
provided by willing and able caregivers when determining what necessary 
services will be provided by the PACE organization, either directly or 
through its contractors. Given the fact that caregivers may provide 
some care to participants, we believe that it is equally important that 
caregivers are able to advocate for services on a participant's behalf. 
It is important that these individuals have an avenue to request 
services for a participant, especially when caregivers that had 
actively been providing care are no longer willing or able to provide 
care in the manner they had been. For example, if a caregiver was 
providing overnight supervision to a participant, but is no longer 
willing or able to provide that care due to the participant's increased 
dementia, the caregiver should be able to submit a service 
determination request to the PACE organization. In regard to 
commenters' concerns relating to the potential increase in burden on 
PACE organizations related to the proposal to permit caregivers to make 
service determination requests, we believe most PACE organizations 
currently allow caregivers to make these requests. According to data 
submitted by PACE organizations for auditing purposes from 2017 through 
2019, approximately 50 percent of service determination requests were 
made by participants and 30 percent were made by caregivers or other 
family members. Because organizations are already accepting and 
processing requests from caregivers (as these data show), we do not 
anticipate that modifying the regulation in this way would result in a 
significant influx of requests for PACE organizations. In addition, the 
role of caregivers in PACE participants' lives has been recognized in 
CMS's policies regarding the PACE program since the first PACE interim 
final rule was published in 1999 (64 FR 66249), and caregivers play a 
vital role in the development and reevaluation of the plan of care as 
we noted at VI.A. of the preamble of this final rule.
    We would like to state that nothing in this provision would expand 
which individuals may be considered a caregiver, nor is it meant to 
imply that any person in the participant's life may request services. 
As we noted in the preamble to the 2006 PACE rule (71 FR 71284), a 
caregiver is a person who attends to a participant's needs and has a 
caregiving relationship with the participant. Historically, CMS has not 
included employees or contractors of the PACE organization, such as 
providers or prescribers, as ``caregivers'' under this definition, and 
instead has interpreted this term to include less formal support 
providers such as family members. This is consistent with our 
discussion at 71 FR 71284 which stated that CMS uses the term ``family 
member'' and ``caregiver'' interchangeably. Employees and contractors 
of PACE organizations enter into a contractual relationship with the 
PACE organization and generally have a predominantly financial 
incentive to provide care; we have not considered these individuals to 
be ``caregivers'' under the regulations. PACE organizations are already 
required at Sec.  460.106(e) to involve a participant's caregiver or 
caregivers for purposes of care planning. We believe that those 
individuals, who should already have a relationship with the PACE 
organization, should also be able to advocate for services outside of 
the care planning process. We believe that permitting caregivers to 
make service determination requests on behalf of a participant is an 
important safeguard: Those participants who do not have a designated 
representative may rely on a caregiver to advocate for services on 
their behalf, and caregivers are usually aware of the participant's 
situation and have valuable insight into what services would be 
beneficial. For the same reasons, we also do not agree with the 
commenters' recommendations to exclude caregivers from the care 
planning process at Sec.  460.106(e). Additionally, caregivers have 
been involved in the care planning process under PACE since the 
regulations were implemented in 1999 through the interim final rule and 
CMS has never previously received feedback indicating that this 
practice might be problematic. As we gain more experience with 
caregiver service determination requests, we may take further action as 
appropriate; for example, to further refine our position on who may be 
considered a caregiver for purposes of making service determination 
requests.
    With regard to requests that may be motivated by financial or 
personal gain, we believe that the proposed service determination 
process would prevent these types of personal conflicts of interest 
from negatively impacting participants. The IDT is responsible for 
deciding whether to approve or deny a service determination request, 
and thus functions as a gatekeeper preventing the provision of 
unnecessary services. Section 460.121(g) also requires the IDT to 
consider all relevant information when evaluating a service 
determination request, including the criteria specified

[[Page 6019]]

in Sec.  460.92(b). Under Sec.  460.92(b), the IDT must consider the 
participant's current medical, physical, emotional, and social needs, 
and current clinical practice guidelines and professional standards of 
care applicable to the particular service, when deciding to provide or 
deny a service. Additionally, if the IDT conducts a reassessment in 
response to the service determination request, the reassessment should 
take into consideration the participant's wishes and preferences for 
care, to ensure that services, if approved, are in the participant's 
best interest, in accordance with the participant's rights for 
participation in treatment decisions under Sec.  460.112(e). If a 
service determination request is made and the IDT determines, after 
reassessing the participant, that the service is not necessary based on 
all relevant information, the IDT should deny the request. These 
requirements would apply to all requests for services, including 
requests for end of life care. For example, a caregiver may request 
palliative care for the participant, but the IDT would need to consider 
all relevant information prior to approving or denying the service, 
including the participant's and designated representative's wishes, 
applicable clinical guidelines, and the participant's current medical, 
physical, emotional, and social needs. Similarly, if a caregiver 
requested the participant to remain in the home for self-serving 
purposes, and the IDT determined that the participant was not safe to 
remain in the home and did not wish to remain in the home, the IDT 
should not approve the caregiver's request.
    Therefore, we believe that the IDT plays a pivotal role in ensuring 
that services are provided only when necessary, and this in turn 
protects participants from receiving services that are not in their 
best interest, including those that may be motivated by financial or 
personal gain.
    Comment: Several commenters provided feedback related to permitting 
prescribers or other providers to make service determination requests. 
One commenter was in favor of permitting prescribers or other providers 
to make service determination requests on behalf of a participant. Most 
commenters were opposed to CMS allowing other individuals to make 
service determination requests. These commenters noted that PACE 
organizations, through the participant's primary care provider, are 
currently required to oversee the use of specialists. In situations 
when another provider or prescriber's recommendation is not 
implemented, the IDT would be required under proposed Sec.  
460.102(d)(1)(ii) to document the reasoning behind this determination 
in the participant's medical record. One commenter noted that for these 
reasons, this contemplated proposal would be duplicative of the 
proposed regulatory requirements under Sec.  460.102(d)(1)(ii), and as 
a result would be disruptive to the effective functioning of the IDT. 
Further, the commenters noted that a participant or his or her 
designated representative has the right to submit a service 
determination request if the PACE organization does not provide a 
recommended service.
    Response: We appreciate the commenters' feedback and recognize that 
by finalizing our proposals at Sec.  460.102(d)(1)(ii), we will enhance 
the consideration and documentation of recommendations made by 
specialists, and better integrate those individuals into the process of 
determining what care and services are necessary for participants. As 
discussed in section VI.C.3 of this final rule and in response to other 
comments received, we are finalizing the proposal at Sec.  
460.102(d)(1)(ii), largely as proposed. While we continue to believe 
that communication among specialists and the IDT is vital, we agree 
with commenters that these communications do not need to be handled 
through the service determination process. By requiring that the IDT 
document such recommendations in the medical record in accordance with 
Sec.  460.210(b), including proposed Sec. Sec.  460.210(b)(4) and 
(b)(5), if there is a subsequent service determination request made by 
a participant, designated representative, or a caregiver, there will be 
a record of the recommendation and why it was not provided. We expect 
that this information will provide useful perspective to the IDT and 
will allow the IDT to conduct a more meaningful review of the service 
determination request under Sec.  460.121(g). We also agree with the 
commenter that a participant, designated representative, or caregiver 
could make a service determination request for any service that was not 
provided in accordance with a recommendation from an employee or 
contractor of a PACE organization. Because of these proposals and the 
integral role the IDT plays in determining what services are necessary, 
we do not believe that it is necessary to specifically include 
prescribers or other providers among the individuals who are allowed to 
submit service determination requests at this time. Accordingly, we are 
finalizing our proposals for Sec.  460.121(c)(3) as proposed.
    Comment: Commenters were supportive of CMS's proposal to allow 
service determination requests to be made either orally or in writing.
    Response: We thank the commenters for their support of this 
provision.
    Comment: Some commenters agreed with CMS's proposal at Sec.  
460.121(d)(2) which would allow service determination requests to be 
made to any employee or contractor of the PACE organization that 
provides direct care to a participant. The majority of these commenters 
responded to CMS's request for feedback on whether this requirement 
should be limited to a smaller subset of individuals and agreed that 
CMS should limit the individuals to whom a service determination 
request could be made to a PACE organization's employees and 
contractors who provide direct participant care in the participant's 
residence, the PACE center, and while transporting participants, which 
would preclude service determination requests from being made to direct 
care providers with whom participants would generally have less 
frequent contact, for example, hospital staff or other medical 
specialists. These commenters also suggested that requests for services 
made while participants are being transported should be limited to 
routine transportation and exclude transportation in emergency 
situations. Another commenter recommended limiting request submission 
to any employee or contractor who serve in a required interdisciplinary 
team member role to eliminate any confusion for participants, their 
designated representatives, and employees and contractors of the PACE 
organization on the process of submitting service determination 
requests.
    Response: We appreciate the commenters' support for this provision. 
After consideration of the comments received, we will specify in the 
final rule that service determination requests may be made to any 
employee or contractor of the PACE organization that provides direct 
care to a participant in the participant's residence, the PACE center, 
or while transporting participants. These are the settings where 
participants have the most frequent contact with employees or 
contractors of the PACE organization, often on a daily basis. 
Therefore, we believe that these are the most logical settings where 
service determination requests are most likely to occur. It would also 
be a smaller subset of employees and contractors for the PACE 
organization to train and oversee to

[[Page 6020]]

ensure those individuals were correctly identifying service 
determination requests when they are made. We note that a participant's 
residence would include a skilled-nursing facility or long-term care 
facility and a participant would be able to make a service 
determination request to staff who provide direct care to a participant 
in those facilities. We also recognize that if we were to finalize this 
requirement as proposed it could be difficult for a PACE organization 
to operationalize because of the varied and significant roles played by 
contractors in PACE. For example, PACE organizations routinely contract 
with hospitals and it would be difficult to train all of the employees 
within the hospital system to recognize and accept service 
determination requests.
    In terms of requests made while transporting participants, we do 
not believe that it is necessary or appropriate to exclude 
transportation in emergency situations from this requirement. Under the 
requirements at Sec.  460.70(a), a PACE organization is required to 
have a written contract with each outside organization, agency, or 
individual that furnishes administrative or care-related services not 
furnished directly by the PACE organization except for emergency 
services. Because the requirement at Sec.  460.121(d)(2) would only 
apply to an employee or contractor of the PACE organization, this 
requirement would not apply to those situations where the PACE 
organization does not have a contractual relationship for emergency 
services, including emergency transportation. Additionally, based on 
our oversight and monitoring experience we have never seen 
circumstances where a service determination request was made while a 
participant was being transported for emergency purposes; therefore, we 
do not expect that this will happen with significant frequency. More 
commonly, we would expect requests to be made during routine 
transportation services, and the PACE organization would be required to 
implement processes for staff and contracted employees to identify and 
process these requests. However, to the extent that service 
determination requests are made during emergency transportation, to a 
contractor of the PACE organization, we believe it is important for 
those requests to be captured and processed accordingly.
    With regards to commenters' recommendation that requests only be 
submitted to interdisciplinary team members, we do not believe that 
this would be in the participant's best interest based on the nature of 
the care provided by a PACE organization. As discussed in the proposed 
rule, PACE organizations are required to provide care across all care 
settings and a participant may not know with whom they need to 
communicate in order to make a service determination request (85 FR 
9127). Certain participants may also see home care aides more 
frequently than members of the IDT and we believe it is appropriate to 
permit individuals to communicate service determination requests to 
home health aides rather than requiring them to make such requests to a 
member of the IDT. Because of the vulnerability of the PACE participant 
population, we believe it is important to have a robust system of 
safeguards in place so that participants have the ability to easily 
request and obtain access to those services that would improve or 
maintain their overall health status. We believe that requiring a 
participant or other requestor to go to a member of the IDT would 
create an unnecessary hurdle and could lead to confusion, if for 
example, an individual is instructed by an employee or contractor of a 
PACE organization to make requests in a different manner.
    Comment: A commenter agreed with the proposal at Sec.  
460.121(e)(1) which would require the PACE organization to bring a 
service determination request to the interdisciplinary team as 
expeditiously as the participant's health condition requires, but no 
later than 3 calendar days from the date the request is made. Other 
commenters recommended that CMS change the proposed timeframe for 
bringing a service determination request to the IDT from 3 calendar 
days to 3 business days. These commenters were fully supportive of 
CMS's perspective that there is an acceptable period of time between 
when the service determination request is made and when it is received 
by the IDT; however, noted that implementing a 3 calendar-day timeframe 
will effectively force PACE organizations to convene full IDT meetings 
on both Fridays and Mondays to consider requests for services initiated 
on Thursdays and Fridays. The commenters also noted that holidays that 
fall on Mondays may pose a challenge if requests must be brought to the 
IDT within 3 calendar days from the day the request is received. The 
majority of commenters also recommended CMS change the proposed 
timeframe for notification in paragraph (i) from 3 calendar days to 3 
business days.
    Response: We appreciate the commenters' concerns regarding the 3 
calendar day timeframes that we proposed for processing service 
determination requests; however, we disagree with the commenters and 
consider this to be a reasonable timeframe. Section 1894(b)(1)(B) of 
the Act requires PACE organizations to provide necessary covered items 
and services 24 hours per day, every day of the year. PACE 
organizations must therefore be able to process requests efficiently 
and timely, even on weekends and holidays. Under the current 
requirements at Sec.  460.104(d)(2)(iii), the IDT must generally notify 
a participant or designated representative of its decision to approve 
or deny a request within 72 hours from the date the request is 
received. As we stated in the preamble to the proposed rule (85 FR 
9129), CMS has interpreted this language as requiring that the IDT must 
notify the participant or their designated representative within 3 
calendar days of receiving a request, based on the wording of the 
requirement which states ``72 hours from the date.'' We stated that we 
believe this is a reasonable timeframe for the IDT to conduct these 
reviews, and therefore proposed a similar timeframe in the proposed 
rule. We believe that requiring the IDT to notify the participant or 
their designated representative of its decision as expeditiously as the 
participant's health condition requires, but no later than 3 calendar 
days at Sec.  460.121(i) provides the IDT sufficient time to meet and 
make a decision regarding a participant's care, taking into account 
weekends and holidays, and are finalizing this requirement as proposed. 
Additionally, we created a second timeframe at Sec.  460.121(e) to 
ensure that PACE organizations bring requests to the IDT for review 
within a reasonable period of time. Specifically, we proposed to 
require that requests must be brought to the interdisciplinary team as 
expeditiously as the participant's condition requires but no later than 
3 calendar days from the time the request is made, and we believe this 
timeframe is appropriate for purposes of Sec.  460.121(e). We believe 
that this timeframe strikes an appropriate balance between providing 
sufficient time for PACE organization staff to transmit the request to 
the IDT, while ensuring timely resolution of participant requests. We 
are therefore finalizing this timeframe as proposed.
    Comment: The majority of commenters requested that if CMS finalizes 
the proposed requirement at Sec.  460.121(d)(2) which would allow for 
participants to make service determination requests to individuals 
other than IDT members, that CMS also

[[Page 6021]]

allow for service determination requests made to non-IDT members to be 
brought to the appropriate IDT member and that the IDT member have the 
opportunity to approve the request subject to the streamlined 
requirements set forth under Sec.  460.121(e)(2). The commenters noted 
that by adopting this approach, the need for a full-IDT review as 
required under Sec.  460.121(f) would not be based on who received the 
request but the nature of the request. The commenters stated that they 
would not want the additional step of allowing a non-IDT member to 
bring a service determination request to the appropriate IDT member to 
lengthen the service determination process overall and recommended that 
service determination requests be brought to the appropriate IDT member 
in time for him or her to consider the request and, if approved, notify 
the participant or his or her designated representative of the approval 
within the 3 calendar timeframe proposed at Sec.  460.121(e)(1). The 
commenters stated that this approach would be consistent with CMS' 
objectives for Sec.  460.121(e)(2), as noted in the proposed rule, 
``the participant would be better served by the IDT member quickly 
communicating the approval, and working to provide the requested 
service as expeditiously as the participant's condition requires.'' (85 
FR 9128). The commenters further suggested that consistent with CMS' 
observations in regard to proposed Sec.  460.121(e)(2), the recommended 
approach would also reduce the current burden on PACE organizations.
    Response: The exception that we proposed at Sec.  460.121(e)(2) 
provided that if a member of the IDT receives a service determination 
request and is able to approve the request in full at the time the 
request is made, the PACE organization would not be required to follow 
certain processing requirements. This provision was intended to allow 
for immediate approval of a service determination request during a 
conversation between a participant or their designated representative 
or caregiver and a member of the IDT. Allowing an employee or 
contractor of a PACE organization who is not an IDT member to 
communicate the request to the appropriate IDT member for approval 
would require the non-IDT employee or contractor to identify the 
appropriate member of the IDT that should receive the request, which 
could take several days and would take away from the immediacy of the 
approval. We intended to create an exception to expedite the process 
for approval of service determination requests, and reduce unnecessary 
burden on the PACE organization, given the fact that PACE 
organizations, as direct care providers, routinely interact with 
participants and these interactions often include treatment discussions 
that may result in a service determination request by the participant. 
We do not anticipate that finalizing this requirement as proposed would 
create a large burden on PACE organizations because, if a member of the 
interdisciplinary team would have been able to approve a particular 
service determination request in full at the time the request was made, 
we presume that in the event the same service determination request was 
brought to the full IDT, the full IDT would also have the ability to 
quickly approve the request at that time, without having to conduct a 
reassessment. Based on these considerations, we are not modifying this 
requirement and are finalizing this provision as proposed.
    Comment: Commenters were supportive of the proposal at Sec.  
460.121(e)(2), which would allow a member of the IDT to approve a 
service determination request in full at the time the request is made 
and not be required to follow certain processing requirements. 
Specifically, this would exclude the requirements at proposed Sec.  
460.121(f) through (i), (j)(2), and (l) which include review by the 
full interdisciplinary team, reassessment in response to a service 
determination request, and notification timeframes.
    Response: We thank the commenters for their support of this 
provision.
    Comment: The majority of commenters agreed with the proposed 
provisions at Sec.  460.121(g) which set forth the specific information 
the IDT must consider when evaluating a service determination request.
    Response: We thank the commenters for their support of this 
provision.
    Comment: Several commenters were also in favor of the proposal at 
Sec.  460.121(h), which would require that if the IDT expects to deny 
or partially deny a service determination request, the appropriate 
members of the IDT, as identified by the IDT, must conduct an in-person 
reassessment before the IDT makes a final decision, and that the team 
members performing the assessment must evaluate whether the requested 
service is necessary to meet the participant's needs. These commenters 
requested clarification on whether assessments can be completed in 
advance of the IDT's receipt of the request, so long as the assessment 
is completed in response to the request.
    Response: We thank the commenters for their support of this 
provision. With respect to assessments being completed in advance of 
the request being brought to the full IDT, we wish to clarify that this 
would be acceptable provided the regulatory requirements, including 
Sec.  460.121(h), are satisfied. However, we would not expect this to 
occur often. As required under Sec.  460.121(h)(1), if the IDT expects 
to deny or partially deny a request, the appropriate member of the IDT, 
as identified by the IDT, must conduct an in-person reassessment before 
the IDT makes a final decision. Given the 3 calendar day timeframe for 
a PACE organization to bring a service determination request to the IDT 
under Sec.  460.121(e)(1), there may be situations when one or more 
members of the IDT are able to conduct a reassessment in response to a 
service determination request in order to gather the relevant 
information needed for discussion and review by the full IDT within 
that timeframe. However, there is a risk that the appropriate member of 
the IDT, as identified by the IDT, may not participate in a 
reassessment if the reassessment is completed prior to the IDT 
convening. This fact notwithstanding, if the reassessment was completed 
in response to a service determination request, and when the full IDT 
meets, the IDT determines that the assessment was conducted by the 
appropriate IDT members, this would be permitted.
    Comment: Several commenters expressed concern that the proposed 
criteria that must be met for the IDT to extend the 3 calendar day 
timeframe for review and notification of a service determination 
request at Sec.  460.121(i)(1) is overly restrictive. The commenters 
also recommended revising the proposed requirements under Sec.  
460.121(i)(1) to allow for extensions when a participant is not 
available for an assessment or when an IDT member is unexpectedly not 
available. The commenters explained that in addition to situations in 
which the requestor may request an extension of the 3-day timeframe, it 
is also possible that the participant may be unavailable for a 
reassessment that is required for the IDT to make its determination. 
These commenters suggested, for example that the participant may be out 
of town or otherwise unavailable for reasons beyond the PACE 
organization's control and rather than requiring the requestor to 
request an extension in these situations, the IDT should, on its own, 
be able to notify the requestor of the need for an extension beyond 3 
days. The commenters also recommended that CMS not limit the extension 
timeframe at Sec.  460.121(i)(1) to 5 days when the

[[Page 6022]]

participant or their designated representative requests an extension 
for a longer period of time. Further, the commenters stated that while 
they agree it is important that the IDT does not routinely take 
extensions when the participant or other requestor has not requested 
one or the participant is unavailable for a required reassessment, the 
proposed language in Sec.  460.121(i)(2) does not take into account 
circumstances that necessitate such extensions. Specifically, it is 
possible that the IDT member identified by the IDT as needing to 
perform a reassessment or who is critical to the IDT's discussion of 
the service determination request is unexpectedly not available. In 
situations when the PACE organization can demonstrate the importance of 
this reassessment and/or the IDT member's participation in the IDT 
discussion and the potential for it to change the IDT's decision to 
deny a service, and that the circumstances surrounding the IDT member's 
absence could not be anticipated, the commenters argue that an 
extension of up to 5 business days is appropriate. They expressed their 
belief that extending the timeframe for notification of the service 
determination request would be preferable to exceeding the standard 3-
day timeframe and then having to automatically process the service 
determination request as an appeal which would further delay the 
requestor's receipt of a response to his/her request.
    Response: We appreciate the commenters' concerns and agree that 
there may be situations that arise during the course of the service 
determination process that would hinder a PACE organization's ability 
to make its decision and notify the participant or their designated 
representative of its decision within the required timeframes under 
Sec.  460.121(i). In the proposed rule (85 FR 9129), we accounted for 
situations where the participant or other requestor should be able to 
request an extension under Sec.  460.121(i)(1)(i) and used as an 
example circumstances where the participant is out of town and stated 
that the caregiver could request the IDT take an extension in order for 
the participant to be in-person for the reassessment required for the 
request. We would encourage the IDT to discuss service determination 
requests with the participant where the IDT needs to perform a 
reassessment and the participant would be out of town. Because 
decisions related to service determination requests must be made as 
expeditiously as the participant's condition requires, we do not 
believe that it would be appropriate to allow for any additional 
extensions beyond the proposed 5 calendar day timeframe. If the IDT is 
unable to conduct a reassessment within that timeframe, then we would 
expect that the IDT would issue a denial and subsequent appeal rights. 
We reiterate in this final rule that it is important that the IDT does 
not routinely take extensions when the participant or other requestor 
has not solicited it because of the frailty of the PACE population. We 
also note that that any extension must be documented in accordance with 
the recordkeeping requirements at Sec.  460.121(m).
    With respect to the recommendation that CMS allow for extensions 
when an IDT member is unexpectedly not available, we do not believe 
that it would be appropriate to view this as justifying an extension. 
The requirements at Sec.  460.121(i) specify that the IDT must make its 
decision and provide notification of that decision as expeditiously as 
the participant's condition requires but no later than 3 calendar days 
after the date the IDT receives the request and we do not believe that 
it would be appropriate for an extension to be taken for a reason 
unrelated to the participant's availability or condition. It is the 
responsibility of the PACE organization to ensure that there is 
sufficient staff coverage to meet these requirements.
    Comment: The majority of commenters agreed with the proposed 
provisions at Sec.  460.121(i)(2), which would require an IDT to notify 
the participant or their designated representative in writing as 
expeditiously as the participant's condition requires but no later than 
24 hours after the IDT decides to extend the timeframe under Sec.  
460.121(i)(1), and explain the reasons for the delay. However, these 
commenters also recommended modifying the requirement to allow PACE 
organizations to notify the participant or designated representative of 
the extension either orally or in writing. The commenters suggested 
that regardless of whether the notification is oral or in writing it 
would include an explanation of the reason(s) for the delay and would 
be issued no later than 24 hours after the IDT decides to extend the 
timeframe. They also noted that allowing oral notification would 
facilitate the requestor's receipt of notice of the extension, because 
if CMS required PACE organizations to issue written notification within 
24 hours after the IDT decides to extend the timeframe, it would 
require at least a day or two for such written notification to reach 
the requestor. Additionally, regardless of whether notification was 
provided orally or in writing, commenters noted the PACE organization 
would have to maintain documentation of the notification in accordance 
with the recordkeeping requirements at Sec.  460.121(m).
    Response: We appreciate the commenters' suggestions to modify the 
proposed regulatory text at Sec.  460.121(i)(2) to allow PACE 
organizations to provide notification of the decision by the IDT to 
extend the regulatory timeframe either orally or in writing. We believe 
that providing written notification of the rationale for an extension 
is important in order to ensure the participant receives a full 
explanation. Additionally, a written explanation of the extension will 
allow the participant to share that information with family members or 
caregivers if desired, for instance if the participant needs assistance 
with understanding the rationale. Therefore, we are not persuaded to 
modify the regulation at this time to allow PACE organizations to 
notify participants orally instead of in writing, and are finalizing 
the requirements under Sec.  460.121(i)(2) as proposed. We will 
consider building additional flexibility into the regulation through 
future rulemaking. Additionally, while we are not modifying the 
regulation to allow for oral notification and PACE organizations will 
be required to provide written notification when the IDT extends the 
timeframe for processing a service determination request, nothing would 
preclude the organization from choosing to call a participant in 
addition to sending a written notification. This would alleviate any 
concerns the organization might have about providing notice to the 
participant in as timely a manner as possible.
    Comment: The majority of commenters agreed with CMS's proposal to 
require PACE organizations to provide the participant or designated 
representative with oral or written notice of the IDT's decision to 
approve a service determination request under Sec.  460.121(j)(1). 
However, these commenters also requested clarification regarding CMS' 
expectations with respect to the requirement that such notice must 
explain the conditions of the approval.
    Response: We appreciate the commenters' support. The explanation of 
the conditions of an approval that the IDT is required to provide to 
the participant or their designated representative under Sec.  
460.121(j)(1) should include any parameters that may be applicable to 
the approval. We wish

[[Page 6023]]

to clarify that PACE organizations would only be required to explain 
the conditions of the approval if the request is approved in full, but 
there are conditions applicable to the approval. As we discussed in the 
proposed rule, requests are not considered approved in full unless the 
IDT member can approve exactly what is requested. (84 FR 9127). In 
these situations, if there are conditions on a particular service that 
are not inconsistent with a participant's request but that the IDT 
still needs to make the participant aware of, we would expect that they 
notify the participant of the conditions of the approval that apply. 
These conditions may include any additional information about duration 
or timing, or a limitation on the service that needs to be conveyed to 
the participant. For example, if a participant makes a general service 
determination request for physical therapy (and does not request a 
specific duration), and the PACE organization approves physical 
therapy, but determines that the participant only needs physical 
therapy 3 times a week for 6 weeks, the required notice must include 
the specific duration and frequency of the approved service. Another 
example would include circumstances where the PACE organization 
approves a visit to a specialist, but requires the participant to go to 
a particular contracted specialist, the required notice must include 
this information. If the request cannot be approved in full as 
requested, then the decision is a partial denial and the specific 
reason for the denial and appeal rights must be provided both orally 
and in writing pursuant to Sec.  460.121(j)(2). For example, if the 
participant makes a service determination request for 8 hours of home 
care, split over 3 visits each week, but the PACE organization approves 
a total of 6 hours of home care, split between 2 visits each week, this 
would be considered a partial denial and notification would have to be 
provided pursuant to Sec.  460.121(j)(2). Another example would be if a 
participant requested physical therapy for six weeks, but the PACE 
organization only approved physical therapy for four weeks. Because the 
PACE organization did not approve exactly what the participant 
requested, and only approved four weeks instead of six, that decision 
would be considered partially denied.
    Comment: The majority of commenters agreed with CMS' proposed 
provisions in Sec.  460.121(j)(2), which require PACE organizations to 
provide the participant or designated representative with oral and 
written notice of the IDT's decision to deny or partially deny a 
request. We proposed that this notification must include the specific 
reason(s) for the denial, including why the service is not necessary to 
maintain or improve the participant's overall health status, taking 
into account the participant's medical, physical, emotional, and social 
needs, and the results of the reassessment(s) in understandable 
language, inform the participant or their designated representative of 
his or her right to appeal the decision under Sec.  460.122, describe 
the standard and expedited appeals processes, and inform a Medicaid 
participant of his or her right to continue receiving disputed services 
during the appeals process and the conditions for continuing to receive 
disputed services. One commenter recommended that CMS provide PACE 
organizations with template language for denial notifications.
    Response: We thank the commenters for their support of this 
provision. Historically we have not been prescriptive about PACE 
organizations' appeals processes, and it remains up to the PACE 
organization to develop a formal written appeals process with specified 
timeframes for response to address noncoverage or nonpayment for 
services under Sec.  460.122(a), subject to the minimum requirements 
specified in Sec.  460.122(c). Accordingly, we believe that each PACE 
organization is in the best position to create a notice that is 
tailored directly to its internal processes, in accordance with the 
requirements at Sec.  460.122(j). We appreciate the commenters' 
recommendation and we may consider providing template language for 
denial notifications in the future, as appropriate in light of the 
needs of the PACE program.
    Comment: In response to CMS' request for feedback on whether it 
would be preferable for Sec.  460.121(j)(2)(iv) to cross-reference 
Sec.  460.122(e) or Sec.  460.122(e)(1), the majority of commenters 
agreed that CMS should cross-reference Sec.  460.122(e)(1). Several 
commenters requested confirmation that the provisions in Sec.  
460.121(j)(2)(iv) would not prohibit a PACE organization from informing 
all participants, regardless of Medicaid eligibility, of their ability 
to continue receiving disputed services during the appeals process 
until issuance of the final determination.
    Response: We appreciate the commenters' responses to our request 
for feedback and are finalizing the cross reference at Sec.  
460.121(j)(2)(iv) as proposed. At this time the requirement at Sec.  
460.121(j)(2)(iv) applies only to Medicaid eligible participants, 
including those participants that are dually eligible for Medicare and 
Medicaid, and we are not expanding this to include Medicare-only 
participants in this rule. PACE organizations are not required under 
Sec.  460.122(e) to continue to furnish the service(s) under dispute 
during the appeals process for Medicare-only participants. The 
requirements under Sec.  460.122(e)(1) specify that for a Medicaid 
participant, the PACE organization must continue to furnish the 
disputed services until issuance of the final determination if the PACE 
organization is proposing to terminate or reduce services currently 
being furnished or if the participant requests continuation with the 
understanding that he or she may be liable for the costs of the 
contested services if the determination is not made in his or her 
favor.
    Comment: Commenters agreed with CMS' proposal at Sec.  460.121(k) 
regarding the effectuation requirements when the IDT approves a service 
determination request, in whole or in part. As proposed, Sec.  
460.121(k) would require PACE organizations to provide approved 
services as expeditiously as the participant's condition requires, 
taking into account the participant's medical, physical, emotional, and 
social needs. This provision would also require the IDT to explain when 
the participant may expect to receive the service in accordance with 
Sec.  460.121(j)(1). Commenters also agreed with CMS's proposals under 
Sec.  460.121(l) relating to the effect of failure by the IDT to meet 
the processing timeframes. CMS proposed to require the PACE 
organization to automatically process an appeal in accordance with 
Sec.  460.122 if the IDT fails to provide the participant with timely 
notice of the resolution of the request or does not furnish the 
services required by the revised plan of care, as this failure would 
constitute an adverse decision.
    Response: We thank the commenters for their support of these 
provisions and are finalizing as proposed.
    Comment: Commenters were also supportive of the proposed 
recordkeeping requirements at Sec.  460.121(m), which would require 
PACE organizations to establish and implement a process to document, 
track, and maintain records related to all processing requirements for 
service determination requests received both orally and in writing, and 
ensure those records would be available to the IDT to ensure that all 
members remain alert to pertinent participant information.

[[Page 6024]]

    Response: We thank the commenters for their support of this 
provision and are finalizing as proposed.
    After consideration of the comments received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing the changes at Sec. Sec.  460.121(e), (g), (h), (i), (j), 
(k), (l), and (m) as proposed. We are finalizing the remaining 
provisions at Sec.  460.121 with several modifications. First, we have 
modified the terminology used at Sec.  460.121 by changing the title to 
refer to ``service determination process'' and replacing the term 
``service delivery request'' with ``service determination request'' 
throughout. We have also made corresponding changes throughout the 
proposed regulatory text at part 460. We are amending proposed Sec.  
460.121(a) by changing the word ``section'' to ``Part'' in order to 
state that PACE organizations' written procedures for identifying and 
processing service determination requests must be developed in 
accordance with the requirements in part 460 rather than Sec.  460.121. 
This change will better reflect the content of our proposals under 
Sec.  460.121, which specifically reference other applicable 
requirements in Part 460 of Title 42 and will not affect the meaning of 
the regulation as proposed or described in the final rule. We have made 
modifications to 460.121(b)(2) by changing the language from ``made 
prior to the development of the initial care plan'' to ``prior to 
completing the development of the initial plan of care'' to reflect our 
intent, as expressed in the preamble to the proposed rule, that this 
exception applies until the initial plan of care is complete. We are 
also amending proposed Sec.  460.121(d)(2) to require that individuals 
may make service determination requests to any employee or contractor 
of the PACE organization that provides direct care to a participant in 
the participant's residence, the PACE center, or while transporting 
participants, in response to comments received about whether we should 
adopt an approach that permits service determination requests to be 
made only in those settings. In addition, at Sec.  460.121(f) we 
proposed to use a question mark at the end of the paragraph title 
instead of a period. This was an oversight and therefore, we have 
modified the regulatory text to reflect this change. This change will 
not have a substantive impact on the effect of the regulation. Finally, 
we have made minor grammatical corrections to Sec.  460.121(b)(1), (c), 
and (f) which will not change the intended meaning of the regulation as 
proposed or described in this final rule. We are finalizing the changes 
at Sec.  460.104(d)(2) as proposed, except in regard to the use of the 
term ``service determination request.''

B. Appeals Requirements Under PACE (Sec. Sec.  460.122 and 460.124)

    As discussed previously, sections 1894(b)(2)(B) and 1934(b)(2)(B) 
of the Act require PACE organizations to have in effect written 
safeguards of the rights of enrolled participants, including procedures 
for grievances and appeals. In the preamble to Medicare and Medicaid 
Programs; Programs of All-Inclusive Care for the Elderly (PACE) interim 
final rule which was published in the Federal Register on November 24, 
1999 (64 FR 66234) (hereinafter referred to as the 1999 PACE interim 
final rule), CMS explained that we considered the appeals requirements 
under what is now MA when creating the appeals requirements for PACE 
(see 64 FR 66257 and 66258). CMS established the requirements for PACE 
organizations' appeals processes in Sec. Sec.  460.122 (PACE 
organization's appeals process) and 460.124 (Additional appeal rights 
under Medicare or Medicaid). Over time, PACE organizations have 
requested that CMS explain certain aspects of the appeals processes 
described in Sec. Sec.  460.122 and 460.124. Therefore, we proposed 
certain changes to Sec. Sec.  460.122 and 460.124 that would provide 
additional detail about the appeals process and help ensure consistency 
in the administration of the appeals process among PACE organizations. 
We also proposed a few other changes to increase beneficiary awareness 
of and access to the appeals process, and to align with other changes 
in this rule. The term ``appeal'' is currently defined in Sec.  460.122 
as a participant's action taken with respect to the PACE organization's 
noncoverage of, or nonpayment for, a service including denials, 
reductions, or termination of services. We would add a sentence after 
the definition to require that PACE organizations must process all 
requests to initiate, modify or continue a service as a service 
delivery request before processing an appeal under Sec.  460.122. As we 
discussed in section VI.A. of this final rule, we have seen through 
audits that some PACE organizations will process an appeal instead of 
processing a service delivery request when a participant makes a 
request to continue receiving a service that the PACE organization is 
discontinuing or reducing. We would add a sentence to this introductory 
paragraph in order to affirmatively require that all requests that 
satisfy the definition of a service delivery request under Sec.  
460.121(b) must first be processed as such before a PACE organization 
may process an appeal. Section 460.122(b) currently provides that upon 
enrollment, at least annually thereafter, and whenever the IDT denies a 
request for services or payment, the PACE organization must give a 
participant written information on the appeals process. Consistent with 
the changes to existing Sec.  460.104(d)(2) and new Sec.  460.121, 
which are discussed in section VI.A. of this final rule, we would 
modify Sec.  460.122(b) to specify that PACE organizations must provide 
participants with written information on the appeals process at 
enrollment, at least annually thereafter, and whenever the IDT denies a 
service delivery request or other request for services or payment. By 
proposing this change, CMS was seeking to ensure that participants 
consistently and timely receive information about their appeal rights, 
including when PACE organizations deny their service delivery requests.
    Section 460.122(c) provides requirements for the minimum written 
procedures that PACE organizations must establish for their appeals 
process. We have heard that these requirements have created confusion 
among PACE organizations, which has led to inconsistent implementation 
among PACE organizations and a lack of participant awareness of and 
participation in the appeals process. As a result, we proposed a number 
of changes to decrease confusion and increase beneficiary awareness of 
and access to the appeals process.
    We proposed two modifications at paragraph (c)(2). First, we would 
add a participant's designated representative as someone who has the 
right to appeal on the participant's behalf. We believe that this is an 
important participant safeguard because it allows for assistance in 
navigating the appeals process. Additionally, in developing procedures 
for how a participant or a participant's designated representative 
files an appeal, PACE organizations would be required to include 
procedures for receiving oral and written appeal requests. Because of 
the comprehensive nature of the care PACE organizations provide, 
participants are likely to have more verbal interactions with staff of 
the PACE organization and may express their desire to appeal a 
decision, but may be unsure or confused as to how. We believe that by 
requiring PACE organizations to accept appeal requests made both orally 
and in writing, we would create an important safeguard for the 
participant population enrolled in the PACE program. By allowing both 
oral and written requests for appeals, this proposal would enhance 
participant access to the

[[Page 6025]]

appeals process, and to services covered under the PACE benefit.
    Second, in response to questions received from PACE organizations, 
we would add language in paragraph (c)(4) to specify the qualifications 
required of an appropriate third party reviewer or members of a review 
committee. Specifically, we would require PACE organizations to ensure 
appeals are reviewed by an appropriate reviewer or committee. This 
includes separating the requirements that an appropriate third party 
reviewer and the members of a review committee must be ``independent'' 
and ``appropriately credentialed'' to emphasize the fact that an 
appropriate third party reviewer or member of a review committee must 
be both independent and appropriately credentialed. We discuss the use 
of a review committee in the preamble to the 2006 PACE final rule (see 
71 FR 71302) and PACE organizations currently utilize review committees 
in their review processes; therefore, we would incorporate review 
committees in regulation at this time and require the members of review 
committees to satisfy the same requirements as appropriate third party 
reviewers. Employees or contractors of a PACE organization may 
participate in review committees as long as they meet the requirements 
set forth in Sec.  460.122(c)(4). Consistent with the current 
requirements at Sec.  460.122(c)(4), we would specify that in order to 
be an appropriate third party reviewer or member of a review committee, 
an individual must be an impartial third party who was not involved in 
the original action and does not have a stake in the outcome of the 
appeal. We also proposed to add language that more clearly defines an 
appropriately credentialed reviewer. As we discussed in the preamble to 
the 2006 final rule, the appropriate third party reviewer must be 
someone with expertise in the appropriate field. Thus it would not be 
appropriate for a social worker to review an appeal related to a 
physical therapy denial; nor would it be appropriate for a gynecologist 
to review a denial of services relating to coronary surgery (71 FR 
71302). Therefore, we would modify the language in paragraph (c)(4) to 
specify that an appropriate third party reviewer is one who is 
credentialed in a field or discipline related to the appeal. We do not 
believe that these proposals would affect the way PACE organizations 
currently choose their third party reviewers since the existing 
regulation at Sec.  460.122(c)(4) requires the appointment of an 
appropriately credentialed and impartial third party that was not 
involved in the original action and who does not have a stake in the 
outcome of the appeal to review the participant's appeal. By proposing 
amendments to expressly state that the same requirements also apply to 
the members of a review committee, we believe that as proposed this 
would give PACE organizations more clarity and flexibility to utilize 
resources within the organization as well as contracted employees.
    PACE organizations have expressed confusion about the third party 
review process, and we are aware of inconsistent decisions made by 
third party reviewers, such as inconsistent decisions at different PACE 
organizations. In order to reduce confusion, create a more consistent 
application of Medicare and Medicaid coverage requirements under PACE, 
and increase consistency for participants, we proposed additional 
modifications to the requirements under Sec.  460.122(c). Specifically, 
we added a new paragraph (c)(5) that would require PACE organizations 
to take specific steps to ensure their third party reviewers understand 
the PACE benefit package and the coverage requirements under the PACE 
program, and how to review requests in a manner consistent with both. 
As noted in the preamble to the 2006 PACE final rule (71 FR 71302), 
PACE organizations should ensure that credentialed and impartial third 
party reviewers are trained to make decisions in a manner similar to 
the determinations under section 1862(a)(1)(A) of the Act. Such 
determinations would be based on the participant's medical needs and 
not on other reasons such as the cost of the disputed care, who is 
paying the third party reviewer's salary or fee, an individual's 
reputation, or other factors. Therefore, we proposed, in new paragraph 
(c)(5), to require PACE organizations to provide written or electronic 
materials to an appropriate third party reviewer(s) that, at a minimum, 
explain that services must be provided in a manner consistent with the 
requirements in Sec. Sec.  460.92 and 460.98, the need to make 
decisions in a manner consistent with determinations made under section 
1862(a)(1)(A) of the Act, and the requirements in Sec.  460.90(a) that 
specify that many of the limitations on the provision of services under 
Medicare or Medicaid do not apply in PACE.
    The requirements for providing appeal notifications at Sec.  
460.122(d) currently provide that a PACE organization must give all 
parties involved in the appeal (1) appropriate written notification and 
(2) a reasonable opportunity to present evidence related to the 
dispute, in person, as well as in writing. However, PACE organizations 
have expressed that this section of the regulation is confusing because 
it discusses both the notification requirements and the participant's 
opportunity to submit evidence during an appeal. To reduce confusion, 
we would separate these requirements. Accordingly, we would redesignate 
paragraph (g) as (h) and also change the title of paragraph (h) to 
``Actions following a favorable decision.'' This redesignation allows 
for the addition of new paragraph (g) that sets forth notification 
requirements. We would modify paragraph (d) to address the existing 
requirement that the PACE organization must give all parties involved 
in the appeal a reasonable opportunity to present evidence related to 
the dispute in person as well as in writing. At new paragraph (g), we 
proposed to revise the notice requirements for appeals to more closely 
align with the notice requirements for service delivery requests at 
Sec.  460.121(j) by specifying the content of the notice in order to 
ensure consistency and minimize confusion for PACE organizations and 
participants. PACE organizations would be required to give all parties 
involved in the appeal (for example participants or their designated 
representatives) appropriate written notice of all appeal decisions. In 
the case of appeal decisions that are favorable to the participant, the 
PACE organization would be required to explain any conditions on the 
approval in understandable language. For partially or fully adverse 
decisions, the PACE organization would be required to state the 
specific reason(s) for the denial, explain the reason(s) why the 
service would not improve or maintain the participant's overall health 
status, inform the participant of his or her right to appeal the 
decision, and describe the additional appeal rights under Sec.  
460.124. Conditions of approval may include, but are not limited to, 
the duration of the approval, limitations associated with an approval 
such as dosage or strength of a drug, or any coverage rules that may 
apply. We also proposed to revise and move the current requirements at 
paragraph (h) into new paragraph (g)(2)(ii). These requirements specify 
that for determinations that are wholly or partially adverse to a 
participant, at the same time the decision is made, the PACE 
organization must notify CMS, the State administering agency, and the 
participant. Because this paragraph includes additional notification 
requirements that PACE organizations

[[Page 6026]]

must follow after a decision is made to deny an appeal, we believe that 
this belongs in Sec.  460.122(g)(2) for notice of adverse decisions. We 
would revise this requirement to use terminology consistent with our 
other amendments to Sec.  460.122, specifically, to refer to 
``partially or fully adverse'' decisions and to refer to an appeal 
decision rather than to a determination for consistency with Sec.  
460.122(g)(2)(i) and other sections of this regulation.
    We proposed a few minor changes to align with other changes in this 
rule. First, we would change the reference to Sec.  460.104(d)(2)(iv) 
in Sec.  460.122(c)(1) to reference the service delivery request 
requirements in Sec.  460.121(i) and (m). The current citation 
references the extension requirements for unscheduled reassessments; 
however, we believe that this reference should have been to the general 
timeframes for processing service delivery requests. We would 
redesignate the current paragraphs (c)(5) and (6) as (c)(6) and (7) in 
Sec.  460.122 to allow for the addition of a new paragraph (c)(5), as 
discussed earlier in this section.
    Lastly, we added language to Sec.  460.124 that delineates the 
additional appeal rights that PACE participants are entitled to receive 
under Medicare or Medicaid and add processing requirements for the PACE 
organization. In response to comments CMS received on the 1999 PACE 
interim final rule, CMS discussed stakeholder concerns about the PACE 
appeals process in the preamble to the 2006 PACE final rule and 
reiterated the intended process in the preamble. (See 71 FR 71303 and 
71304.) Specifically, CMS stated in the preamble to the 2006 PACE final 
rule that Medicare beneficiaries have access to the Medicare external 
appeals route through the IRE that contracts with CMS to resolve MA 
appeals, while Medicaid eligible participants have access to the State 
Fair Hearing (SFH) process (see 71 FR 71303). However, despite this 
clarification, CMS's audits have revealed that PACE organizations 
continue to misinterpret the requirements under Sec.  460.124 relating 
to participants' additional appeal rights under Medicare or Medicaid. 
To address this issue, we proposed several changes to Sec.  460.124. 
First, we would add new paragraphs (a) and (b) at Sec.  460.124. In 
Sec.  460.124(a) we would specify that Medicare participants have the 
right to a reconsideration by an independent review entity (IRE). We 
recognize that there are differences in the terminology used in PACE 
versus MA and therefore have to add similar language at new Sec.  
460.124(a)(1), (2), and (3) to establish in regulation the requirements 
for how an appeal may be made to the independent, outside entity, the 
timeframe in which the independent outside entity must conduct the 
review, and who are the parties to the appeal. In Sec.  460.124(a) 
introductory text and (a)(1) we have intended to parallel the 
requirements at Sec.  422.592(a) with minor differences. Under MA there 
is automatic escalation to the independent review entity at this level 
of appeal if the organization upholds its adverse decision, in whole or 
in part. However, in PACE, appeals are not automatically escalated 
because most PACE participants are dually eligible for Medicare and 
Medicaid benefits and these participants may choose to utilize the 
Medicaid or Medicare route for independent review. For these dually 
eligible individuals, it may be more appropriate to pursue an appeal 
through the Medicaid path rather than the Medicare path. The provisions 
relating to automatic-escalation in MA ensure that the beneficiary 
receives a review by an independent reviewer; however, this protection 
is not necessary in PACE as the PACE participant has already received 
an independent review on the appeal during the internal appeal 
processed in accordance with Sec.  460.122. Therefore, we proposed at 
Sec.  460.122(a)(1) to specify that a written request for a 
reconsideration must be filed with the independent review entity within 
60 calendar days of the decision by the third party reviewer. We did 
not specify who must file the request because we discuss at Sec.  
460.124 that the PACE organization must assist the participant in 
choosing which appeal rights to pursue (that is, Medicaid SFH or 
Medicare IRE) and as such, we believe that the PACE organization is 
also responsible for ensuring that the request is filed with the 
appropriate external entity. However, a participant always maintains 
the right to file a request without assistance from the PACE 
organization. At Sec.  460.124(a)(2) we would add a requirement that 
the independent review entity must conduct the review as expeditiously 
as the participant's health condition requires but must not exceed the 
deadlines specified in the contract. The independent review entity is 
currently operating under these timeframes, consistent with the 
requirements at Sec.  422.592(b), and participants are currently 
utilizing the independent review entity to exercise their external 
appeal right, consistent with CMS's historical interpretation that 
these requirements are applicable to the PACE program. We also proposed 
adding language at Sec.  460.124(a)(3) that would parallel the 
requirement at Sec.  422.592(c), to specify that when the independent 
review entity conducts a reconsideration, the parties to the 
reconsideration are the same parties described in Sec.  460.122(c)(2), 
with the addition of the PACE organization. We are seeking to enhance 
transparency and we believe it is important to make PACE organizations 
aware that they are considered a party to the appeal once it reaches 
the independent review entity. We would add a new paragraph (b) that 
specifies that Medicaid participants have the right to a SFH as 
described in part 431, subpart E. Finally, we would add a new paragraph 
(c) to specify that participants who are dually eligible for both 
Medicare and Medicaid have the right to external review by means of 
either the IRE or the SFH process. This provision would specify that 
dually eligible participants may choose to pursue an appeal through 
either the Medicare or Medicaid process. In accordance with the 
existing provisions under Sec.  460.124, PACE organizations must assist 
dual eligible participants in choosing which route to pursue if both 
the IRE and the SFH review processes are applicable. For example, if 
the appeal is related to an enrollment dispute, the Medicaid SFH 
process would be the appropriate route for a participant to pursue. 
Whereas for a dispute related to a Part D medication, the IRE would be 
the appropriate route for a participant to pursue. By codifying these 
appeal rights in regulation, we are seeking to enhance transparency for 
PACE organizations to ensure that participants are able to access 
additional levels of appeal in order to receive services they believe 
that they are entitled to under the PACE benefit.
    We summarize the comments on the proposals related to appeal 
requirements under PACE, and provide our responses to those comments, 
below.
    Comment: Numerous commenters agreed with the proposed changes to 
the definition of ``appeal'' under Sec.  460.122, which the commenters' 
noted would specifically state their understanding of CMS's 
longstanding policy, that a service determination request must be 
processed before an IDT determination regarding a request to initiate, 
modify, or continue a service could be appealed. Another commenter 
recommended revising the definition to eliminate the language ``a 
participant's action taken with respect to the PACE organization's 
noncoverage of, or nonpayment for, a service including denials, 
reductions or termination of services'' and instead replace it with ``a 
participant or their designated representative's action taken

[[Page 6027]]

with respect to the PACE organization's denial of a service request to 
initiate, continue, increase, decrease or discontinue a service.'' The 
commenter suggested that this would eliminate any confusion on what 
constitutes an appeal.
    Response: We appreciate commenter support of our changes to the 
definition. While we proposed adding a sentence to the introductory 
language of Sec.  460.122 to require that PACE organizations process 
any request to initiate, modify, or continue a service as a service 
determination request before the PACE organization can process an 
appeal under Sec.  460.122, we did not propose any changes to the 
current language regarding what constitutes an appeal. We have chosen 
not to include the designated representative in the definition because 
we specifically provide at Sec.  460.122(c)(2) that a PACE 
organization's appeals process must include written procedures for how 
``a participant or their designated representative files an appeal . . 
.'', we do not believe it is necessary to refer to the designated 
representative in the introductory text. Furthermore, we do not believe 
it is necessary to change the proposed definition as the commenter 
suggests since we are maintaining the proposed criteria for what 
constitutes a service determination request to include requests to 
initiate, modify, or continue a service. Therefore, we are finalizing 
our proposed changes to the introductory text of Sec.  460.122 as 
proposed.
    Comment: The majority of commenters recommended that CMS modify the 
proposed language in Sec.  460.122(b) from, ``or other request for 
services or payment'' to ``or request for payment.'' These commenters 
expressed confusion about why CMS would include ``or other services'' 
in addition to a service determination request. A commenter stated that 
``or other request for services or payment'' is in reality a service 
determination request and therefore is redundant in Sec.  460.122(b) 
and should be removed.
    Response: Section 460.122(b) does not address the right to appeal, 
but rather the responsibility of the PACE organization to provide 
participants with written information about their appeal rights. In 
addition to providing notice of these rights at enrollment and 
annually, we believe that it is important for the PACE organization to 
provide notice when it denies a service determination request, which is 
why we proposed to modify Sec.  460.122(b) to include that language. We 
did not propose to make other changes to the text of Sec.  460.122(b) 
such as removing ``or other requests for services or payment.'' We 
agree with commenters that all requests for services would be resolved 
within the service determination request process. Because all requests 
for services would be resolved through the service determination 
request process, there would be no ``other requests for services'' that 
might be subject to appeal, and removing this language would not 
substantively affect the meaning of the revised text of Sec.  
460.122(b) as proposed. However we also note that certain requests for 
payment may not meet the definition of a request to initiate, modify or 
continue a service. For example, a PACE participant may go to the 
hospital or emergency room without first requesting the service from 
the IDT, and may subsequently submit the bill to the PACE organization 
as a request for payment. Since the underlying service was already 
received, this would not be a request to initiate, modify or continue a 
service, but we would expect the PACE organization to provide 
notification of appeal rights if the payment was denied by the IDT. We 
can also envision scenarios where a participant receives a bill for 
routine care provided by a contractor of the PACE organization, such as 
care provided by a nursing facility or specialist, and the participant 
subsequently requests payment from the PACE organization. Because these 
services would not involve requests to initiate, modify, or continue a 
service, these payment decisions would be processed outside of the 
service determination process. For these reasons, we are persuaded to 
remove ``or other request for services'' but will retain ``or payment'' 
as this would align with our proposal to require notification of appeal 
rights following a denied service determination request or a decision 
to deny a request for payment for a service. We are therefore revising 
Sec.  460.122(b) to remove the reference to ``other services'' and to 
require that upon enrollment, at least annually thereafter, and 
whenever the interdisciplinary team denies a service determination 
request or request for payment, the PACE organization must give a 
participant written information on the appeals process.
    Comment: The majority of commenters recommended modifying the 
cross-reference in Sec.  460.122(c)(1), ``Minimum requirements'', from 
Sec.  460.121(g) to Sec.  460.121(i) as it would make the appeals 
requirement clearer.
    Response: We appreciate the commenters' recommendation and agree 
that this cross-reference should be revised. In section VI.B. of the 
proposed rule, we proposed in Sec.  460.122(c)(1) to change the 
reference from Sec.  460.104(d)(2)(iv) to Sec. Sec.  460.122(i) and (m) 
to reference both the notification timeframes and the documentation 
requirements for service delivery requests. (85 FR 9133). The proposed 
regulation text at Sec.  460.122(c)(1) incorrectly referenced Sec.  
460.121(g). Therefore we have modified the regulatory text in this 
final rule to reflect the correct reference, to Sec. Sec.  460.121(i) 
and (m).
    Comment: The majority of commenters agreed with the revisions at 
Sec.  460.122(c)(2), to require that a PACE organization's appeals 
process must include written procedures for how a participant or their 
designated representative files an appeal. The commenters specifically 
noted their support for allowing the participant's designated 
representative as an individual who may submit an appeal on the 
participant's behalf.
    Response: We thank the commenters for their support of this 
provision.
    Comment: We received several comments on the proposed requirements 
for third party reviewers. The majority of commenters supported the 
requirements that allow for third party review by a committee at Sec.  
460.122(c)(4). The commenters also supported the requirement that a 
third party reviewer or committee member must be appropriately 
credentialed in the field or discipline related to the appeal. A 
commenter specifically recommended requiring that appeals of physical 
therapy services be reviewed by a licensed physical therapist. These 
commenters also supported the proposed provisions at Sec.  
460.122(c)(5), which require distribution of written or electronic 
materials to third party reviewers.
    Response: We thank the commenters for their support of these 
provisions. With respect to the comment regarding review by licensed 
physical therapists, we expect that the PACE organization would 
determine what constitutes an appropriately credentialed individual in 
the field or discipline related to the appeal as specified at proposed 
Sec.  460.122(c)(4)(i). Given the vast array of services that could be 
under appeal, we do not believe it would be feasible for CMS to list 
each discipline or set of appropriate credentials that we would expect 
to see in each case. Therefore, we are not adopting this suggestion. In 
section VI.B. of the proposed rule, we provided an example stating that 
it would not be appropriate for a social worker to review an appeal 
related to a denial of physical therapy services, and

[[Page 6028]]

we would expect a PACE organization to consider this guidance when 
making determinations about whether third party reviewers are 
appropriately credentialed in the field or discipline related to the 
appeal.
    Comment: The majority of commenters recommended that CMS either 
clarify the meaning of, ``all parties,'' as referenced in Sec.  
460.122(d) and Sec.  460.122(g) by adding a list of individuals that 
would be considered a ``party'', or modify the language to state, ``A 
PACE organization must give the participant or designated 
representative . . .'' These commenters also recommended adding 
designated representative as a party that must be provided information 
on the PACE organization's appeals process in Sec.  460.122(b).
    Response: The use of the terminology ``all parties'' is consistent 
with the current language used in the context of appeal notification 
and the opportunity to present evidence at Sec.  460.122(d) and we 
proposed to retain the existing language. According to Merriam-Webster.com, the term ``party'' includes ``a person or group taking one 
side of a question, dispute, or contest.'' \75\ Generally, we would 
interpret the term ``all parties'' to refer to all parties taking a 
formal position on one or the other side of the appeal, which would 
include the participant (and his or her designated representative, if 
applicable), and the PACE organization. This terminology has been in 
use in the PACE regulations since 1999 and based on CMS oversight 
activities we do not have concerns with how PACE organizations are 
currently interpreting this term. Under Sec.  460.122(c)(2) a 
participant may file an appeal, or a participant's designated 
representative may file an appeal on the participant's behalf. If a 
designated representative has filed an appeal on behalf of a 
participant, that representative typically acts on the participant's 
behalf throughout the appeal process, and CMS considers the participant 
and the designated representative to be the same ``party'' for purposes 
of the appeal. For purposes of notification at Sec.  460.122(g), the 
``parties'' to the appeal will depend on the circumstances of the 
appeal. Generally, we believe the parties would include the participant 
or the designated representative of the participant, if applicable. For 
example, if a participant filed an appeal without assistance from a 
designated representative, the PACE organization would be required to 
provide notification to the participant, but if the participant 
designated a representative to represent him or her in the appeal, the 
designated representative should also receive notice. For purposes of 
submitting evidence during the appeal at Sec.  460.122(d), there may be 
circumstances where a representative submits evidence on behalf of the 
participant, and there may be circumstances where both the participant 
and the representative submit evidence during the appeal. After 
consideration of the comments received, we are finalizing this 
provision as proposed.
---------------------------------------------------------------------------

    \75\ https://www.merriam-webster.com/dictionary/party.
---------------------------------------------------------------------------

    With respect to the recommendation to add the designated 
representative as a party that must be provided information about the 
PACE organization's appeals process under Sec.  460.122(b), we do not 
agree that this is necessary, although there may be circumstances when 
a designated representative should receive information about the 
appeals process. As we discussed earlier in this section, the PACE 
organization would be required to give a participant written 
information on the appeals process upon enrollment, at least annually 
thereafter, and whenever the interdisciplinary team denies a service 
determination request or request for payment. A participant could 
designate a representative for purposes of interacting with the PACE 
organization at any one of these points in time, in which case the 
notice to the participant could go to the designated representative who 
is acting on the participant's behalf. Additionally, we proposed to 
retain the current requirements for notification of an adverse decision 
in regard to a service determination request, which provide that a PACE 
organization must notify the participant or the designated 
representative orally and in writing of the adverse determination, in a 
notification that includes a description of both the standard and 
expedited appeals processes Sec.  460.121(j)(2).
    Comment: A commenter was supportive of the proposed notification 
requirements at Sec.  460.122(g). The majority of commenters 
recommended revising the language in Sec.  460.122(g)(2) to remove the 
statement, ``the PACE organization must provide the participant with 
written notification of the decision,'' since the requirement to notify 
participants is already contained in the first paragraph of Sec.  
460.122(g). These commenters also recommended removing the newly 
redesignated Sec.  460.122(i). The commenters noted that the 
requirements to notify CMS and the State administering agency of a 
wholly or partially adverse decision in the newly redesignated Sec.  
460.122(i), are incorporated into Sec.  460.122(g)(2)(ii) and are 
therefore duplicative.
    Response: We thank the commenters for their support and for their 
recommendations. We recognize that the proposed language at Sec.  
460.122(g)(2) restates the requirement to provide written notification 
of the decision to the participant; we are persuaded to revise this 
section to remove the duplicative language. At Sec.  460.122(g), we 
proposed that a PACE organization must give all parties involved in the 
appeal appropriate written notification of the decision to approve or 
deny the appeal. We did not refer to ``all parties'' at Sec.  
460.122(g)(2) and we realize that this could be viewed as inconsistent. 
Therefore, we are removing the language at Sec.  460.122(g)(2) that 
states that a PACE organization must provide the participant with 
written notification of the decision. By making this change we are 
enhancing consistency and also ensuring notification to all parties 
involved in the appeal. Because the designated representative is 
permitted to file an appeal on a participant's behalf, and therefore 
are parties to the appeal, we believe it is important that any 
notification, including one related to a partially or fully adverse 
decision, be communicated to all parties involved.
    With regards to removing the redesignated Sec.  460.122(i) 
(existing Sec.  460.122(h)), we agree that the requirements to notify 
CMS and the State administering agency of a wholly or partially adverse 
decision in the redesignated Sec.  460.122(i) would be duplicative of 
the notification requirements in proposed Sec.  460.122(g)(2)(ii). It 
was not our intention to duplicate these requirements in the 
regulations and therefore we are revising the amendatory language to 
the regulation text to redesignate the current paragraph (h) as a new 
paragraph (g)(2)(ii), as revised.
    Comment: A commenter agreed with CMS's proposal at Sec.  460.122(g) 
which sets forth the requirements for providing notification of appeal 
decisions. The majority of commenters requested clarification regarding 
the proposed requirements in Sec.  460.122(g)(2)(ii), which would 
require PACE organizations to provide written notification of an 
adverse appeal decision to the participant, CMS and the State 
administering agency (SAA) at the same time the decision is made. 
Specifically, the commenters sought to clarify the meaning of ``at the 
same time the decision is made'' and how long

[[Page 6029]]

organizations would have to notify CMS and the SAA.
    Response: We appreciate the commenter's support of this provision. 
With respect to the commenters' question regarding what CMS intends by 
the language ``at the same time the decision is made,'' we appreciate 
the opportunity to share our historical interpretation of this 
requirement. Under the current requirements at redesignated Sec.  
460.122(c)(6), the PACE organization's appeals process must include 
written procedures for responses to and resolution of appeals as 
expeditiously as the participant's health condition requires, but no 
later than 30 calendar days after the PACE organization receives the 
request. Under the current requirements at Sec. Sec.  460.122(f)(1) and 
(f)(2), a PACE organization must also have an expedited appeals process 
and must respond to the appeal as expeditiously as the participant's 
health condition requires, but no later than 72 hours after it receives 
the appeal, unless the PACE organization takes an extension under Sec.  
460.122(f)(3). While both the decision and notification must be made 
within these regulatory timeframes, we recognize that generally the 
decision for an appeal will occur prior to the notification (sometimes 
by more than a day). Additionally, under the current requirements at 
Sec.  460.122(h) (redesignated as Sec.  460.122(g)(2)(ii)), the PACE 
organization must notify CMS, the State administering agency, and the 
participant of a determination that is wholly or partially adverse to a 
participant, at the same time the decision is made. We have not 
historically expected PACE organizations to notify CMS and the SAA of a 
decision at the same time as the decision is made; rather, our 
historical interpretation has been that notification to those entities 
should occur around the same time as when the PACE organization 
notifies the participant of the adverse decision. We would expect that 
organizations notify CMS and the SAA of the adverse decision at the 
time they notify the participant of the adverse decision, or within the 
regulatory timeframe for notification pursuant to Sec. Sec.  460.122.
    We are removing ``participant'' from the list at Sec.  
460.122(g)(2)(ii) because including that term on the list would be 
duplicative in light of the change to the wording of that provision. 
The requirement at Sec.  460.122(g) already establishes that the PACE 
organization must give all parties involved in the appeal, which 
includes the participant (or, as applicable, his or her designated 
representative), appropriate written notification of the decision to 
approve or deny the appeal. Therefore, we believe that removing 
participant from the list of entities that must also receive 
notification of a denial or partial denial at Sec.  460.122(g)(2)(ii) 
will reduce confusion without affecting the substance of our proposals.
    Comment: A commenter addressed the proposals at Sec.  460.124 and 
was supportive of the additional clarifications around additional 
appeal rights under Medicare and Medicaid.
    Response: We thank the commenter for their support of this proposed 
provision and therefore are finalizing as proposed.
    After consideration of the comments received, and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing the changes to the introductory text of Sec.  460.122, Sec.  
460.122(c)(2), (c)(4), (c)(5), (d), (h), and Sec.  460.124 as proposed. 
We are finalizing the provisions at Sec.  460.122(b) with 
modifications. Specifically, we have modified the requirement at 
paragraph (b) by removing the language ``other requests for services''. 
We are finalizing the provision at paragraph (c)(1) with a minor 
technical correction to change the reference from Sec.  460.121(g) to 
Sec. Sec.  460.121(i) and (m). We are finalizing Sec.  460.122(g) as 
proposed, with a few technical changes to address duplicative language. 
First, we removed duplicative language in paragraphs (g)(2)(i) and 
(g)(2)(ii) stating that the requirements in question applied to 
decisions that are partially or fully adverse, and added ``partially or 
fully'' in paragraph (g)(2) to reflect the fact that all of the 
requirements within (g)(2) applied to decisions that were partially or 
fully adverse to the participant. We also removed language from 
paragraph (g)(2)(i) that restated the requirement at (g) that the PACE 
organization must provide the participant with written notification of 
its decision. Similarly, at paragraph (g)(2)(ii) we have removed 
several references to ``the participant,'' including from the list of 
people who must receive notification of a partially or fully adverse 
decision, to reflect the fact the participant would already receive 
notice of any decision under Sec.  460.122(g), as a party to the 
appeal. In addition, there was an oversight in the proposed amendatory 
language for the regulation text that would reflect the move of the 
current requirements at paragraph (h) into new paragraph (g)(2)(ii), as 
proposed at 85 FR 9133. Therefore, we are modifying the amendatory 
language to reflect this change.

C. PACE Services, Excluded PACE Services, and the Interdisciplinary 
Team (Sec. Sec.  460.92, 460.96, and 460.102)

1. Required Services
    Sections 1894(a)(2)(B) and 1934(a)(2)(B) of the Act state that the 
PACE program provides comprehensive health care services to PACE 
participants in accordance with the PACE program agreement and 
regulations under those sections. Sections 1894(b) and 1934(b) of the 
Act set forth the scope of benefits and beneficiary safeguards under 
PACE. Sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act specify in 
part that PACE organizations must provide participants, at a minimum, 
all items and services covered under titles XVIII and XIX of the Act 
without any limitation or condition as to amount, duration, or scope, 
and all additional items and services specified in regulations, based 
upon those required under the PACE protocol.\76\ CMS codified these 
required services in Sec.  460.92 of the regulations, which provides 
that the PACE benefit package for all participants, regardless of the 
source of payment, must include all Medicare covered items and 
services, all Medicaid covered items and services, as specified in the 
State's approved Medicaid plan, and other services determined necessary 
by the interdisciplinary team (IDT) to improve and maintain the 
participant's overall health status.
---------------------------------------------------------------------------

    \76\ The original PACE protocol was replaced by the PACE program 
agreement (84 FR 25613).
---------------------------------------------------------------------------

    We proposed to modify the requirements at Sec.  460.92 to more 
clearly define required services, and to specify CMS' expectations for 
making decisions about the services that are required under the PACE 
benefit package. First, we would create a new paragraph (a) and include 
under (a) the current requirements in Sec.  460.92. In order to do 
that, we proposed to renumber existing paragraphs (a), (b), and (c) as 
(a)(1), (2), and (3). We would add a new paragraph (b) that provides 
the standards that the IDT must consider when evaluating whether to 
provide or deny services described under (a) for a participant.
    In addition to redesignating Sec.  460.92(a) as Sec.  460.92(a)(1), 
we would modify the language to refer to all Medicare-covered services. 
In light of our amendments to the definition of ``services'' in Sec.  
460.6, and the current definition of that term, PACE organizations 
should understand that providing necessary drugs, whether they are 
covered under Medicare Parts A, B, or D, is an important part of the 
PACE benefit package. See section VI.I. of this

[[Page 6030]]

final rule for a more detailed discussion of the definition of 
``services.''
    We would add a new paragraph (b) in order to specify the standards 
that the IDT must consider when evaluating whether to provide or deny 
services required under Sec.  460.92(a) for a participant. Under Sec.  
460.92(b)(1) we would require the IDT to take into account all aspects 
of a participant's condition, including the participant's medical, 
physical, emotional, and social needs, when determining whether to 
approve or deny a request for a service. As we discussed in section 
VI.A. of this final rule, the determination for a service should be 
based on all aspects of the participant's care. For example, additional 
center days may not be necessary when considering the participant's 
physical needs, but when taking into account the participant's social 
needs, the IDT may find that those services become necessary in order 
to improve the participant's social or emotional condition. We have 
discovered through audits that PACE organizations sometimes only 
consider the medical or physical needs of a participant but do not 
consider their social or emotional needs when those social or emotional 
needs are relevant to the request.
    We also proposed to add language at Sec.  460.92(b)(2) that would 
require organizations to utilize current clinical practice guidelines 
and professional standards of care when making a decision, so long as 
those guidelines and standards are applicable to the particular 
service. PACE organizations are currently required to utilize current 
clinical practice guidelines and professional practice standards when 
developing the outcome measures for their quality improvement programs 
at Sec.  460.134(b). When we discussed this requirement in the preamble 
to the 1999 PACE interim final rule, we stated that we expect that PACE 
organizations will utilize current clinical standards as a routine part 
of their daily operations and care management strategies. (See 64 FR 
66260). However, we have discovered through our PACE audits that 
decisions to deny services are sometimes not based on accepted clinical 
guidelines or standards. We understand that current clinical practice 
guidelines and professional standards of care may vary based on the 
type of service that is being considered. For example, when determining 
if a participant requires a cardiac catheterization, the organization 
may reference clinical practice guidelines issued by the American Heart 
Association. On the other hand, when determining the appropriate 
insulin for a participant the organization may appropriately refer to 
guidelines published by the American Diabetic Association. We also 
understand that certain services may not have an applicable clinical 
practice guideline. For example, determining the frequency of PACE 
center attendance may not be based on clinical practice guidelines, but 
may instead be based on the medical, physical, emotional, and social 
needs of the participant. Therefore, we added language to (b)(2) to 
require the IDT to take into account current clinical practice 
guidelines and professional standards of care if applicable to a 
particular service. By adding this requirement, we do not intend to 
restrict a PACE organization's ability to determine what service is 
appropriate or necessary for a participant: The IDT would remain 
responsible for determining the participant's overall health status and 
needs, and ensuring those needs are met through the provision of 
necessary services.
    We are not scoring this provision in the Regulatory Impact Analysis 
section because PACE organizations are already required to utilize 
current clinical practice guidelines as a part of their quality 
improvement program, and they are required to consider the 
participant's physical, medical, emotional and social needs as a part 
of care planning discussions. We believe that by modifying this 
provision we will not be increasing burden on PACE organizations, as 
they already consider these items on a routine basis.
    We summarize the comments on the proposals related to required 
services, and provide our responses to those comments, below.
    Comment: All commenters that addressed this provision recommended 
that CMS modify the proposed language at Sec.  460.92(b) to state, 
``The interdisciplinary team makes determinations of whether or not to 
approve, deny or partially deny services for participants. These 
determinations must be based on an evaluation of the participant that 
takes into account. . .''. These commenters asserted that this 
modification is necessary based on the proposed removal of Sec.  
460.96(a) and they believed the revised language would clarify the 
IDT's authority to approve or deny services. These commenters also 
agreed with removal of Sec.  460.96(a), contingent on CMS' use of the 
recommended language in Sec.  460.92(b).
    Response: We thank the commenters for their recommendation 
regarding the establishment of the IDT's authority to make decisions. 
As we stated in the preamble to the proposed rule, the IDT's authority 
and responsibilities are defined throughout the PACE regulations, and 
under our proposal the IDT would retain the its ability to determine 
which services are appropriate for a participant, and would remain 
responsible for coordinating the care of participants 24 hours a day, 
every day of the year. Therefore, our proposal would retain the IDT's 
ability to make decisions to approve or deny services consistent with 
the proposed regulatory requirements at Sec.  460.92(a). 85 FR 9136. As 
proposed, the introductory language at Sec.  460.92(b) states 
``Decisions by the interdisciplinary team to provide or deny services 
under paragraph (a) of this section. . . .'' Paragraph (a) of section 
460.92 encompasses the complete PACE benefit package including all 
Medicare-covered services and all Medicaid-covered services, as 
specified in the State's approved Medicaid plan.
    We believe that commenter's proposed change to ``the 
interdisciplinary team makes determinations'' was suggested in order to 
ensure that the IDT's authority to render these decision was clear. 
However, we believe our proposed introductory language at Sec.  
460.92(a) appropriately articulates this authority. We would also 
reiterate that decisions made under 460.92(b) encompass all decisions 
made by the IDT and are not limited to service determination requests 
processed under 460.121. We do not believe that the commenters' 
recommendation would significantly clarify the IDT's authority to make 
decisions regarding what services will be approved or denied.
    After consideration of the comments received, we are finalizing our 
changes to Sec.  460.92 as proposed, without modification.
2. Excluded Services
    As we stated earlier in this section, in the discussion regarding 
required services, the PACE benefit package includes all Medicare-
covered items and services, all Medicaid-covered items and services, as 
specified in the state's approved Medicaid plan, and other services 
determined necessary by the IDT to improve or maintain the 
participant's overall health status. The regulations at Sec.  460.96 
list a number of services that are excluded from coverage under PACE. 
Currently, paragraph (a) states that any service that is not authorized 
by the IDT, even if it is a required service, is an excluded service 
unless it is an emergency service. In addition, paragraph (b) states 
that in an inpatient facility, private room and

[[Page 6031]]

private duty nursing services (unless medically necessary), and 
nonmedical items for personal convenience such as telephone charges and 
radio or television rental are also excluded from coverage under PACE 
unless specifically authorized by the IDT as part of the participant's 
plan of care. We proposed to remove Sec.  460.96(a) and (b).
    These proposals are consistent with our authority to amend the 
regulations. The exclusions in Sec.  460.96 are not specifically listed 
in the PACE statute. They were included in the 1999 PACE interim final 
rule that implemented the PACE program in part because they were 
included in section A.6 of the PACE Protocol included as Addendum A to 
the 1999 PACE interim final rule. (See 64 FR 66247 and 66301 and 
subparagraphs 1894(f)(2)(A) and 1934(f)(2)(A) of the Act.) Sections 
1894(f)(1) and 1934(f)(1) of the Act give the Secretary the authority 
to issue regulations to carry out the PACE program created under 
sections 1934 and 1894 of the Act. Sections 1894(f)(2) and 1934(f)(2) 
of the Act state that, in issuing such regulations the Secretary shall, 
to the extent consistent with the provisions of sections 1894 and 1934 
of the Act, incorporate the requirements applied to PACE demonstration 
waiver programs under the PACE protocol. As we stated in the 2019 PACE 
final rule (84 FR 25613), we believe sections 1894(f) and 1934(f) of 
the Act primarily apply to issuance of the initial interim and final 
PACE program regulations because they refer to the PACE Protocol,\77\ 
which has now been replaced by the PACE program agreement.\78\ Sections 
1894(f)(2)(B) and 1934(f)(2)(B) of the Act permit the Secretary to 
modify or waive provisions of the PACE Protocol as long as any such 
modification or waiver is not inconsistent with and does not impair any 
of the essential elements, objectives, and requirements under sections 
1894 or 1934 of the Act, but precludes the Secretary from modifying or 
waiving any of the following provisions:
---------------------------------------------------------------------------

    \77\ https://www.gpo.gov/fdsys/pkg/FR-1999-11-24/pdf/99-29706.pdf.
    \78\ https://www.cms.gov/Medicare/Health-Plans/pace/downloads/programagreement.pdf.
---------------------------------------------------------------------------

     The focus on frail elderly qualifying individuals who 
require the level of care provided in a nursing facility.
     The delivery of comprehensive integrated acute and long-
term care services.
     The IDT approach to care management and service delivery.
     Capitated, integrated financing that allows the PACE 
organization to pool payments received from public and private programs 
and individuals.
     The assumption by the PACE organization of full financial 
risk.
    Taking this authority into account, we would remove Sec.  460.96(a) 
for the following reasons. CMS has gained a significant amount of 
experience with the PACE program since the 1999 PACE interim final 
rule, and we now believe that a number of PACE organizations are 
interpreting the exclusion under Sec.  460.96(a) in a manner that is 
not consistent with sections 1894 and 1934 of the Act. Many PACE 
organizations appear to be interpreting Sec.  460.96(a) to allow an IDT 
to exclude from coverage any service that the IDT does not authorize 
for a participant, even if it is clearly covered under the Medicare or 
Medicaid programs and is medically necessary. For example, CMS has 
identified through audits that some PACE organizations have denied 
certain types of covered Part D drugs for participants, even when the 
drug is medically necessary and the participant is qualified to receive 
the drug under Medicare.
    These denials are inconsistent with the statutory requirement under 
sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act to provide all 
items and services covered by Medicare and Medicaid, as well as all 
additional items and services specified in regulations. As we stated in 
the 2006 PACE final rule (71 FR 71248), in accordance with sections 
1894 and 1934 of the Act, PACE organizations shall provide all 
medically necessary services including prescription drugs, without any 
limitation or condition as to amount, duration, or scope and without 
application of deductibles, copayments, coinsurance, or other cost 
sharing that would otherwise apply under Medicare or Medicaid. PACE 
organizations are required to provide all Medicare covered services and 
all Medicaid covered services in accordance with the State's approved 
Medicaid plan under current Sec.  460.92(a) and (b). In addition, PACE 
organizations are required to cover other items and services that are 
determined necessary by the IDT to improve and maintain the 
participant's overall health status under current Sec.  460.92(c). In 
order to ensure that IDTs continue to make decisions that are 
consistent with the statutory requirements, we would remove paragraph 
(a) from Sec.  460.96. We believe that removing paragraph (a) is 
necessary in order to ensure that participants receive the services to 
which they are entitled under PACE.
    By proposing to remove paragraph (a), we did not intend to waive or 
eliminate the IDT approach to care management and service delivery. The 
IDT's authority and responsibility are defined throughout the PACE 
regulations, and under this amendment, the IDT would retain its ability 
to determine which services are appropriate for a participant, and 
would remain responsible for coordinating the care of participants 24 
hours a day, every day of the year. Additionally, as discussed in our 
changes to Sec.  460.92, the IDT's decision to provide or deny required 
services must be based on an evaluation of the participant that takes 
into account the participant's current medical, physical, emotional and 
social needs, along with any current clinical practice guidelines and 
professional standards of care that are applicable to the particular 
service. We do not believe that the current provision at Sec.  
460.96(a) affects an IDT's authority for determining what services are 
required under Sec.  460.92, or changes the IDT's responsibility for 
coordinating 24-hour care delivery. However, we are concerned that the 
current language at Sec.  460.96(a) is confusing and implies that there 
are some required services that are not covered under the PACE program 
because they are excluded. The term ``excluded'' implies that a service 
is outside of the benefit package or never covered. The term 
``excluded'' could also suggest that services that are not authorized 
are not appealable, which runs counter to our historical interpretation 
of the PACE statutes and regulations and the policies we have 
promulgated to safeguard participants' right to appeal adverse 
decisions by the IDT. While the IDT remains responsible for determining 
the needs of each participant, and then implementing services that 
would meet those identified needs, PACE participants should always have 
the ability to advocate for services, through the service delivery 
request and appeal process, including any services the IDT determines 
not to be necessary (or does not authorize).
    We would eliminate paragraph (b) from Sec.  460.96 for the 
following reasons. Currently, this paragraph generally excludes from 
PACE coverage private rooms and private duty nursing services, and non-
medical items for personal convenience, in an inpatient facility, but 
notes that a private room or private duty nursing services would be 
covered if medically necessary, and non-medical items for personal 
convenience would be covered if specifically authorized by the IDT as 
part of the participant's plan of care. We continue to believe that 
services such as a private room, private nursing services,

[[Page 6032]]

or non-medical personal care items would not be covered under PACE, 
unless they were medically necessary or authorized by the IDT as part 
of the participant's plan of care. However, we believe that including 
this provision under a section of the regulation titled ``Excluded 
Services'' may give a false impression that the IDT would not have to 
consider whether those services are medically necessary or necessary to 
improve and maintain the participant's overall health status. As we 
previously indicated, the IDT is responsible for comprehensively 
assessing each individual participant to determine their needs, and 
then providing services that would meet those needs. If the IDT 
determines that private nursing services or a telephone are necessary 
to improve and maintain the participant's health status, those services 
would be covered for that participant under PACE. Therefore, these are 
not always or by definition excluded services, and we would eliminate 
paragraph (b) from the excluded services provision for that reason.
    In addition to eliminating paragraphs (a) and (b), we would 
redesignate paragraphs (c) through (e) as (a) through (c).
    We did not score this provision in the Regulatory Impact Analysis 
section because PACE organizations are already required to cover all 
PACE required services under Sec.  460.92, and by modifying the 
provisions relating to excluded services we are hoping to increase 
compliance with existing requirements.
    We summarize the comments on the proposals related to excluded 
services, and provide our responses to those comments, below.
    Comment: All commenters that addressed this proposal expressed 
concern with the removal of Sec.  460.96(b). The commenters noted that 
although they understand CMS' rationale for removing this provision, 
they believe this would impede a PACE organization's ability to deny 
these services when they are not necessary to maintain the 
participant's overall health. Specifically, commenters noted that 
removing this provision could be interpreted to mean that inpatient 
facilities, private rooms and private duty nursing services could be 
available without approval from the IDT. The commenters also stated 
that they do not believe removal of this section is necessary since the 
services would be provided, if determined necessary by the IDT, 
consistent with criteria established in Sec.  460.92(b).
    Response: We appreciate the commenters' concern and wish to explain 
that by removing the excluded language at Sec.  460.96(b) we would not 
preclude a PACE organization from denying these services if they are 
determined not to be necessary. Currently, Sec.  460.96(b) provides 
that private rooms, private duty nursing services and nonmedical items 
for personal convenience are excluded from coverage under PACE unless 
medically necessary or specifically authorized by the IDT as part of 
the participant's plan of care. As such, these services are not 
actually excluded from coverage under PACE, and a participant is 
currently able to receive these services if authorized by the IDT. We 
do not include other services that are excluded or denied as part of 
the PACE benefit package in this section and we do not believe that it 
is necessary to specifically list out these services and therefore are 
finalizing this provision as proposed. As noted in the proposed rule, 
we do not want to give a false impression by including services that 
should be considered by the IDT, as appropriate, under a section of the 
regulation titled ``Excluded Services.''
    After consideration of the comments received, we are finalizing our 
proposed changes under Sec.  460.96 as proposed, without modification.
3. Responsibilities of the Interdisciplinary Team
    A multidisciplinary approach to care management and service 
delivery is a fundamental aspect of the PACE model of care (see for 
example, the 1999 PACE interim final rule at 64 FR 66254). The 
regulations at Sec.  460.102 require in part that the IDT must 
comprehensively assess and meet the needs of each participant, and that 
the IDT members must remain alert to pertinent input about participants 
from team members, participants, and caregivers. While we believe many 
IDTs appropriately apply the multidisciplinary approach to providing 
care, we have learned through our monitoring efforts that some IDTs may 
not consider pertinent input about participants from specialists and 
other clinical and non-clinical staff, whether employees, or 
contractors (for example, home health service providers). Because these 
individuals have direct contact with participants, including in the 
participant's home, and may have a similar level of expertise as the 
members of the IDT listed in Sec.  460.102(b) or expertise in another 
medical field, they are likely to be in the best position to provide 
input that may contribute to a participant's treatment plan. An IDT 
could not comprehensively assess a participant and provide a 
multidisciplinary approach to care management if it did not consider 
pertinent input about a participant from any individual with direct 
knowledge of or contact with the participant, such as caregivers, 
employees, or contractors of the PACE organization, including 
specialists. For example, if a home care aide informed the organization 
that a participant seems more confused than normal, the IDT might not 
be able to fully meet the participant's needs if it did not take this 
information into consideration. While the IDT is responsible for many 
aspects of care provided to their participants, it might not interact 
with their participants on a regular basis. It is important that the 
IDT consider input from other individuals that have more regular or 
direct contact with the participant population, in order to inform its 
ability to appropriately meet participants' needs. Therefore, we would 
revise Sec.  460.102(d)(2)(ii) by adding employees, contractors, and 
specialists to the individuals from whom the IDT must remain alert to 
pertinent input. We would include specialists because there may be 
circumstances in which a participant is receiving care or seeking 
treatment options from a provider that specializes in a particular area 
and we believe that input from these medical professionals is vital in 
order for a PACE organization to provide comprehensive care to its 
participants. We would add these individuals as unique sub-paragraphs 
under Sec.  460.102(d)(2)(ii) in order to emphasize that these are 
unique groups of individuals, each of whom may provide information that 
is pertinent to the IDT. As part of the requirement that the IDT 
members remain alert to pertinent input from these individuals, we 
expect that the IDT members would consider all recommendations for care 
or services made by other team members, participants, caregivers, 
employees, contractors, or specialists for a participant when making 
treatment decisions.
    We proposed a minor change to redesignate the provisions at Sec.  
460.102(d)(1) under a new (d)(1)(i), and to retain the current 
requirement that the IDT is responsible for the initial assessment, 
periodic reassessment, plan of care, and coordination of 24-hour care 
delivery. We would add a new Sec.  460.102(d)(1)(ii) to require the IDT 
to document all recommendations for care and services and, if the 
service is not approved, the reasons for not approving or providing 
that care or service in accordance with the requirements in Sec.  
460.210(b). By requiring the IDT to document all recommendations for 
care

[[Page 6033]]

or services and, if not approved or provided, the rationale supporting 
the IDT's decisions, we believe our proposals under Sec.  460.102(d) 
would better position the PACE organization and the IDT to remain alert 
to pertinent information and to share that information with 
participants, caregivers, and appeal entities when applicable.
    We believe the burden associated with this provision is related to 
the documentation of the recommendations in the medical record. We 
discuss and account for the burden of documenting these recommendations 
in the medical record in the regulatory impact analysis.
    We summarize the comments on the proposals related to 
responsibilities of the IDT, and provide our responses to those 
comments, below.
    Comment: A commenter agreed with CMS' proposed revisions at Sec.  
460.102(d)(1)(ii) which would make the IDT responsible for documenting 
all recommendations for care or services and the reason(s) for not 
approving or providing recommended care or services. However, the 
majority of commenters expressed concern that the requirement is not 
consistent with the preamble or regulatory language at proposed Sec.  
460.210(b)(4) and (5), which limits documentation to recommendations by 
employees and contractors of a PACE organization, including 
specialists, as well as the reason(s) for not approving or providing 
recommended services. Specifically, the commenters noted that the 
language as proposed at Sec.  460.102(d)(1)(ii) could be interpreted to 
require the IDT to document recommendations made by the individuals 
other than those listed in Sec.  460.210(b)(4).
    Response: We thank the commenter who supported this provision. We 
do not agree, however, that the citation at Sec.  460.102(d)(1)(ii) 
should be modified. We included a citation to Sec.  460.210(b) in order 
to specify the IDT's responsibility for documenting all recommendations 
for care or services and the reasons for not approving or providing 
recommended care or services, if applicable, in any form encompassed 
under Sec.  460.210(b). While we agree that recommendations will most 
often come from the individuals identified in Sec.  460.210(b)(4), we 
did not propose and did not intend to limit this requirement to only 
those individuals. For example, redesignated Sec.  460.210(b)(9) 
relates to hospital discharge summaries and, to the extent there are 
recommendations for care included in a summary, we would want the IDT 
to consider and document those recommendations. While PACE 
organizations contract with hospitals, it is possible that a 
participant would be taken to a non-contract hospital during the course 
of an emergency, and we would want the PACE organization to consider 
any recommendations for care provided by hospital staff even though the 
hospital was not a contract provider.
    Comment: All commenters who addressed the proposals at Sec.  
460.102(d)(2)(ii), agreed with the proposal which would require the IDT 
to remain alert to pertinent input from any individual with knowledge 
of or contact with the participant. These commenters also recommended 
expanding the list to include the designated representative, as that 
individual plays a key role in the service delivery request process and 
appeals process.
    Response: We thank the commenters for their support for this 
proposal and appreciate the suggestion to include the designated 
representative in the list of individuals that the IDT must remain 
alert to. We agree that designated representatives play an important 
role in advocating for services on behalf of the participant. We note 
that the change commenters suggest is consistent with our proposal; we 
proposed to make the individual IDT members responsible for remaining 
alert to pertinent input from any individual with direct knowledge of 
or contact with a given participant, and provided a list of examples of 
those individuals. The list was not all-inclusive, and we believe that 
designated representatives would fall within the intended class of 
individuals from whom IDT members must remain alert to pertinent input. 
Therefore, we are finalizing the regulatory text with a modification to 
include designated representatives among the specific list of 
individuals from whom the IDT must remain alert to pertinent input.
    After consideration of the comments received and for the reasons 
outlined in our responses to comments, we are finalizing the changes to 
Sec.  460.102(d)(1)(i) and Sec.  460.102(d)(1)(ii) as proposed. We are 
also finalizing our proposed changes to Sec.  460.102(d)(2)(ii) as 
proposed, with the exception of one modification to the regulatory text 
at Sec.  460.102(d)(2)(ii)(G) to specify that the IDT must remain alert 
to input from designated representatives.

D. Documenting and Tracking the Provision of Services Under PACE (Sec.  
460.98)

    As discussed at section VI.C. of this final rule, under sections 
1894(a)(2)(B) and 1934(a)(2)(B) of the Act, PACE organizations provide 
comprehensive health care services to PACE participants in accordance 
with the PACE program agreement and regulations under those sections. 
Sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act specify in part 
that PACE organizations must provide participants, at a minimum, all 
items and services covered under titles XVIII and XIX of the Act 
without any limitation or condition as to amount, duration, or scope, 
and all additional items and services specified in regulations, based 
upon those required under the PACE protocol.\79\ Sections 1894(b)(1)(A) 
and 1934(b)(1)(A) of the Act also specify that, under a PACE program 
agreement, a PACE organization must furnish items and services to PACE 
participants directly or under contract with other entities. 
Additionally, sections 1894(b)(1)(B) and 1934(b)(1)(B) of the Act 
require that a PACE organization must provide participants access to 
all necessary covered items and services 24 hours per day, every day of 
the year. These statutory provisions ensure that a PACE participant can 
receive all PACE covered services, as needed, 24 hours a day, every day 
of the year. This includes the full range of services required under 
the PACE statute and regulations. We have implemented these 
requirements in several sections of the PACE regulations. For example, 
we require in Sec.  460.70 that PACE organizations must have written 
contracts that meet specific regulatory requirements with any outside 
entity furnishing administrative or care-related services not furnished 
directly by the PACE organization, except for emergency services as 
described in Sec.  460.100. We also require PACE organizations to 
establish and implement a written plan to furnish care that meets the 
needs of each participant in all care settings 24 hours a day, every 
day of the year at Sec.  460.98(a). Through oversight and monitoring, 
we recognized that some PACE organizations are not appropriately 
implementing these requirements. CMS routinely sees PACE organizations 
deny or restrict necessary services. PACE organizations have also 
documented in participants' medical records that they do not provide 
access to care and services 24 hours a day, regardless of participant 
need. CMS has also learned through monitoring of PACE organizations 
that some organizations are not providing all care and services through 
employees or contractors of the organization. Instead, these 
organizations purport to rely on caregivers such as family members to

[[Page 6034]]

provide necessary care and services to participants.
---------------------------------------------------------------------------

    \79\ The original PACE protocol was replaced by the PACE program 
agreement (84 FR 25613).
---------------------------------------------------------------------------

    We would make several modifications to Sec.  460.98 ``Service 
Delivery'' in response to failure by certain PACE organizations to 
fulfill their responsibilities to provide all necessary care and 
services, through the use of employees or contractors, as expeditiously 
as the participant's health condition requires, and ensure access to 
those services 24 hours a day, every day of the year. Currently, Sec.  
460.98(a) requires that PACE organizations establish and implement a 
written plan to furnish the care that meets the needs of each 
participant in all care settings 24 hours a day, every day of the year. 
We are concerned that the current version of this paragraph places more 
emphasis on the requirement to establish a written plan than it does on 
the requirement that the PACE organization actually implement such a 
plan by furnishing services. Therefore, we would modify paragraph (a) 
to more clearly emphasize that PACE organizations must not only have a 
plan to furnish care as described in existing Sec.  460.98(a), but must 
also carry it out. We proposed to change the title of Sec.  460.98(a) 
from ``Plan'' to ``Access to services'' in order to emphasize the 
requirement is that PACE organizations must provide access to services 
and not just have a plan. We also proposed to revise the language of 
Sec.  460.98(a) to emphasize that PACE organizations are responsible 
for providing care that meets the needs of each participant, across all 
care settings, 24 hours a day, every day of the year, as well as 
establishing a written plan to ensure that care is appropriately 
furnished. We believe the amendments would align with the statutory 
requirement that PACE organizations provide access to necessary care 
and services at all times. We would retain the requirement that PACE 
organizations must establish and implement a written plan to furnish 
care, with one modification to specify that the plan must ensure that 
care is appropriately furnished. Additionally, we want to emphasize 
that, both under the current regulation and the amendments, the PACE 
organization is (and would remain, if our proposed amendments are 
finalized) responsible for providing this care regardless of the care 
setting. In other words, regardless of whether the participant receives 
care in the home, at the PACE center, or in an inpatient facility, the 
PACE organization is (and would remain) responsible for furnishing care 
in all care settings, 24 hours a day, every day of the year.
    Currently, Sec.  460.98(b) specifies in part that the PACE 
organization must furnish comprehensive medical, health, and social 
services that integrate acute and long term care to each participant, 
and must furnish these services in at least the PACE center, the home, 
and inpatient facilities. We would make three changes to Sec.  
460.98(b) by modifying paragraph (b)(1) and adding new paragraphs 
(b)(4) and (5). Sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act, 
and the PACE regulations at Sec.  460.70(a), require PACE organizations 
to furnish administrative and care-related services by employees or 
contractors of the organization. Through monitoring and oversight, we 
have identified instances where PACE organizations have relied on 
individuals other than employees or contractors to provide necessary 
care and services to participants. To address these concerns we added a 
reference to Sec.  460.70(a) at Sec.  460.98(b)(1) to reiterate the 
requirement that PACE organizations furnish all services through 
employees or contractors, regardless of whether the services relate to 
medical, health, or social services, including both acute and long term 
care.
    We proposed to add a new paragraph at Sec.  460.98(b)(4), to 
require that all services must be provided as expeditiously as the 
participant's health condition requires, taking into account the 
participant's overall medical, physical, emotional and social needs. 
While there is a similar requirement in Sec.  460.104(e)(4), that 
services that result in a change to the care plan must be provided as 
expeditiously as the participant's health condition requires, we have 
identified through monitoring and oversight that participants routinely 
receive care that is determined necessary but is not formally 
incorporated into the care plan, and is instead handled through 
discipline-specific progress notes or treatment plans. For example, the 
primary care provider may order pain medication for a participant, but 
not incorporate that order into the participant's plan of care. 
Regardless of whether the service is in the plan of care, we believe 
that the PACE organization retains the responsibility of ensuring that 
participants receive all recommended or ordered treatment or care as 
expeditiously as the participant requires. We would specify at Sec.  
460.98(b)(4) that services must be provided as expeditiously as the 
participant's health condition requires, taking into account the 
participant's medical, physical, emotional, and social needs. We do not 
believe that we could implement a specific timeframe given the vast 
array of services that PACE organizations provide. Additionally, 
determining how quickly a service must be provided would depend on more 
than just the physical health of the participant, and PACE 
organizations should consider all aspects of the participant's 
condition, including their social, emotional, and medical needs, when 
determining the provision of services. For example, if the participant 
has a high risk of falling, the provision of a service that mitigates 
that risk may be necessary within a very short window of time. However, 
if the necessary service is a preventative trip to the dentist for 
routine care, the provision of that service may not be as urgent. These 
decisions must be made on a case by case basis and the PACE 
organization will be expected to demonstrate that services were 
provided as expeditiously as the participant's medical, physical, 
emotional, and social needs require through monitoring efforts by CMS.
    Lastly, we added a new paragraph (b)(5) to Sec.  460.98 to require 
PACE organizations to document, track, and monitor the provision of 
services across all care settings, regardless of whether services are 
formally incorporated into the participant's plan of care. PACE 
organizations would be required to document, track and monitor 
necessary services in order to ensure that they are actually provided 
in accordance with Sec.  460.98(b)(4). CMS' audits have revealed that 
in practice, certain PACE organizations do not routinely track the 
services provided and often lack documentation that services have been 
rendered. In order for the IDT to remain alert to pertinent information 
and coordinate care appropriately, we believe the PACE organization 
must be capable of ensuring that all approved services are tracked and 
documented, regardless of whether they are formally incorporated into 
the participant's plan of care. This means that not only should a PACE 
organization document that a service has been ordered, but that the 
PACE organization should also document when and how the approved 
service was provided. We believe that monitoring the provision of 
services is vital for a PACE organization in order to ensure their 
participants are receiving appropriate services, and that those 
services are achieving the desired effect. In addition, CMS regulations 
at Sec.  460.134 require that PACE organizations use objective measures 
to demonstrate improvement across a range of areas, such as the 
utilization of PACE services and the effectiveness and

[[Page 6035]]

safety of staff-provided and contracted services, including the 
promptness of service delivery, among other requirements. We believe 
that this proposal will ensure that PACE organizations are able to more 
effectively meet the minimum requirements established at Sec.  460.134.
    We summarize the comments received on the proposals related to 
documenting and tracking the provision of services, and provide our 
responses to those comments, below.
    Comment: While a commenter agreed with CMS' proposals at Sec.  
460.98(a) and (b)(1), the majority of commenters requested 
clarification on the preamble language describing the proposals. 
Specifically, commenters agreed that PACE organizations are responsible 
for providing care that meets the needs of the participant across all 
care settings, 24 hours a day, every day of the year, and that neither 
PACE organizations nor the IDTs may require caregivers to provide 
necessary care or services on their behalf. However, the commenters 
were concerned that the preamble implied that PACE organizations cannot 
take into consideration family or informal caregiver support when 
determining which services the PACE organization must furnish in order 
to meet these needs. In order to clarify the regulatory requirements 
and CMS's position, commenters requested that CMS confirm that willing 
and able family members or other informal caregivers may be actively 
involved in a participant's care and that a PACE organization would be 
in compliance with the proposed regulatory requirements if the IDT 
considers services provided to participants by willing and able 
caregivers when determining which services must be provided by the PACE 
organization. Another commenter suggested that the regulation, as 
proposed at Sec.  460.98(b)(1), would not allow any individual 
caregivers and informal support systems to be involved in helping meet 
a participant's needs without contracting with the PACE organization.
    Response: As noted in the proposed rule, sections 1894(b)(1)(B) and 
1934(b)(1)(B) of the Act require the PACE organization to provide 
participants with all PACE-covered services, as needed, 24 hours a day, 
every day of the year. This includes the full range of services 
required under the PACE statute and regulations. We believe the 
existing requirements are clear. Our proposed changes in Sec.  
460.98(a) and (b)(1) would not change the existing requirements; nor 
would they change how we have historically interpreted those 
requirements. Instead, our proposals would better align the regulatory 
language with the statutory requirements that require PACE 
organizations to provide access to necessary care and services at all 
times. The PACE organization is responsible for ensuring that the 
participant's needs are met 24 hours a day, every day of the year, 
consistent with the existing Sec.  460.98(a).
    We agree with commenters that a PACE organization cannot require or 
compel a caregiver to provide care that the IDT determines is 
necessary. However, we recognize that caregivers may be willing and 
able to provide some care to participants, such as cooking a meal or 
providing transportation to an appointment. None of our proposed 
changes would change CMS' expectations regarding the relationship 
between caregivers and PACE organizations. While we proposed to add a 
reference to Sec.  460.70(a) at Sec.  460.98(b)(1), we did not propose 
to change the requirement at Sec.  460.70(a) or our interpretation of 
that requirement. Historically, CMS has interpreted the requirement at 
Sec.  460.70(a) as not applicable in circumstances where family members 
or other informal support willingly provide care to PACE participants 
that could otherwise be provided by the PACE organization, without any 
compensation from or agreement with the PACE organization. Thus, we 
would not expect a PACE organization to have a contract with such 
caregivers unless the caregivers are providing services on behalf of 
the PACE organization and are receiving compensation from the PACE 
organization for doing so. We note that Merriam-Webster's dictionary 
defines willing as ``done, borne, or accepted by choice or without 
reluctance'' \80\ and defines able as ``having sufficient power, skill, 
or resources to do something''.\81\ We believe these definitions are 
widely understood, and provide a valuable point of reference in this 
context.
---------------------------------------------------------------------------

    \80\ https://www.merriam-webster.com/dictionary/willing.
    \81\ https://www.merriam-webster.com/dictionary/able.
---------------------------------------------------------------------------

    The IDT may take into consideration informal support that willing 
and able caregivers provide when determining what necessary services 
will be provided by the PACE organization directly or through 
contractors when developing the participant's plan of care. However, 
the existence of a caregiver does not absolve a PACE organization of 
its responsibilities to meet the needs of participants 24 hours a day, 
7 days of the week. In determining how informal caregiver support 
affects the necessary services the PACE organization must provide 
directly or through contractors, PACE organizations must consider 
whether a caregiver is both willing and able to provide care, and 
whether it is safe for the participant to receive the care in question 
from the caregiver. This would include for example, when the PACE 
organization is evaluating participant and caregiver preferences for 
care during the initial assessments under Sec.  460.104(a)(4)(iii) or 
when obtaining approval from the participant or their designated 
representative for a revised plan of care under Sec.  460.104(e)(3). In 
particular, PACE organizations should not pressure a caregiver to 
provide any service that is necessary and that could otherwise be 
provided by the PACE organization, and should not rely on a willing 
caregiver to provide care if there is evidence that the caregiver 
cannot do so safely or in a way that meets the relevant needs of the 
participant. Additionally, PACE organizations may not deny a request to 
provide a service on the basis that a participant has a caregiver even 
if the caregiver has historically informally provided care that meets 
the participant's need for that service. We have seen through 
complaints and audits that PACE organizations sometimes inappropriately 
rely on caregivers, and in some instances attempt to require caregivers 
to provide care the IDT has determined is necessary for a participant, 
even when the caregiver is unable or unwilling to do so. For example, 
CMS has identified instances where PACE organizations attempted to 
require caregivers to provide 24-hour supervision or provide assistance 
with activities of daily living (ADLs) even after the caregivers 
indicated they could not do so, or were unwilling to do so. Through 
complaints and audits, we have also seen situations where a PACE 
organization inappropriately relied on a willing caregiver when it was 
not safe for the participant to receive care from that caregiver. For 
example, a caregiver may be willing to provide wound care, but without 
the necessary skills and knowledge to provide that care, it would be 
unsafe for the caregiver to attend to that need because it would 
increase the participant's risk of infection. We note that even when a 
caregiver previously had elected to provide some level of assistance to 
a participant, their ability or willingness to provide assistance may 
change during the course of a participant's enrollment in PACE, 
rendering the caregiver unable or unwilling to continue to provide that

[[Page 6036]]

support (e.g., the caregiver does not have a vehicle to accommodate a 
motorized wheelchair or the caregiver becomes ill). Similarly, a 
caregiver may express an interest in providing assistance, but may not 
be able to meet the needs of the participant. For example, the 
participant may need assistance with toileting, but the caregiver is 
physically unable to support this need. PACE organizations must ensure 
that when a caregiver is unwilling or unable to assist with the 
participant's care for any reason, that the needs of the participant 
are being met through employees or contractors of the PACE 
organization. In each of these situations, the PACE organization seems 
to be incorrectly or inappropriately determining that certain care and 
services are not needed because the PACE organization wants to rely 
upon a particular caregiver, even when it is clear from the 
circumstances that the participant needs the PACE organization to 
provide services because the caregiver is unwilling or unable to 
provide care, or because it is not safe for the participant to receive 
this care from the caregiver. For these reasons, we proposed to revise 
the regulations by adding a reference to Sec.  460.70(a) at Sec.  
460.98(b) to ensure that PACE organizations understand their 
responsibilities, and we will continue monitoring PACE organizations 
for compliance with these requirements. We are finalizing these 
provisions as proposed.
    Comment: A commenter recommended that CMS provide further 
clarification on how ``coordination'' and ``furnish'' are used and 
defined in the PACE regulations and to take steps to ensure that terms 
are used consistently throughout the PACE regulations. This commenter 
stated that under the proposed language at Sec.  460.102(d)(1)(i), the 
IDT would be responsible for the initial assessment, periodic 
reassessments, plan of care, and coordination of 24-hour care delivery. 
The commenter asserted that this has a very different meaning than the 
proposed requirements at Sec.  460.98(b)(1) which states that the PACE 
organization must furnish comprehensive medical, health, and social 
services that integrate acute and long-term care, and that these 
services must be furnished in accordance with Sec.  460.70(a).
    Response: We agree with the commenter's observation that the 
proposed requirements under Sec.  460.102(d)(1)(i) and Sec.  
460.98(b)(1) are not the same, including the fact that Sec.  
460.102(d)(1)(i) uses the term, ``coordinate'' while Sec.  460.98(b)(1) 
uses the term ``furnish.'' However, we did not propose that those terms 
would be used interchangeably. We agree that those terms have different 
meanings, and we believe that those terms are used appropriately within 
the regulation. PACE organizations are responsible for furnishing 
comprehensive services to PACE participants. The IDT, which consists of 
a subset of PACE organizations employees or contractors, is responsible 
for certain activities, such as coordinating care, which includes 
services that are furnished by the IDT as well as services furnished by 
other employees and contractors of the PACE organization.
    Comment: Multiple commenters requested clarification regarding the 
intent of CMS's proposal under Sec.  460.98(b)(1) to add a reference to 
Sec.  460.70(a) that would require services to be furnished through 
either an employee or contractor of the organization. Specifically, 
those commenters requested that CMS modify Sec.  460.70(a) to address 
circumstances that might justify an exception to the requirement that 
PACE organizations must have a written contract with each entity that 
furnishes administrative or care related services not furnished 
directly by the PACE organization except for emergency services. As an 
example, commenters noted that there are times when a specialty 
provider may be in short supply and the PACE organization may be 
unsuccessful in obtaining a contract.
    Response: We did not propose changes to Sec.  460.70(a), and as 
such are not finalizing any changes to that section in this final rule. 
With regards to the commenter's question about out of network 
providers, that comment relates to the topic of network adequacy for 
PACE organizations and we will take the commenter's feedback into 
consideration in future policy development for PACE.
    Comment: A commenter was supportive of the provisions at Sec.  
460.98(b)(5), while the majority of commenters expressed concern with 
to the use of the term ``track.'' These commenters suggested that 
requiring a PACE organization to track the provision of services could 
imply that PACE organizations would be required to establish and 
maintain specific logs, universes or data sets, and that such a 
requirement would conflict with CMS' Patients Over Paperwork 
initiative. These commenters stated that PACE organizations should have 
greater flexibility to determine how the provision of services is 
monitored and rather than dictating the specific manner in which PACE 
organizations maintain this documentation, they recommended the 
following regulatory text: ``The PACE organization must monitor and 
document the provision of services across all care settings in order to 
ensure the interdisciplinary team remains alert to the participant's 
medical, physical, emotional, and social needs regardless of whether 
services are formally incorporated into the participant's plan of 
care.'' Additionally, these commenters requested that CMS explain that 
this provision would only require the PACE organization to monitor and 
track services furnished by the PACE organization's employees or 
contractors and not by caregivers.
    Response: As noted in the proposed rule, in order for the IDT to 
remain alert to pertinent information and coordinate care 
appropriately, we believe that the PACE organization must be capable of 
ensuring that all approved services are tracked and documented, 
regardless of whether they are formally incorporated into the 
participant's plan of care (85 FR 9139). In order to ensure services 
are actually provided, we proposed that PACE organizations document, 
track and monitor services. We understand from commenters' concerns 
that the use of the word ``track'' could be interpreted to suggest that 
PACE organizations would be required to maintain a real time ``log'' of 
services which could potentially be burdensome to implement. As we 
stated in the proposed rule, we believe that PACE organizations should 
document that a service has been ordered as well as when and how the 
approved service was provided. It was not our intention in the proposal 
to dictate how an organization implements this provision, and we agree 
with the commenter that PACE organizations should have flexibility in 
how they operationalize the requirement to track, monitor and document 
the provision of services. We expect that PACE organizations will 
create their own methods for tracking and monitoring services. We 
reiterate that the PACE organization is responsible for furnishing all 
services determined necessary through its employees or contractors in 
accordance with existing Sec.  460.70(a) and proposed Sec.  
460.98(b)(1), and this provision would only apply to those services 
furnished by the PACE organization's employees or contractors.
    After consideration of the comments received, we are finalizing our 
proposed changes to Sec.  460.98 without modification.

[[Page 6037]]

E. Access to Data and Safeguarding Records Under PACE (Sec.  460.200)

    In accordance with sections 1894(e)(3)(A) and 1934(e)(3)(A) of the 
Act, Sec.  460.200 requires PACE organizations to collect data, 
maintain records, and submit reports, as required by CMS and the State 
Administering Agency (SAA). The current requirement at Sec.  460.200(b) 
requires that PACE organizations must allow CMS and the SAA access to 
data and records, including but not limited to, participant health 
outcomes data, financial books and records, medical records, and 
personnel records. Some PACE organizations have requested clarification 
on whether access is limited to allowing CMS or the SAA to view 
requested information. CMS has long interpreted this provision to 
require that CMS and the SAA must be able to obtain, examine, or 
retrieve information as needed to administer and evaluate the program 
and fulfill their oversight obligations. Therefore, we proposed to 
codify CMS' interpretation of this requirement. Specifically, we would 
redesignate current Sec.  460.200(b)(1) through (4) as Sec.  
460.200(b)(1)(i) through (iv), in order to add a new paragraph (b)(2) 
to state that CMS and the State administering agency (SAA) must be able 
to obtain, examine, or retrieve the information described under Sec.  
460.200(b)(1). This may include CMS or the SAA reviewing information at 
the PACE site or remotely. It may also include CMS requiring a PACE 
organization to upload or electronically transmit information, or send 
hard copies of required information by mail.
    PACE organizations are also required to safeguard data and records 
in accordance with Sec.  460.200(d). This section currently provides 
that a PACE organization must establish written policies and implement 
procedures to safeguard all data, books, and records against loss, 
destruction, unauthorized use, or inappropriate alteration. Through our 
monitoring of PACE organizations, CMS has discovered that PACE 
organizations do not always maintain and safeguard important records 
such as communications related to a participant's care from family 
members, caregivers, and the participant's community. In fact, CMS has 
discovered that organizations may summarize written communications and 
sometimes destroy or lose original written communications. When CMS has 
obtained copies of original communications from an outside source (such 
as the family or caregiver), we have noted that organizations are not 
accurately summarizing information or retaining the relevant 
information in the communication. In light of these findings, we 
believe that any written communication received from a participant or 
their informal support (for example, a family member, caregiver, 
designated representative, or other member of the community) that 
relates to the participant's care, health or safety must be safeguarded 
and maintained in its original form. Therefore, we proposed to modify 
Sec.  460.200(d) to require PACE organizations to maintain all written 
communications received from a participant or other parties in their 
original form when the communication relates to the participant's care, 
health, or safety. We would expect that this would include most, if not 
all, communications that an organization receives on these topics. For 
example, the following types of communications would need to be 
protected under this provision: Written requests for services that the 
participant, designated representative or caregiver believes are 
necessary; grievances or complaints relating to the participant's care 
or health; and communications from the community that indicate concerns 
over the well-being of a PACE participant. We proposed corresponding 
changes to Sec.  460.210(b)(6), to require PACE organizations to 
maintain original written communications in the participant's medical 
record, as discussed at section VI.F. of this final rule.
    We believe the burden associated with this provision is related to 
the documentation of these original communications in the medical 
record. We discuss and account for the burden of documenting these 
communications in the medical record in the regulatory impact analysis.
    We solicited comments on these proposals.
    We summarize the comments on the proposals related to access to 
data and safeguarding records, and provide our responses to those 
comments, below.
    Comment: All of commenters who responded to this proposal requested 
clarification on the provision which would require access to data 
described in Sec.  460.200(b)(1) both at the PACE site and remotely. 
Specifically, commenters requested clarity around whether or not the 
provision meant that the SAA and CMS would have independent remote 
access to PACE organizations' medical records, without the knowledge of 
the PACE organizations, or if it meant that CMS would require PACE 
organizations to make records available, either remotely or onsite, via 
a web-based or comparable application with the participation of PACE 
organization staff. Commenters stated that participation of PACE 
organization staff would ensure PACE organizations could maintain a 
record of individuals who accessed participants' medical records and 
would also assist CMS and SAA reviewers in locating documentation 
within medical records.
    Response: We appreciate commenters' feedback on this proposal. As 
proposed under Sec.  460.200(b)(2), CMS and the SAA must be able to 
obtain, examine, or retrieve the information specified at paragraph 
(b)(1) of that section, which may include reviewing information at the 
PACE site or remotely. We wish to clarify that it is not CMS's intent 
that CMS or the SAA would have completely unrestricted access to a PACE 
organization's medical records and the provision at Sec.  460.200(b)(2) 
would not permit CMS or the SAA to access a PACE organization's medical 
records without the PACE organization's knowledge. PACE organizations 
will continue to be required to grant access to medical records, which 
may be electronic and/or paper based, before these records are 
obtained, examined or retrieved by CMS or the SAA. In order to be able 
to obtain, examine, or access these records, CMS or the SAA may need 
technical assistance from PACE organization staff, but otherwise would 
not require staff involvement in the review process. For example, CMS 
or the SAA may need assistance with navigating medical record systems 
or locating records within medical record systems.
    Comment: Commenters were split on the proposal to require original 
documentation to be maintained in the medical record. A commenter 
agreed with the proposed requirements in Sec. Sec.  460.200(d)(2) and 
460.210(b)(6), which would require PACE organizations to maintain all 
written communications received from participants or other parties, in 
their original form, when the communications relate to a participant's 
care, health or safety, including written communications from an 
advocacy or governmental agency. Another commenter was opposed to this 
provision stating that not all communication lends itself to being kept 
in the original form and the proposed requirement may be impracticable 
for mundane, routine communications such as confirming an address for a 
family member. This commenter recommended that CMS remove the phrase 
``all written communication'' and instead provide a specific list of 
communications that must be kept in its original format. The

[[Page 6038]]

majority of commenters requested clarification and expressed some 
concerns regarding the proposed requirements. This included concerns 
that maintaining original documentation of any written communication 
relating to the care, health or safety of a participant in any format 
in the medical record would compromise the usefulness of the medical 
record, due to the quantity of information that would be required to be 
stored. These commenters also stated that requiring direct care 
providers to download or otherwise transfer all such communications to 
the medical record would be burdensome and take them away from 
providing care to participants. As a solution, these commenters 
recommended permitting PACE organizations to scan written documentation 
and copy and paste communications received via email or text into 
electronic medical records. The same commenters expressed concerns that 
the requirements were overly broad and recommended that CMS revise its 
proposals to both allow PACE organization staff to use their discretion 
when determining the types of communication that must be included in a 
participant's medical record and exclude communications related to 
processing of service requests, appeals and grievances as those 
communications are often kept in separate systems. Another commenter 
indicated that the practice of summarizing verbal conversations and 
documenting in the EMR should apply to written communications. This 
commenter also recommended that CMS clarify its expectations with 
regard to communications from advocacy or governmental agencies and 
suggested that faxes and emails requesting documents should not be 
placed in the medical record.
    Response: We appreciate commenters' feedback and suggestions on 
Sec. Sec.  460.200(d) and 460.210(b)(6). We address comments related to 
Sec.  460.210(b)(6) in more detail at section VI.F of this final rule. 
PACE organizations are required to safeguard data and records in 
accordance with Sec.  460.200(d). This section currently provides that 
a PACE organization must establish written policies and implement 
procedures to safeguard all data, books, and records against loss, 
destruction, unauthorized use, or inappropriate alteration. As we 
stated in the proposed rule (85 FR 9134), through our monitoring and 
oversight efforts, CMS has discovered that PACE organizations do not 
always maintain and safeguard important records, and may often 
summarize written communications in their records and destroy or lose 
the original written communications. In addition, we have discovered 
that in some cases, PACE organizations are not always retaining or 
accurately summarizing all of the relevant information in those 
communications. Because our oversight efforts have revealed that all 
relevant information in written communications has not always been 
retained or accurately summarized by PACE organizations, we are not 
persuaded by commenters to allow PACE organizations to summarize 
written communications that relate to a participant's care, health or 
safety instead of maintaining the communication in its original form. 
In order for the IDT to remain alert to pertinent input from the 
participant and their caregivers, and for PACE organizations to provide 
care that meets the needs of each participant in all care settings 24 
hours a day, every day of the year, we believe that communications from 
individuals who provide information pertinent to a participant's care, 
health or safety, must be safeguarded and maintained in their original 
form. Furthermore, we are not persuaded by one commenter's suggestion 
that the practice of summarizing verbal communication in the medical 
record should also apply to written communication. We believe that 
summarizing verbal communication is a reasonable and necessary practice 
because it would be unnecessarily burdensome to require PACE 
organization staff to record verbal communication verbatim. In 
contrast, it is not necessary to summarize written communications 
because entire written communications can be stored in the medical 
record. We also believe that, in many cases, the amount of time spent 
summarizing the contents of written communications would exceed the 
amount of time necessary to enter the original documentation into the 
medical record, which would negate any benefits associated with 
summarizing the written communication.
    With respect to excluding certain communications from this 
requirement or providing a specific list of communications that must be 
kept in their original format, we note that we have already limited 
this requirement by only requiring PACE organizations to maintain all 
written communications that relate to a participant's care, health, or 
safety. As we stated in the proposed rule (85 FR 9135), the types of 
communication that would be protected under this provision include, but 
are not limited to: Written requests for services that the participant, 
designated representative or caregiver believes are necessary; 
grievances or complaints relating to the participant's care or health; 
and communications from the community that indicate concerns over the 
well-being of a PACE participant. For example, if the participant sent 
the PACE organization a letter requesting long-term nursing facility 
placement or Adult Protective Services emailed the PACE organization to 
express concern about the participant's ability to live on their own, 
we would expect these communications to be maintained. Given the nature 
of the PACE program, we recognize that there is frequent communication 
between a PACE organization and various individuals regarding each 
participant and that many of these communications would not be 
appropriate to maintain. For example, if a caregiver texted the PACE 
organization stating that they were going to be 15 minutes late in 
dropping off a participant at the PACE center or a participant emailed 
the PACE organization because they wanted to know what type of food 
would be served at the PACE center on a particular day, we would not 
expect this communication to be maintained.
    After consideration of the comments received, we are finalizing 
Sec.  460.200 as proposed with a minor grammatical change in the 
introductory paragraph of Sec.  460.200(d), to add ``a'' before ``PACE 
organization.'' This grammatical correction will not change the 
intended meaning of the regulation as proposed and described in this 
final rule.

F. Documentation in Medical Records Under PACE (Sec.  460.210)

    In accordance with Sec.  460.210(a), a PACE organization must 
maintain a single, comprehensive medical record for each participant, 
in accordance with accepted professional standards, that is accurately 
documented and available to all staff, among other requirements. We 
have previously discussed the importance of maintaining a complete 
record for each participant. In the preamble to the 2006 PACE final 
rule (71 FR 71326), we stated that, because care for the PACE 
population will be provided by a variety of sources (for example, PACE 
center employees, contracted personnel, hospital staff, nursing home 
staff, etc.), it is critical that all information on the participant be 
documented in the medical record to ensure quality and continuity of 
care. CMS currently specifies at Sec.  460.210(b) the minimum required 
contents of a medical record. Based on audit and oversight experience, 
we identified

[[Page 6039]]

additional requirements that we believe should be added under Sec.  
460.210(b) to ensure that participant medical records are fully 
comprehensive.
    We proposed to redesignate Sec.  460.210(b)(4) through (12) as (7) 
through (15), and to add three new paragraphs under Sec.  460.210(b) to 
address how recommendations for care and treatment, decisions regarding 
those recommendations, and communications relating to a participant's 
care, health or safety should be documented in the medical record. 
Specifically, we proposed to add a new paragraph (b)(4) that would 
require the PACE organization to document all recommendations for 
services made by employees and contractors of the PACE organization, 
including by all specialists such as dentists, neurologists, 
cardiologists, and others, in the participant's medical record. We 
believe that all recommendations for services from these sources must 
be documented in order for the IDT to remain alert to all pertinent 
information, even if the IDT decides not to pursue the recommendations, 
for example based on a determination that the service is not necessary. 
Recommendations are made based on the employee or contractor's 
determination that a participant might benefit from a particular 
service given the participant's health status or condition. Even if the 
IDT ultimately decides that the recommended service would not be 
necessary to improve and maintain the participant's health status, the 
IDT should document that recommendation in order to remain alert to why 
a particular contractor or employee believed that service was necessary 
as required by Sec.  460.102(d)(2)(ii).
    Additionally, we proposed adding a new paragraph (b)(5) that would 
require the IDT to document in the medical record the reason(s) for not 
approving or providing a service recommended by one of these sources. 
When an employee, contractor, or specialist recommends a service within 
the scope of their authority to practice, we believe that it is 
necessary for the IDT to consider this information and document any 
decision against providing the recommended service in the medical 
record. For example, if a gastroenterologist recommends that a 
participant receive drug therapy for Hepatitis C, and after reviewing 
the recommendation the IDT determines that treatment is not medically 
necessary or is contraindicated, we would require the IDT to document 
in the participant's medical record the rationale for not providing the 
recommended drug therapy, including the clinical criteria used as the 
basis for that determination. This not only ensures that the IDT can 
review the information used to make the decision, but also that the 
participant has access to information about the basis of the decision 
not to provide a recommended service. This would also align with the 
requirement we finalized in the 2019 PACE final rule (84 FR 25643) that 
requires the IDT to document the rationale for determining certain 
services are not necessary in the participant's plan of care following 
the initial comprehensive assessment. While the 2019 PACE final rule 
required the IDT to follow this process during the development of the 
initial care plan, we are expanding the requirement to account for 
situations that arise after the initial plan of care is developed. For 
example, a participant may be diagnosed with diabetes after the 
development of the initial care plan, and should the PACE organization 
determine that treatment is not necessary, we would expect that it 
document that decision and the reasons for that decision in the 
participant's medical record.
    We also proposed to require PACE organizations to maintain certain 
written communications received by the PACE organization in the 
participant's medical record, in new paragraph Sec.  460.210(b)(6). The 
PACE program presents unique challenges in terms of providing care to 
participants. PACE participants require a nursing facility level of 
care and often have complex medical needs. When a Medicare or Medicaid 
beneficiary is in a nursing home, they have daily interactions with 
staff, and their needs, including changes in condition, are noted by 
the staff and acted upon. PACE participants, on the other hand, largely 
remain in their own homes and might not be seen on a daily basis by 
PACE organization staff. PACE participants do, however, often have 
regular interactions with caregivers, family members, neighbors, and 
other members of their communities, as well as with social service 
organizations like local Area Agencies on Aging (AAA) or Adult 
Protective Services (APS) agencies. We believe that maintaining a 
comprehensive, complete, and accurate medical record allows a PACE 
organization to remain alert to all information that is relevant to a 
participant's care, health, and safety and to provide appropriate and 
timely care to the participant. We also believe information about a 
participant's care, health, or safety provided to a PACE organization 
by any of these sources could play a critical role in providing 
comprehensive care to the participant. Therefore, we proposed to add a 
new paragraph (b)(6) to Sec.  460.210, to require PACE organizations to 
maintain, in a participant's medical record, original documentation of 
any written communication relating to the care, health, or safety of a 
participant that the PACE organization receives from certain sources in 
any format (for example, emails, faxes, letters, etc.). At a minimum, 
PACE organizations would be required to maintain communications from 
the participant, his or her designated representative, family members, 
caregivers, or any other individual who provides information pertinent 
to a participant's care, health, or safety, as well as communications 
from advocacy or governmental agencies like an AAA or APS. We also 
proposed at Sec.  460.200(d)(2) a reference to Sec.  460.210(b)(6) 
which would require that the PACE organization maintain this 
information in its original written form rather than summarizing the 
information in the participant's record. See 85 FR 9134-9135 and 9259).
    We summarize the comments we received on the proposals related to 
the requirements for the contents of participant medical records under 
Sec.  460.210(b), and provide our responses to those comments, below.
    Comment: A commenter agreed with the proposals under Sec. Sec.  
460.210(b)(4) and (b)(5) which would require PACE organizations to 
document all recommendations for services made by employees or 
contractors of the PACE organization, including specialists, and the 
reason(s) for not approving or providing services recommended by these 
sources in the participant's medical record.
    Response: We thank the commenter for their support of this 
provision.
    Comment: Commenters were split on the proposal to require original 
documentation to be maintained in the medical record. A commenter 
agreed with the proposed requirements in Sec. Sec.  460.200(d)(2) and 
460.210(b)(6), which would require PACE organizations to maintain all 
written communications received from participants or other parties, in 
their original form, when the communications relate to a participant's 
care, health or safety, including written communications from an 
advocacy or governmental agency. Another commenter was opposed to this 
provision stating that not all communication lends itself to being kept 
in the original form and the proposed requirement may be impracticable 
for mundane, routine communications such as confirming an

[[Page 6040]]

address for a family member. This commenter recommended that CMS remove 
the phrase ``all written communication'' and instead provide a specific 
list of communications that must be kept in its original format. The 
majority of commenters recommended that the provisions at Sec.  
460.210(b)(6) be modified consistent with their comments on the 
proposal at Sec.  460.200(d)(2). Specifically, commenters were 
concerned that maintaining original documentation of any written 
communication relating to the care, health or safety of a participant 
in any format in the medical record would compromise the usefulness of 
the medical record, due to the quantity of information that would be 
required to be stored. These commenters also stated that requiring 
direct care providers to download or otherwise transfer all such 
communications to the medical record would be burdensome and take them 
away from providing care to participants. As a solution, these 
commenters recommended permitting PACE organizations to scan written 
documentation and copy and paste communications received via email or 
text into electronic medical records. The same commenters expressed 
concerns that the requirements were overly broad and recommended that 
CMS revise its proposals to both allow PACE organization staff to use 
their discretion when determining the types of communication that must 
be included in a participant's medical record and exclude 
communications related to processing of service requests, appeals and 
grievances as those communications are often kept in separate systems. 
Another commenter indicated that the practice of summarizing verbal 
conversations and documenting in the EMR should apply to written 
communications. This commenter also recommended that CMS clarify its 
expectations with regard to communications from advocacy or 
governmental agencies and suggested that faxes and emails requesting 
documents should not be placed in the medical record.
    Response: We appreciate commenters' feedback and suggestions on 
Sec. Sec.  460.200(d)(2) and 460.210(b)(6). As we indicated in the 
discussion regarding Sec.  460.200 at section VI.E. of this final rule, 
we made corresponding changes to Sec.  460.210(b)(6) to require that 
the PACE organization maintain written communications in their original 
written form in the participant's medical record. (85 FR 9135). We made 
these corresponding changes at Sec.  460.210(b)(6) in order to 
establish requirements that would govern how PACE organizations must 
maintain written communications under Sec.  460.200(d)(2). Currently, 
Sec.  460.210(b)(7) (redesignated at 460.210(b)(10) in this rule) 
requires PACE organizations to document reports of contact with 
informal support, for example, caregivers, legal guardians, or next of 
kin in the participant's medical record. Since these reports of contact 
are already maintained in the medical record, we believe that PACE 
organizations should also maintain original written communication from 
the participant, his or her designated representative, family members, 
caregivers, or any other individual who provides information pertinent 
to a participant's care, health or safety, as well as communications 
from advocacy or governmental agencies like an AAA or APS within the 
medical record. We believe that documenting this written communication 
is necessary to maintain a comprehensive medical record for each 
participant that is complete and accurately documented, and in order to 
ensure that the IDT is remaining alert to pertinent information. We do, 
however, agree with the commenters' recommendation that PACE 
organizations should be permitted to include an unaltered electronic 
copy, such as a scanned pdf, of the original written communication in a 
participant's medical record, which aligns with the intent of this 
proposal. As discussed in the proposed rule related to Sec.  
460.200(d)(2), we were motivated in making this proposal by a concern 
that PACE organizations are not accurately summarizing written 
communication or retaining relevant information in written 
communications they receive. (85 FR 9134). The original basis for the 
proposal at Sec.  460.200(d)(2) also led us to establish the 
corresponding changes to Sec.  460.210(b)(6) which would require PACE 
organizations to maintain these communications in the medical record. 
(85 FR 9135). We continue to believe that this proposal will ensure 
that PACE organizations retain relevant information received in written 
communications relating to the care, health and safety of a 
participant. We also believe that commenters' suggestion to permit PACE 
organizations to retain an unaltered electronic copy would be 
consistent with this proposal, while also reducing the burden 
associated with storing the documentation in its original format. This 
change means that PACE organizations would be required to maintain all 
covered written communications described in Sec.  460.210(b)(6)(i) and 
(ii), but that they can be maintained in either their original form or 
as an unaltered electronic copy. We believe this change to Sec.  
460.210(b)(6) will ensure that written communications are complete, 
accurately documented, readily accessible, and available to all staff, 
while allowing additional administrative flexibility for PACE 
organizations in operationalizing this requirement. We are not 
establishing specific requirements governing where affected 
communications must be stored within a participant's medical record. 
PACE organizations may operationalize these requirements in accordance 
with the capabilities of their medical records systems. PACE 
organizations may also identify which staff will be responsible for 
entering these communications in the medical record. Section 
460.210(b)(6) does not require that covered communications be entered 
by direct care staff. Although direct care staff must remain alert to 
the pertinent information contained within these covered 
communications, PACE organizations may assign the responsibility for 
entering these covered communications to any staff, including those 
that does not provide direct care to participants.
    After consideration of the comments received and for the reasons 
outlined in our responses to comments, we are finalizing Sec.  
460.210(b)(4) and (5) as proposed. We are also finalizing Sec.  
460.210(b)(6) with one modification in the regulation text, which will 
require PACE organizations to include original documentation, or an 
unaltered electronic copy, of any written communication the PACE 
organization receives relating to the care, health or safety of a 
participant, in the participant's medical record.

G. PACE Participant Rights: Contact Information and Access Requirements 
(Sec.  460.112)

    Sections 1894(b)(2)(B) and 1934(b)(2)(B) of the Act specify in part 
that PACE organizations must have in effect written safeguards of the 
rights of enrolled participants including a patient bill of rights. 
Previously, we established in Sec.  460.112 certain rights to which a 
participant is entitled. This includes the participant's right to 
receive accurate, easily understood information and to receive 
assistance in making informed health care decisions under Sec.  
460.112(b); and the participant's right to a choice of health care 
providers, within the PACE organization's network, that is sufficient 
to ensure access to appropriate high-quality

[[Page 6041]]

health care under Sec.  460.112(c). CMS proposed to add three new 
participant rights in Sec.  460.112 to increase beneficiary 
protections: The right to contact 1-800-MEDICARE for information or to 
make a complaint; the right to have reasonable and timely access to 
specialists as indicated by the participant's health condition and 
consistent with current clinical practice guidelines; and the right to 
receive necessary care across all care settings, up to and including 
placement in a long term care facility when the PACE organization can 
no longer maintain the participant safely in the community through the 
support of PACE services.
    Section 1804(b) of the Act requires CMS to provide information on 
Medicare programs through 1-800-MEDICARE, as a means by which 
individuals may seek information and assistance for Medicare programs. 
This number may be utilized by Medicare beneficiaries to address 
coverage questions, find plan information, or make complaints related 
to the Medicare program. While PACE organizations are responsible for 
providing to all participants all services covered under Medicare and 
Medicaid, including prescription drugs, and other services determined 
necessary by the IDT to improve and maintain the participant's overall 
health status, PACE organizations are not required to provide this 
toll-free number to participants in any current communication. In the 
MA program, MA organizations must provide this information to 
beneficiaries in their Annual Notice of Change (ANOC) and Evidence of 
Coverage (EOC) under Sec.  422.111 as well as longstanding guidance 
under the Medicare Communications and Marketing Guidelines.\82\ We have 
discovered through oversight and monitoring efforts that PACE 
participants and/or their caregivers are often not aware that, in 
addition to the internal grievance process under Sec.  460.120, 
participants also have the right to contact 1-800-MEDICARE; for 
example, to file quality of care complaints, including filing a 
complaint regarding the delivery of a necessary service. For example, 
if the IDT approved treatment for a specific condition, but the 
participant never received that treatment, the participant or caregiver 
could call 1-800-Medicare to lodge a complaint. Given the frailty of 
the PACE population, we believe it is important that these participants 
be explicitly notified of their right to have their complaints heard 
and resolved by calling 1-800-MEDICARE. When a participant files a 
complaint with 1-800-MEDICARE, the complaint gets logged and routed to 
a CMS account manager or case worker in order to ensure it is 
appropriately responded to and resolved. To ensure PACE participants 
are notified about 1-800-MEDICARE, we proposed to amend Sec.  460.112 
by adding a new paragraph (b)(4) which would specify that participants 
have the right to contact 1-800-MEDICARE for information and 
assistance, including to make a complaint related to quality of care or 
delivery of a service. PACE organizations are required under Sec.  
460.116(c)(2) to display the PACE participant rights in a prominent 
location in the PACE center, and to include the participant bill of 
rights in the enrollment agreement under Sec.  460.154(m). Thus, by 
adding (b)(4) would ensure each PACE organization makes the 1-800-
MEDICARE number available to participants by posting it in an 
accessible location at the PACE center and including it in the 
enrollment agreement.
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    We also proposed to include a participant's right to have 
reasonable and timely access to specialists as indicated by the 
participant's health condition and consistent with current clinical 
practice guidelines at new Sec.  460.112(c)(3). PACE organizations are 
responsible for ensuring participants receive all necessary care from 
specialists, which is coordinated through the primary care provider and 
IDT in accordance with Sec.  460.102(c)(2)(ii) and (d)(1). In addition, 
as noted in the preamble to the 1999 PACE interim final rule that 
implemented the PACE program (see 64 FR 66260) and the preamble to the 
2006 PACE final rule that implemented Sec.  460.92 of the regulations 
(see 71 FR 71305), PACE organizations must utilize clinical practice 
guidelines to ensure the quality of care for PACE participants. CMS has 
also historically required the use of clinical practice guidelines and 
professional standards in determining outcome measures applicable to 
the care of PACE participants as part of the PACE organizations quality 
improvement program (see Sec.  460.134(b)). The 1999 PACE interim final 
rule also established the expectation that PACE organizations will 
utilize current clinical standards as a routine part of their daily 
operations. (64 FR 66260). Because part of the purpose of the quality 
improvement program is to identify areas to improve or maintain the 
delivery of services and patient care, CMS believes that these same 
guidelines and standards should be used as part of care planning and in 
making determinations about services as discussed in section VI.C. of 
this final rule. However, CMS' audits of PACE organizations have shown 
that some PACE participants have not received timely access to 
appropriate specialists as necessary to improve and maintain the 
participant's overall health status and in accordance with current 
clinical practice guidelines. Instead, the IDTs at some PACE 
organizations seem to be making their decisions based on factors not 
related to the participant's health condition. In some instances, 
participants have experienced negative outcomes because they have not 
received access to a specialist. Therefore, we proposed to redesignate 
paragraph (c)(3) as (c)(5) and add a new paragraph (c)(3), which 
expressly states each participant has the right to reasonable and 
timely access to specialists as indicated by the participant's health 
condition and consistent with current clinical practice guidelines.
    Lastly, we added a new paragraph at Sec.  460.112(c)(4) to address 
a participant's right to receive care across all care settings. A PACE 
organization is expected to provide for the care that is necessary for 
each participant and determine the appropriate setting in which to 
provide that care, up to and including placement in a long term care 
facility when a participant's condition requires it (see Sec.  
460.98(a) and (b)). However, CMS' monitoring and audit activity show 
that some PACE organizations are not providing long-term care services, 
even when their IDTs determine a participant can no longer live safely 
in their home and requires a higher level of care. We have learned that 
in some cases, affected participants disenroll from PACE in order to 
receive the long-term care that is needed. One of the purposes of the 
PACE program is to enable frail, older adults to live in the community 
as long as medically and socially feasible (see Sec.  460.4(b)(3)). 
PACE organizations are also responsible for furnishing comprehensive 
medical, health, and social services that integrate acute and long-term 
care, and providing services that are accessible and adequate to meet 
the needs of its participants. (See Sec.  460.98(b) and (d)(2) 
respectively). Lastly, enrollment in the PACE program continues until 
the participant's death, regardless of changes in health status, unless 
the participant voluntarily disenrolls, or is involuntarily 
disenrolled. (See Sec.  460.160(a)). A PACE organization cannot deny 
placement in

[[Page 6042]]

a long-term care facility if the IDT determines the participant 
requires 24-hour care but the PACE organization does not have a method 
for providing that care in the home through either its employees or 
contractors. See the relevant discussion under section VI.D. of this 
final rule regarding providing participants access to services 24 hours 
a day, every day of the year, across all care settings. In order to 
provide more specific detail about what this fundamental program 
requirement entails, we added Sec.  460.112(c)(4) which would state 
that a participant has the right to receive necessary care in all care 
settings up to and including placement in a long term care facility 
when the PACE organization can no longer provide the services necessary 
to maintain the participant safely in the community.
    We summarize the comments on the proposals related to PACE 
participant rights, and provide our responses to those comments, below.
    Comment: All commenters that addressed this proposal agreed with 
CMS's proposal to add a participant right at Sec.  460.112(b)(4) to 
inform participants of their right to contact 1-800-MEDICARE for 
information or assistance, including making a complaint related to the 
quality of care or the delivery of a service. These commenters also 
requested that CMS ensure that call center representatives are trained 
on PACE requirements and are able to handle inquiries from PACE 
participants.
    Response: We thank the commenters for expressing support for 
including the 1-800-MEDICARE number in the participant rights. We are 
committed to ensuring that participants concerns are addressed 
appropriately. Call center operatives are currently educated and 
trained on all Medicare programs, including PACE, and should be able to 
fully address PACE participant inquiries. PACE participants currently 
have the ability to contact 1-800-MEDICARE for concerns; however, 
participants are not utilizing this resource frequently, potentially 
because of a lack of knowledge about 1-800-MEDICARE, and we expect that 
by requiring this telephone number to be displayed in the PACE center 
and included in the participant's bill of rights, participants will 
more frequently utilize this resource if needed.
    Comment: All commenters that addressed this proposal were fully 
supportive of the addition of Sec.  460.112(c)(3) and (c)(4). These 
commenters noted that while they agree with the addition of (c)(4), 
there may be situations when placement in a long-term nursing facility 
may not be compatible with a participant's wishes.
    Response: We appreciate the commenters' support for these 
proposals. As noted in section VI.G. of the proposed rule, a PACE 
organization cannot deny placement in a long-term care facility if the 
IDT determines that the participant requires 24-hour care, but the PACE 
organization is unable to provide 24-hour care in the home through 
either its employees or contractors. Based on our experience overseeing 
PACE organizations, we have observed situations in which participants 
and caregivers were encouraged to disenroll from the PACE organization 
when long-term care placement was necessary to meet the participants 
needs. As required by Sec.  460.162(c), ``a PACE organization must 
ensure that its employees or contractors do not engage in any practice 
that would reasonably be expected to have the effect of steering or 
encouraging disenrollment of participants due to a change in health 
status.'' However, we understand that placement in a long-term care 
facility may not always be in line with a participant's wishes, and it 
is not our intent to require PACE organizations to place participants 
into long-term care facilities against their wishes.
    After consideration of the comments received, we are finalizing 
this provision without modification.

H. Enforcement Action Appeal Rights Under PACE (Sec.  460.56)

    Sections 1894(e)(7) and 1934(e)(7) of the Act specify that, under 
regulations, the provisions at section 1857(h) of the Act, governing 
the procedures for termination of a contract with an MA organization, 
apply to the termination and sanctions of a PACE program agreement and 
PACE organization in the same manner as they apply to an MA 
organization under Medicare Advantage. The current enforcement 
provisions at 42 CFR part 460, subpart D, do not specify a process for 
appeals related to civil money penalties or intermediate sanctions. 
However, at Sec.  460.54, the regulations include appeal rights for 
termination procedures. In the preamble to the 1999 PACE interim final 
rule (64 FR 66236), we discuss the requirement in the BBA of 1997 that 
we take into account some of the requirements established for MA as we 
develop regulations for PACE organizations in certain areas common to 
both programs, such as beneficiary protections, payment rates, and 
sanctions. CMS has interpreted this legal framework as granting the 
agency the authority to utilize the appeals processes that apply to MA 
organizations under Sec.  422.756 when imposing a suspension of 
enrollment or payment, or imposing civil money penalties on PACE 
organizations. Although it has not been codified in regulation, CMS 
currently provides PACE organizations with these appeal rights when 
imposing enforcement actions under Sec. Sec.  460.42, 460.46, and 
460.48(b).
    Therefore, in an effort to enhance transparency and ensure that 
PACE organizations are aware of their right to appeal an enforcement 
action, we added a new Sec.  460.56 in subpart D of the PACE 
regulations to affirmatively state that a PACE organization may request 
a hearing according to the procedures at Sec.  422.756 when CMS imposes 
a sanction or civil money penalty under Sec. Sec.  460.42, 460.46, or 
460.48(b) on PACE organizations.
    For suspensions of enrollment or payment listed under Sec. Sec.  
460.42 and 460.48(b), CMS will follow the hearing procedures for 
imposing intermediate sanctions at Sec.  422.756(b), which includes the 
right to a hearing before a CMS designated hearing officer under 
subpart N of part 422. Under the process specified at Sec.  422.756(b), 
CMS provides organizations with a notice of intent to impose sanctions 
and their right to a hearing before a CMS hearing officer. 
Organizations are given 15 days from the date of the notice to request 
a hearing.
    For civil money penalties listed under Sec.  460.46, CMS will 
follow the procedures for imposition of civil money penalties at Sec.  
422.756(e)(2)(v), which includes the right to a hearing before an 
Administrative Law Judge (ALJ) under subpart T of part 422. In 
addition, CMS must send a written notice of the agency's decision to 
impose a civil money penalty, the amount of the penalty, the date the 
penalty is due, information about the organization's right to a hearing 
and where to file the request for hearing.
    We believe this will ensure PACE organizations understand the 
process CMS utilizes for imposing these enforcement actions, as well as 
the PACE organization's right to appeal those actions.
    We did not include Sec.  460.48(a) or (c) in the proposed rule 
because those provisions refer to the termination of a PACE program 
agreement, for which procedures are already set forth at Sec.  460.54. 
However, Sec.  460.48(b) authorizes us to withhold payment under the 
PACE program agreement, which is similar to the suspension of payment 
provided at Sec.  460.42(b)(1).

[[Page 6043]]

Therefore, the procedures at Sec.  422.756 would apply, as specified at 
Sec.  460.56(a).
    We received no comments on our proposed new Sec.  460.56 to address 
enforcement action appeal rights and therefore are finalizing this 
provision without modification.

I. PACE Definitions (Sec.  460.6)

    As discussed briefly at section VI.A. of this final rule, we 
proposed to modify our existing definition of ``services.'' Currently, 
the term ``services'' is defined as including items and services. We 
proposed a change to use the term ``service'' in Sec.  460.6 to be 
consistent with the use of the singular in the terms defined under 
Sec.  460.6. The definition of the singular ``service'' would also 
apply to the plural ``services.'' In addition, we proposed to modify 
our definition of ``service'' to better reflect the full scope of the 
PACE benefit package by stating that the term ``service'', as used in 
part 460, means all services that could be required under Sec.  460.92, 
including items and drugs. In the 1999 PACE interim final rule, we 
stated that required services included all current Medicare services, 
all Medicaid-covered services as specified by the state's approved 
Medicaid plan, and specifically included ``drugs and biologicals'' as a 
part of a list of minimum benefits PACE organizations were required to 
provide. (64 FR 66246 and 66301). In the 2006 PACE final rule, we 
removed the specific listing of all required services because we 
determined that it was not possible to provide a complete list of all 
services that must be furnished to participants if ordered by the IDT. 
(71 FR 71281). Instead, we adopted the language that is currently used 
in Sec.  460.92 to identify the services required as a part of the PACE 
benefit package. Since that time, through CMS' monitoring and 
oversight, we have found that some PACE organizations do not realize 
that they are responsible for providing the full Medicare benefit, 
including the provision of Part D drugs. Therefore, we proposed to make 
changes by adding ``drugs'' to the definition of services for PACE 
purposes which is consistent with how we have historically defined the 
types of services that are required in PACE. We believe this change is 
necessary to remove potential ambiguity about the meaning of the terms 
``service'' or ``services'' when used in the PACE regulations.
    We received no comments on the proposed definition of ``service'' 
in Sec.  460.6 and therefore are finalizing this provision without 
modification.

VII. Technical Changes

A. Exclusion of Services Furnished Under a Private Contract (Sec.  
422.220)

    We proposed two substantive changes to Sec.  422.220 regarding the 
limits on when an MA organization may or may not pay an opt-out 
provider. In our proposal to amend Sec.  422.220, we sought first to 
align the regulatory definition of ``physician'' in regard to private 
contracts with the definition found in corresponding statute. 
Currently, section 1802(b)(6)(B) of the Act defines ``physician,'' in 
regard to private contracts, as a term that is defined by paragraphs 
(1), (2), (3), and (4) of section 1861(r) of the Act; however, Sec.  
422.220 currently defines ``physician,'' in respect to private 
contracts, using only paragraph (1) of section 1861(r) of the Act--
narrowing the regulatory definition to exclude physicians who are not 
doctors of medicine or osteopathy. To avoid confusion about what kinds 
of providers the opt-out and private contracting rules apply to, we 
proposed to extend the regulatory definition of ``physician'' to match 
the statutory definition when the term is used in regard to private 
contracts. We designed our proposal to achieve this by adding 
references to paragraphs (2), (3) and (4) of section 1861(r) of the Act 
to the definition of ``physician'' at Sec.  422.220 to make the 
regulatory provision consistent with the statute.
    Second, we proposed to clarify the prohibition at Sec.  422.220 in 
regard to the types of items and services for which an opt-out provider 
may and may not receive payment from an MA organization. In the 
proposed rule, we discussed our interpretation of the Medicare statute 
that payments for supplemental benefits are outside the scope of the 
statutory restriction on payments to opt-out providers. Section 
1802(b)(1)(B) of the Act states that an opt-out physician or 
practitioner must receive no reimbursement under the Medicare statute 
directly or on a capitated basis and ``no amount for such item or 
service from an organization which receives reimbursement for such item 
or service under [Title XVIII] directly or on a capitated basis.'' We 
explained that because MA organizations only receive reimbursement for 
Part A and Part B items and services under Title XVIII of the Act, 
supplemental benefits are not among the items and services for which an 
MA organization is prohibited from making payments to an opted-out 
provider. In our proposal, we recommended amending the regulations at 
Sec.  422.220 to make this distinction so that paragraph (a) states the 
prohibition on payment while paragraphs (b) and (c) direct when an MA 
organization must or may nonetheless pay an opt-out provider. We use 
the terms ``basic benefits'' and ``supplemental benefits'' consistent 
with how those terms are used in Sec. Sec.  422.100(c) and 422.102 and 
in section VI.F. of this final rule.
    We received the comments noted on this proposal and our responses 
follow.
    Comment: CMS received comments from an MA organization and a 
provider association in regard to our proposals. The comments CMS 
received were fully supportive of CMS's proposal to amend CMS's 
regulatory definition of ``physician'' at Sec.  422.220, which pertains 
to private contracts between providers and Medicare Advantage 
enrollees, to align with the corresponding statutory definition of 
``physician'' under section 1802(b)(6)(B) of the Act. CMS also received 
full support from these commenters in regard to CMS's proposal to amend 
Sec.  422.220 to clarify that the restrictions on payments to opt-out 
providers apply only to payments for basic benefits (that is, items and 
services covered under Parts A and B).
    Response: We thank the commenters for their remarks, and believe 
that in finalizing these proposals we better align our regulations with 
the statutes from which they originated.
    We received no additional comments on this proposal. After 
consideration of the comments and for the reasons outlined in the 
proposed rule and our response to comments, we are finalizing these 
proposed changes to Sec.  422.220 without modification.

B. Disclosure Requirements for Explanation of Benefits (Sec.  422.111)

    In a final rule titled, ``Medicare Program; Changes to the Medicare 
Advantage and the Medicare Prescription Drug Benefit Programs for 
Contract Year 2012 and Other Changes; Final Rule'' (73 FR 21504) 
(hereinafter referred to as the April 2011 final rule), we finalized a 
regulation at Sec.  422.111(b)(12) that requires an MA organization to 
furnish directly to enrollees, in the manner specified by CMS and in a 
form easily understandable to such enrollees, a written explanation of 
benefits, when benefits are provided under this part. Following the 
finalization of this regulation, CMS tested model Explanation of 
Benefits (EOB) templates, and, based on public comments solicited via 
HPMS memo and in 77 FR 70445, November 26, 2012, made final revisions 
to the EOB templates and issued guidance about the Part C EOBs. 
Subsequently, the

[[Page 6044]]

requirement for MA organizations to furnish Part C EOBs to their 
enrollees applied beginning April 1, 2014.
    In the February 2020 proposed rule, we sought to clarify and codify 
existing requirements for the Part C EOB. First, we sought to change 
where this requirement appears in Sec.  422.111(b) because paragraph 
(b) specifies general information about the MA plan that must be 
disclosed to each enrollee at the time of enrollment and annually, 
which is not when the EOB should be sent. We also proposed to clarify 
that the requirement to send the Part C EOB is permanently in effect. 
To achieve this, we proposed to move the substance of the regulation 
from (b)(12) to a new paragraph (k), with a minor change to delete the 
phrase ``CMS may require'' and to add the word ``must'' after ``MA 
organizations.'' We received no comments in regard to these two 
proposed changes.
    We also proposed to codify the existing content requirements of the 
Part C EOB in new Sec.  422.111(k)(1), (k)(2) and (k)(3). For each Part 
A and Part B covered item and service, mandatory supplemental benefit, 
and optional supplemental benefit furnished during the reporting 
period, we proposed that an MA organization must include a 
corresponding descriptor, billing code, and amount billed; total cost 
approved for reimbursement, share of the total cost paid by the plan; 
and the share of the total cost for which the enrollee is liable. We 
also proposed that MA organizations must include the most current year-
to-date totals in the EOB: the cumulative amount billed by all 
providers, the cumulative total costs approved by the plan, the 
cumulative share of total cost paid for by the plan, the cumulative 
share of total cost for which the enrollee is liable, the amount an 
enrollee has incurred toward the MOOP limit (as applicable), and the 
amount an enrollee has incurred toward the deductible (as applicable). 
We also proposed that MA organizations must provide clear contact 
information for enrollee customer service, instructions on how to 
report fraud, and for any EOB that includes one or more denied claims, 
the EOB must include a clear identification of the claim(s) denied as 
well as information about the denial and the enrollee's appeal rights. 
Our proposed regulation directed that this information about denied 
claims in the EOB would not replace the notice for adverse coverage 
decisions required by Sec. Sec.  422.568 and 422.570.
    We also proposed to codify the time frame choices available for MA 
organizations in sending the EOB. Proposed Sec.  422.111(k)(4) would 
require an MA organization to choose to either send EOBs on a monthly 
basis or quarterly basis with per-claim notification. Consistent with 
our current policy, we proposed that MA organizations that send EOBs 
monthly must send them before the end of each month that follows the 
month a claim was filed and that a per-claim notice must be sent on the 
same cycle as a monthly EOB, which is before the end of each month that 
follows the month a claim was filed; MA organizations that choose to 
send per-claim notices must also send quarterly summary EOBs. 
Consistent with our current policy, we also proposed that MA 
organizations that choose to send EOBs on a quarterly basis must send 
an EOB no later than the end of each month following the quarter a 
claim was filed.
    We summarize the comments received on our proposal and our 
responses follow.
    Comment: A commenter asked CMS to clarify the term ``filed'' as it 
is used in paragraph (k)(4) to require the monthly EOB to be sent 
before the end of the month after the month in which a claim is filed 
and the quarterly EOB to be sent before the end of each month that 
follows the quarter in which a claim was filed.
    Response: We clarify that we consider a claim to be filed when it 
has been received by an MA organization. This is consistent with our 
current policy.
    Comment: Although CMS did not specifically discuss the existing 
policy that exempts MA organizations from sending EOBs to dual-eligible 
enrollees, one commenter asked CMS whether or not D-SNPs must send EOBs 
to their enrollees as a result of this rule.
    Response: Currently, MA organizations are not required to send EOBs 
to dual-eligible enrollees, which would necessarily include any 
enrollee of a D-SNP, because dual-eligible enrollees generally do not 
pay any out-of-pocket costs. In the April 2011 final rule, we discussed 
the comments we solicited on this matter, and determined we would study 
the issue of applicability to dual-eligible enrollees (including those 
enrolled in D-SNPs) further under our pilot program. (76 FR 21507). At 
the conclusion of our pilot program, and after reviewing additional 
public comments solicited via a Health Plan Management System (HPMS) 
memo release with a 30-day comment period, as well as a November 26, 
2012 Federal Register notice (77 FR 70445), the policy that exempts MA 
organizations from sending EOBs to dual-eligible enrollees was 
finalized. As we did not intend to make changes to Part C EOB policy in 
our proposal during this current round of rulemaking, we are finalizing 
this exception at Sec.  422.111(k)(5).
    Comment: A commenter, an MA organization, suggested that CMS no 
longer require MA plans and Part D sponsors to send Part C and Part D 
EOBs on a monthly basis. The MA organization stated that their 
enrollees experience confusion in regard to their EOBs which 
unnecessarily leads to complaints to their customer service department 
and to CMS. The MAO stated that their consumer research found that 
enrollees often did not read or did not know how to interpret their 
EOBs because the documents are lengthy and complex. They also found 
that their enrollees had a tendency to be interested in seeing how 
their cost sharing applied toward their deductible and maximum-out-of-
pocket costs, and less interested in information that involves complex 
claims details or medical terminology. The MAO also stated that 
enrollees often complain about receiving EOBs on a monthly basis. The 
MAO recommended that CMS modify existing EOB guidance to permit MA 
plans and Part D sponsors to send quarterly statements to enrollees 
that include EOB totals related to cost sharing only, rather than the 
full EOB.
    Response: The current Part C EOB was designed to ensure that MA 
enrollees have all of the information necessary to make important 
decisions about their health care, and its content was informed by 
input from MA organizations, patient advocacy groups, and other 
stakeholders. After publication of the April 2011 final rule, we 
engaged MA organizations, industry and advocacy groups, and enrollees 
in listening sessions to gather their feedback; using the feedback we 
collected, we then designed and tested models through a small pilot 
program with a volunteer MA organization in CY 2012. After the 
conclusion of this process, we sought additional public comments on the 
models through a Health Plan Management System (HPMS) memo release with 
a 30-day comment period. Based on public comment we received on the 
HPMS memo and a November 26, 2012 Federal Register notice, we finalized 
the current models for the Part C EOB. While an enrollee may not always 
need the entirety of the information stated in their EOB, some 
circumstances (for example, appeals) may arise when the enrollee needs 
more information than just their updated cost-sharing totals. At this 
time, CMS will not be changing the content requirements of the EOB; 
however, we acknowledge the importance of providing easily

[[Page 6045]]

understandable information to enrollees and may consider limiting the 
content requirements in future rulemaking. We are finalizing the 
proposed option for MA organizations to use a quarterly cycle for 
furnishing the EOBs. We note that the regulation text does not require 
that the MA organization use the same cycle for every enrollee, so an 
MA organization may elect to provide an option for enrollees to select 
the monthly or quarterly cycle, provided that the applicable content 
and timing requirements are met. Finally, the Part D EOB notice is 
outside the scope of this rulemaking.
    Comment: Some commenters asked that CMS reconsider the requirement 
to send enrollees hard copies of their EOBs. An MA organization 
suggested that rather that mail paper EOBs, plans should be permitted 
to instead send enrollees a paper disclosure notice instructing them to 
contact customer service to obtain a hardcopy, or go online to view an 
electronic copy. The same MA organization stated that plans should 
continue to mail hard copies of the Integrated Denial Notice (IDN). 
Another commenter suggested that CMS consider changing the default 
requirement to electronic EOBs with paper opt-in, and stated that 
savings on paper, printing, and mailing could be used toward enhanced 
care and benefits.
    Response: While CMS continues to drive innovation with respect to 
electronic health data access, we also recognize that a default 
electronic format could create disparity for enrollees who do not have 
the skills or equipment to obtain their claims data digitally. In order 
to help ensure that all enrollees are able to access their EOBs, CMS 
does not support a change in policy that would permit MA organizations 
to send EOBs electronically by default at this time. With respect to 
paper and electronic EOBs, CMS is not changing the requirement 
(finalized in section V.E of this rule) that MA organizations mail 
required materials in hard copy or provide them electronically 
following the requirements set forth in Sec.  422.2267(d). CMS notes 
that in order to send an EOB to an enrollee electronically, the MA 
organization must obtain prior consent from the enrollee, provide 
instructions on how and when the enrollee can access the EOB, have a 
process in place through which an enrollee can request hard copies be 
mailed, and have a process for automatic mailing of hard copies when 
electronic versions are undeliverable, consistent with the requirements 
outlined at Sec.  422.2267(d)(2)(ii).
    Comment: An MA organization recommended that CMS provide more 
flexibility with regard to the frequency that an EOB can be sent to 
enrollees. Specifically, the MA organization suggested that CMS allow 
health plans to send the EOB every two weeks.
    Response: Under our current policy and the regulation being 
finalized here at Sec.  422.111(k), an MA organization must deliver the 
EOB at least on a monthly or quarterly basis, complying with the 
applicable content requirements. While CMS currently permits these two 
different frequency cycles, plans may still communicate information to 
their enrollees on a more frequent basis as long as the requirements of 
either the monthly or quarterly cycle continue to be met. At this time, 
CMS will not be making changes to the EOB frequency cycles or their 
respective requirements.
    After consideration of the comments and for the reasons outlined in 
the proposed rule and our responses to comments, we are finalizing our 
proposal for Sec.  422.111(k), with one substantive modification to 
provide that MA organizations are not required to send the explanation 
of benefits to dual-eligible enrollees.

C. Special Requirements During a Disaster or Emergency (Sec.  422.100)

    Section 422.100(m)(5)(iii) currently requires an MA organization to 
provide the information described in paragraphs (m)(1), (2), (3), and 
(4)(i) on its website, but Sec.  422.100(m) does not have a paragraph 
(m)(4)(i) and paragraph (m)(4) requires a notice to CMS regarding the 
MA organization's ability to resume normal operations; rather, 
paragraph (m)(5)(i) describes the terms and conditions of payment 
during a public health emergency or disaster for non-contracted 
providers furnishing benefits to plan enrollees residing in the state-
of-disaster area, which is the information we intended to be posted by 
the MA organization. As noted in the proposed rule, the final rule that 
adopted Sec.  422.100(m), titled ``Medicare Program Contract Year 2016 
Policy and Technical Changes to the Medicare Advantage and the Medicare 
Prescription Drug Benefit Programs'' (80 FR 7912), was clear that the 
requirement at 422.100(m)(5)(iii) was to post the disaster and 
emergency policies in order to facilitate enrollee access to needed 
services while normal care delivery is unavailable, which would enable 
enrollees and providers to know the payment policies for out-of-network 
services provided during disasters.
    We proposed to amend Sec.  422.100(m)(5)(iii) to correct the text, 
replacing the reference to paragraph (m)(4)(i) to paragraph (m)(5)(i). 
We also proposed to update the regulation text to use ``website'' 
rather than ``Web site'' since the non-hyphenated non-capitalized term 
``website'' is now commonly used and more consistent with other 
regulations in part 422.
    We received no comments on this proposal and are finalizing the 
proposed technical amendments to Sec.  422.100(m)(5) for the reasons 
outlined in the proposed rule.

D. Effective Date for Exclusion of Coverage for Kidney Acquisitions 
From Basic Benefits (Sec.  422.100)

    Section 1852(a)(1)(B)(i) of the Act defines the term ``benefits 
under the original Medicare Fee-for-Service program option'' for 
purposes of the requirement in subparagraph (a)(1)(A) that each MA 
organization provide these benefits to MA enrollees. Section 
17006(c)(1) of the Cures Act amended section 1852(a)(1)(B)(i) of the 
Act by inserting ``or coverage for organ acquisitions for kidney 
transplants, including as covered under section 1881(d)'' after 
``hospice care.'' Per section 17006(c)(3) of the Cures Act, this 
amendment applies with respect to plan years beginning on or after 
January 1, 2021. Thus, effective January 1, 2021, MA plans will no 
longer cover organ acquisitions for kidney transplants.
    In the April 2019 final rule, we amended the definition of ``basic 
benefits'' at Sec.  422.100(c)(1) to include ``additional telehealth 
benefits,'' and in doing so, we also amended Sec.  422.100(c)(1) to 
note the new exclusion of coverage for organ acquisitions for kidney 
transplants (in addition to the existing exclusion for hospice care). 
However, we inadvertently omitted the identification of the 2021 
effective date for this change set forth in the Cures Act.
    In the proposed rule, we proposed a technical correction that would 
add the 2021 effective date to Sec.  422.100(c)(1) for the exclusion of 
original Medicare coverage for organ acquisitions for kidney 
transplants. Specifically, we proposed to correct the phrase ``(other 
than hospice care or coverage for organ acquisitions for kidney 
transplants)'' to read: ``(other than hospice care or, beginning in 
2021, coverage for organ acquisitions for kidney transplants).'' This 
provision is technical and, as stated in the proposed rule, is 
therefore not expected to have economic impact beyond current operating 
expenses.
    We received no comments on this proposal and are finalizing the 
proposed amendments to Sec.  422.100(c)(1) without

[[Page 6046]]

modification for the reasons outlined in the proposed rule.

E. Add Back Cost Plan Related Sections From Previous Final Regulation 
(Sec.  422.503)

    In the Medicare Program; Contract Year 2015 Policy and Technical 
Changes to the Medicare Advantage and Medicare Prescription Drug 
Benefit Programs; Final Rule (hereinafter referred to as the May 2014 
final rule), we finalized regulations affecting the cost plan non-
renewal-related requirements (79 FR 29850 through 29851, 29959). The 
final regulation inadvertently identified the non-renewal section as 
Sec.  422.503(b)(4)(vi)(G)(5)(i) and (ii) when instead the revisions 
should have been specified as revising Sec.  422.503(b)(5)(i) and (ii). 
Although the regulatory text for the provision was published in the May 
2014 final rule, it was not correctly codified in the CFR. In the 
February 2020 proposed rule, we proposed to designate the provision in 
the correct paragraph of Sec.  422.503.
    The rule we adopted in 2014 provides that an entity seeking to 
offer an MA organization may not accept new enrollees under a section 
1876 reasonable cost contract in any area in which it seeks to offer an 
MA plan. In the February 2020 proposed rule, we proposed to codify a 
policy adopted in the May 2014 final rule that prohibits an 
organization from offering and accepting enrollment in both an MA plan 
and a cost plan in the same service area; that policy applied to when 
the MA organization and the cost plan organization were the same legal 
entity or corporate affiliates. The proposed rule explained the 
redesignation:
     In new Sec.  422.503(b)(5)(i), we specify that an entity 
seeking to contract as an MA organization must not accept, or share a 
corporate parent organization owning a controlling interest in an 
entity that accepts, new enrollees under a section 1876 reasonable cost 
contract in any area in which it seeks to offer an MA plan.
     In new Sec.  422.503(b)(5)(ii), we specify that an entity 
seeking to offer an MA organization must not accept, or be either the 
parent organization owning a controlling interest of or subsidiary of, 
an entity that accepts, new enrollees under a section 1876 reasonable 
cost contract in any area in which it seeks to offer an MA plan.
    We also proposed minor technical corrections to the regulation text 
described in the May 2014 final rule to improve the flow of the 
regulation text.
    CMS received comments from two healthcare organizations and a trade 
association.
    Comment: The commenters requested that the provision not be 
finalized, stating that it was not necessary. They commented that 
should CMS finalize the proposal, that it not be applied to entities 
that have both a cost plan and dual eligible special needs plan (D-SNP) 
or EGWPs, as the likelihood of an organization moving enrollees from 
one of these plans to another was especially low. In addition, the 
commenters requested that we revise our current understanding of the 
service area affected by the provision to determine whether there is an 
overlap between a cost plan and an MA plan on a county-by-county basis.
    Response: The proposal in this rule is to restore, with minor 
technical and grammatical changes, language from a rule published in 
the Federal Register on May 23, 2014, that was not included in the Code 
of Federal Regulations. As such, we are proposing a technical change 
and the comments are outside the scope of this rule. Similar comments 
regarding the scope of the policy and whether it should apply to D-SNPs 
were submitted and addressed in that earlier rulemaking. For public 
comments and CMS responses to policy questions on the provision, as 
well as additional discussion of this provision, see the May 23, 2014 
final rule (79 FR 29850-29851; 29944; 29959).
    After considering the comments and for the reasons outlined in the 
proposed rule and our responses to comments, we are finalizing the 
amendment to Sec.  422.503(b)(5) as proposed with minor grammatical 
changes.

F. Definition of ``Institutionalized'' (Sec.  422.2)

    Section 1859(b)(6)(B)(i) of the Act permitted the Secretary to 
define the term institutionalized for the purposes of establishing 
eligibility criteria for Medicare Advantage (MA) special needs plans 
for individuals who are institutionalized (I-SNPs). In addition, 
section 1851(e)(2)(D) of the Act permitted the Secretary to define the 
term for purposes of eligibility for a continuous open enrollment 
period to enroll or change enrollment in an MA plan, except for MA MSA 
plans. CMS codified the current definition of institutionalized at 
Sec.  422.2 in the January 2005 final rule (70 FR 4588) as an MA 
eligible individual who continuously resides or is expected to 
continuously reside for 90 days or longer in a long-term care (LTC) 
facility which is a skilled nursing facility (SNF) nursing facility 
(NF); SNF/NF; an intermediate care facility for individuals with 
intellectual disabilities (ICF/IID); or an inpatient psychiatric 
facility. This definition is used in the MA regulations (42 CFR part 
422) to establish eligibility for I-SNPs and eligibility for continuous 
open enrollment.
    We proposed to revise the definition of institutionalized in Sec.  
422.2 to expand the list of facilities and to add a standard to use to 
identify additional facilities where an institutionalized individual 
may reside in order to provide necessary flexibility to the regulation. 
Under our proposal, an institutionalized individual would be an 
individual who continuously resides or is expected to continuously 
reside for 90 days or longer in one of the following long-term care 
facility settings:
    (1) Skilled nursing facility (SNF) as defined in section 1819 of 
the Act (Medicare);
    (2) Nursing facility (NF) as defined in section 1919 of the Act 
(Medicaid);
    (3) Intermediate care facility for individuals with intellectual 
and developmental disabilities as defined in section 1905(d) of the 
Act;
    (4) Psychiatric hospital or unit as defined in section 1861(f) of 
the Act;
    (5) Rehabilitation hospital or unit as defined in section 
1886(d)(1)(B) of the Act;
    (6) Long-term care hospital as defined in section 1886(d)(1)(B) of 
the Act;
    (7) Hospital which has an agreement under section 1883 of the Act 
(a swing bed hospital); and,
    (8) Subject to CMS approval, a facility that is not listed in 
paragraphs (1) through (7) but meets both of the following: (i) 
Furnishes similar long-term, healthcare services that are covered under 
Medicare Part A, Medicare Part B, or Medicaid; and (ii) whose residents 
have similar needs and healthcare status as residents of one or more 
facilities listed in paragraphs (1) through (7).
    We explained in the proposed rule our concern that the current 
definition is too limited in scope given the array of institution and 
facility types in place today. We noted how our current subregulatory 
guidance identifies additional facilities and that the proposed changes 
to the definition would align the regulatory text with existing 
operational practice and current guidance, clarify our policy for MA 
organizations, and promote the expansion of I-SNP offerings under the 
MA program. Our guidance (Chapter 16b of the Medicare Managed Care 
Manual (MMCM) and the MA Enrollment and Disenrollment

[[Page 6047]]

Guidance \83\) taken together list the five types of institutions in 
the current definition and other institutions that are identified in 
some way in Titles XVIII or XIX of the Act in connection with the 
Medicare and Medicaid programs. We also explained the need for a 
standard that we could use to identify additional facility types, 
without having to go through future rulemaking, that we believed would 
be appropriate to use for defining when an individual is 
institutionalized. We explained how, under our proposal and using this 
new standard, CMS could permit an MA organization to offer an I-SNP to 
serve beneficiaries that continuously reside in facilities that meet 
this new standard but are not listed in the definition, provided the 
plan meets the remaining criteria for I-SNPs. We explained how our 
proposed new definition, as a whole, could lead to additional types of 
I-SNPs and provide more options to Medicare beneficiaries for special 
needs plans targeted to the needs of individuals who are 
institutionalized.
---------------------------------------------------------------------------

    \83\ Chapter 16b of the MMCM can be found here: https://
www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/
mc86c16b.pdf; and the MA Enrollment and Disenrollment Guidance 
document can be found here: https://www.cms.gov/Medicare/Eligibility-and-Enrollment/MedicareMangCareEligEnrol/Downloads/CY_2019_MA_Enrollment_and_Disenrollment_Guidance.pdf.
---------------------------------------------------------------------------

    In the proposed rule, we acknowledged that the proposed definition 
would not fully align with Sec.  423.772, which defines 
``institutionalized individual'' as a full-benefit dual eligible 
individual who is an inpatient in a medical institution or nursing 
facility for which payment is made under Medicaid throughout a month, 
as defined under section 1902(q)(1)(B) of the Act. We explained that we 
did not believe alignment was necessary because the definition in Sec.  
423.772 serves a different purpose than the definition we proposed for 
Sec.  422.2 and that differences between the two definitions had been 
in place since 2005, reflecting these different purposes. (85 FR 9145)
    Finally, we discussed why we did not propose to change the 
definition of ``institutionalized-equivalent'' even though that term is 
also used to establish I-SNPs and eligibility for I-SNPs.
    We received the following comments related to our proposals, and 
our responses follow:
    Comment: A commenter stated that the proposed rule disqualifies 
Medicare Advantage enrollees with advanced cancer disease residing in a 
neoplastic disease care hospital by implementing a time requirement of 
90 days, and that current subregulatory guidance in section 30.3 of 
Chapter 2 to the Managed Care Manual and regulations at 42 CFR 
422.62(a)(4) do not require the 90-day time requirement for an 
institutionalized stay.
    Response: As proposed and finalized, the revised definition of the 
term institutionalized aligns with current CMS guidance and expands the 
definition of institutionalized in Sec.  422.2 to reflect the evolution 
of institutions over time and the current landscape of institutional 
health care today. The current definition of institutionalized in Sec.  
422.2 includes, and has included since the definition was adopted in 
2005 (70 FR 4596, 4714), the criterion that the MA eligible individual 
continuously resides or is expected to continuously reside for 90 days 
or longer in a long-term care (LTC) facility. Our guidance in Chapter 2 
of the Medicare Managed Care Manual, regarding enrollment and 
disenrollment, might not specifically address the requirement in the 
definition in Sec.  422.2 that an individual reside or be expected to 
reside in a long term care facility of the type listed but that does 
not change the regulation. Because the definition includes individuals 
who are expected to reside in facility for a 90-day or longer 
continuous period, enrollment into an I-SNP may precede the 90-day 
point based on an appropriate assessment that the regulatory standards 
are met, as CMS explained in the preamble to the 2005 final rule. (70 
FR 4596). The new definition of institutionalized maintains this 
criterion and identifies seven specific types of long-term care 
facilities rather than the original five institution types listed in 
the definition.
    In addition, the definition in the final rule specifies that CMS 
may approve additional facilities that are not listed previously, but: 
(i) Furnish similar long-term, healthcare services that are covered 
under Medicare Part A or Part B or Medicaid; and (ii) whose residents 
have similar needs and healthcare status as residents of one or more 
facilities previously listed. In implementing this final rule, CMS will 
establish a review process to determine whether a particular different 
institution type meets these standards for designation under this 
definition and therefore permit an MA organization to offer an I-SNP to 
serve beneficiaries that continuously reside in (or are expected to 
continuously reside for 90 days or longer in) such designated 
facilities, provided the plan meets the remaining qualifying criteria 
for I-SNPs. This new authority to identify non-listed facilities for 
purposes of determining if an individual is institutionalized is 
applicable for the contract and coverage year beginning January 1, 2022 
and we intend to review requests from MA organizations and others to 
meet that timeframe for identifying facilities that meet this standard. 
In addition, individuals residing in institutions that qualify under 
this part of the definition will also be eligible for the continuous 
open enrollment under Sec.  422.62(a)(4).
    Comment: Another comment stated that the proposed rule would expand 
use of the definition by making it also applicable to the open 
enrollment period for institutionalized individuals. They note that 
this would have the effect of expanding a 90-day length of stay 
requirement to individuals for purposes of their qualification for the 
open enrollment period for institutionalized individuals (OEPI).
    Response: The existing requirements establishing qualifications for 
the open enrollment period for institutionalized individuals (OEPI) are 
established in 42 CFR 422.62(a)(4), which provides that an individual 
who is eligible to elect an MA plan and who is institutionalized, as 
defined in Sec.  422.2, is not limited (except with regard to MA MSA 
plans) in the number of elections or changes he or she may make. The 
use of the definition in Sec.  422.2 to identify individuals who are 
eligible for this OEPI was adopted in a revision of Sec.  422.62(a)(4) 
in the April 2018 final rule (83 FR 16616 through 16618, 16723). This 
final rule does not amend Sec.  422.62(a)(4), so the revised definition 
of institutionalized at Sec.  422.2 will apply to identify who is 
eligible for the OEPI. The revised definition expands the list of 
qualifying institutions and provides an opportunity for similar 
institutions to qualify. We disagree with the commenter, however, that 
the definition of institutionalized, as finalized under this rule, 
changes the previous requirement that an MA eligible individual must 
continuously reside or is expected to continuously reside for 90 days 
or longer in a long-term care (LTC) facility to meet the definition or 
to be eligible for the OEPI. Because the definition includes 
individuals who are expected to reside in facility for a 90 day or 
longer continuous period, enrollment into an I-SNP may precede the 90 
day point based on an appropriate assessment.
    Comment: Another commenter supported the proposed rule but had 
concerns that the change may hinder state Medicaid agency efforts to 
integrate Medicare and Medicaid programs on behalf of dual eligible 
beneficiaries through FIDE SNPs. First, the commenter believes that 
expanding the list of facilities and adding a

[[Page 6048]]

standard to use to identify additional facilities where an 
institutionalized individual may reside could result in a managed care 
plan's ability to offer I-SNPs that do not meet the requirements to be 
D-SNPs to a largely dual eligible beneficiary population, and thus, the 
MA plan would be able operate outside of the State Medicaid Agency 
Contract (SMAC) requirement in section 1859 of the Act (added by the 
MIPPA). The commenter noted that the change in the definition of 
institutionalized creates concerns similar to the recent growth of D-
SNP lookalike MA plans that CMS has sought to regulate. Second, the 
commenter stated that definitional change of institutionalized could 
potentially confuse dual eligible beneficiaries when selecting the best 
SNP for the beneficiary's specific needs. The commenter advised CMS and 
state Medicaid agencies to coordinate implementation if CMS adopted the 
proposed changes.
    Response: We thank the commenter for their remarks, but do not 
share the same concerns that aligning the definition of 
institutionalized in Sec.  422.2 with current CMS guidance and adding a 
standard to recognize facilities that are not listed in the definition, 
but serve the same function for individuals with similar needs, would 
adversely impact integration of Medicare and Medicaid services for 
dually eligible beneficiaries. First, with regard to the specifically 
listed facilities in the definition, this final rule is consolidating 
current CMS guidance regarding I-SNP and OEPI enrollment policies and 
is not a significant break from them. The final rule will also provide 
additional flexibility to account for changes in the types of 
institutions that could potentially be used for I-SNPs that are not 
covered by the current definition of institutionalized. As we stated in 
the proposed rule, we are creating criteria that would accommodate 
changes in forms of institutional care within American healthcare 
without fundamentally changing or conflicting with other regulatory and 
statutory provisions surrounding I-SNPs. Under the finalized rule, the 
definition of institutionalized could include, subject to CMS approval, 
an additional facility that is not listed previously but (i) furnishes 
similar long-term, healthcare services that are covered under Medicare 
Part A or Part B or Medicaid and (ii) whose residents have similar 
needs and healthcare status as residents of one or more facilities 
previously listed. Therefore, CMS could permit an MA organization to 
offer an I-SNP to serve beneficiaries that continuously reside in 
facilities that meet this new standard but are not listed in the 
definition, provided the plan meets the remaining criteria for I-SNPs. 
In addition, any I-SNP application containing newly authorized 
institutions will still need to meet the remaining review standards to 
gain approval.
    Second, we recognize that a portion of I-SNP enrollees are dually 
eligible for Medicare and Medicaid, and that is also true for many 
Medicare beneficiaries requiring a nursing level of care; however, this 
overlap of eligible populations is not complete. This change in the 
definition of institutionalized does not change the current 
requirements that establish the process for I-SNP application approval 
such as meeting the care management requirements for all SNPs, required 
by section 1859(f)(5) of the Act. Given that an MA organization would 
need to meet a separate set of standards, we believe there is limited 
incentive for an MA organization to establish an I-SNP as opposed to a 
D-SNP as a means to circumvent the requirement for a contract between a 
state and MA organization, which is limited to D-SNPs under section 
1859(f)(3)(D) of the Act and Sec.  422.107. Finally, while we 
appreciate that having several plan options available for a beneficiary 
requires the beneficiary to think through his or her needs carefully 
and compare those to the specific benefits and costs of each plan, we 
do not believe that permitting I-SNPs to enroll individuals who 
continuously reside in (or are expected to continuously reside) for 90 
days or longer in a facility that meets the new standard we are 
adopting creates unnecessary confusion or burden for beneficiaries. 
Having a number of plan choices will allow beneficiaries to choose 
among plans with potentially different plan networks, levels of out-of-
pocket costs, and extra benefits like vision, hearing, and dental. We 
believe this ultimately increases the likelihood that beneficiaries 
will be able to find a satisfactory MA plan that fits their healthcare 
needs.
    Comment: Another commenter supported the proposal, but recommended 
a clarification that a ``facility that furnishes similar long term 
healthcare services that are covered under Part A or Part B or Medicaid 
. . . .'' includes facilities/settings where the services may be 
furnished by external healthcare entities that are overseen by the 
facility.
    Response: We do not believe the proposed rule will prohibit 
services from being furnished by external healthcare entities as long 
as all other requirements are met by the I-SNP and contracted facility 
under the plan. Therefore, we are not making the recommended revision.
    After consideration of the comments and for the reasons outlined in 
the proposed rule and our responses to comments, we are finalizing the 
revised definition of institutionalized at Sec.  422.2 as proposed. In 
reviewing our proposal to amend the definition of institutionalized, we 
realized that the definition of ``special needs individual'' in Sec.  
422.2 refers to an individual who is institutionalized but not to an 
individual who is institutionalized-equivalent. In the final rule 
published in the Federal Register on January 12, 2009 (74 FR 1495 
through 1496), we first clarified that that I-SNPs can enroll 
individuals who are institutionalized-equivalent. In that rule, we 
noted that section 164 of MIPPA amended section 1859(f) of the Act, 
allowing institutional SNPs to enroll a special needs individual who is 
living in the community but requires an institutional level of care 
(LOC) (that is, an ``institutional-equivalent individual''). In 
connection with that statutory amendment, we added the definition for 
the term ``institutionalized equivalent'' to Sec.  422.2 but failed to 
amend the definition of ``special needs individual'' to include 
individuals who meet the standard of being institutionalized-
equivalent. In order to address this oversight, we are finalizing here 
a technical change in the definition of ``special needs individual'' to 
add that an individual who is institutionalized-equivalent is also a 
special needs individual, which is consistent with that prior final 
rule and our current practice.

G. Medicare Electronic Complaint Form (Sec. Sec.  422.504 and 423.505)

    On April 15, 2011, CMS amended Sec. Sec.  422.504 and 423.505 to 
add a new Sec. Sec.  422.504(a)(15) and 423.505(b)(22) requiring MA and 
Part D plans to address and resolve complaints received through CMS' 
complaint tracking system and to provide a direct link on their main 
web page to the Medicare.gov electronic complaint form. We are 
finalizing our proposal to modify Sec. Sec.  422.504(a)(15) and 
423.505(b)(22) by removing Sec. Sec.  422.504(a)(15)(ii) and 
423.505(b)(22)(ii) and recodifying the substance (requiring plans to 
display a link to the electronic complaint form on the Medicare.gov 
internet website on the plan's main web page) to subpart V, 
Communication requirements. Sections 422.111(h)(2) and 423.128(d)(2) 
require MA and Part D plans to maintain a

[[Page 6049]]

website. In section VI.H. of this final rule, we are adding new 
Sec. Sec.  422.2265 and 423.2265, which provide requirements for MA and 
Part D plan websites. Specifically, in Sec. Sec.  422.2265(b) and 
423.2265(b), we identify the required content for websites, including a 
link to the Medicare.gov electronic complaint form. We believe the 
requirement for a direct link is more appropriately addressed in CMS' 
website requirements rather than in Sec. Sec.  422.504(a)(15) and 
423.505(b)(22).
    We are not making any substantive changes to Sec. Sec.  
422.504(a)(15) and 423.505(b)(22) other than minor changes in the text 
to make it clear that plans must use the CMS complaint tracking system 
to address and resolve complaints received by CMS against the plan. In 
connection with removing Sec. Sec.  422.504(a)(15)(ii) and 
423.505(b)(22)(ii), we are redesignating the substance of Sec. Sec.  
422.504(a)(15)(i) and 423.505(b)(22)(i) as Sec. Sec.  422.504(a)(15) 
and 423.505(b)(22).
    We received no comments on this proposal and are finalizing the 
proposed technical amendments to Sec. Sec.  422.504(a)(15) and 
423.505(b)(22) without modification for the reasons outlined in the 
proposed rule.

H. General Requirements for Applicable Integrated Plans and 
Continuation of Benefits (Sec. Sec.  422.629 and 422.632)

    We proposed technical changes to Sec.  422.629(k)(4)(ii) to correct 
four technical errors from the April 2019 final rule. Paragraph 
(k)(4)(ii) references Medicare coverage criteria, however Medicaid 
coverage criteria are also applicable during the unified appeals 
process described in this section. Therefore, we proposed to add the 
phrase ``and Medicaid'' following ``knowledge of Medicare'' in Sec.  
422.629(k)(4)(ii).
    Also in paragraph (k)(4)(ii) of this section, there is an incorrect 
reference to the MA organization. We proposed to replace ``MA 
organization'' with the correct term, ``applicable integrated plan''. 
Also, we proposed to add the word ``integrated'' before ``organization 
determination decision'' to conform to the terminology used elsewhere 
in Sec.  422.629(k). Lastly, we proposed to remove the comma between 
the words ``expertise'' and ``in'' in the regulation text to clarify 
that the required expertise is in the topics identified in the text.
    In Sec.  422.632(b)(1), we proposed to change the citation from 
Sec.  422.633(e) to (d). Section 422.632(b)(1) reflects the requirement 
that the enrollee file a request for an integrated appeal in a timely 
manner, with a cross reference to the regulation that sets the 
timeframe for such appeals. Paragraph (d) of Sec.  422.633 sets that 
timeframe while paragraph (e) addresses the requirements for expedited 
integrated reconsiderations. We therefore proposed to amend Sec.  
422.632(b)(1) to use the correct cross-reference.
    We received no comments on this proposal and are finalizing the 
proposed technical amendments to Sec. Sec.  422.629(k)(4)(ii) and 
422.632(b)(1) without modification for the reasons outlined in the 
proposed rule.

I. Representatives in Part D Appeals (Sec. Sec.  423.560, 423.566, 
423.578, 423.2014, and 423.2036)

    The regulations for Medicare fee-for-service (Part A and Part B) 
claims and entitlement appeals at part 405, subpart I, reference two 
types of representatives--authorized and appointed. Section 405.902 
defines an authorized representative as an individual authorized under 
state or other applicable law to act on behalf of a beneficiary or 
other party involved in an appeal, and separately defines an appointed 
representative as an individual appointed by a party to represent the 
party in a Medicare claim or claim appeal. Similarly, for appeals of 
Medicare Part C organization determinations, Sec.  422.561 defines 
``representative'' as an individual appointed by an enrollee or other 
party, or authorized under state or other applicable law, to act on 
behalf of an enrollee or other party involved in the grievance or 
appeal. For appeals of Medicare Part D coverage determinations, 
however, Sec.  423.560 defines ``appointed representative'' as meaning 
either an individual appointed by an enrollee or authorized under state 
or other applicable law to act on behalf of the enrollee.
    For consistency in the use of these terms across Medicare programs, 
we proposed to replace the definition of ``appointed representative'' 
in Sec.  423.560 with a definition of ``representative.'' We also 
proposed to replace references to appointed representatives in 
Sec. Sec.  423.566(c)(2), 423.578(b)(4), 423.2014(a)(1)(ii), and 
423.2036(c) and (d) with references to representatives.
    We summarize the comment we received on this proposal and respond 
as follows.
    Comment: We received one comment in support of the proposal to 
replace the definition of ``appointed representative'' in Sec.  423.560 
with a definition of ``representative.'' The commenter requested that 
sufficient time be built in for the implementation of this provision to 
allow affected enrollee communications documents to be modified to 
reflect this change.
    Response: We appreciate the commenter's support for this proposal. 
Given that we are enhancing consistency in the use of the term 
``representative'' across the Medicare program and not substantively 
altering the concept of who may be a representative in the grievance 
and appeals processes, we believe the effective date of this rule 
affords plans ample opportunity to make any necessary changes to 
enrollee communications.
    After consideration of the comments and for the reasons outlined in 
the proposed rule and our responses to comments, we are finalizing, 
without modification, the proposed amendments to Sec. Sec.  423.560, 
423.566, 423.578, 423.2014, and 423.2036 to clarify and streamline 
references to ``representatives'' in the Part D appeal regulations.

J. Copayments and Coinsurance in Amount in Controversy Calculations 
(Sec. Sec.  422.600 and 423.2006)

    We proposed amendments to Sec. Sec.  422.600 and 423.2006 to 
clarify how the amount in controversy (AIC) is calculated for appeals 
for MA plans, section 1876 cost plans, section 1833 health care 
prepayment plans and Part D plans. The regulations applicable to cost 
plans and healthcare prepayment plans, Sec. Sec.  417.600 and 417.840 
respectively, require those plans to also use the MA appeal 
regulations.\84\
---------------------------------------------------------------------------

    \84\ We cited Sec.  405.840 in the proposed rule but provide the 
correct citations here.
---------------------------------------------------------------------------

    We explained in the proposed rule the statutory background for 
using the same rules for calculating the AIC as used for the Medicare 
FFS program for MA appeals. The regulations at part 405, subpart I, 
specifically Sec.  405.1006(d), provide the methodology for calculating 
the amount in controversy (AIC) in Medicare fee-for-service (Part A and 
Part B) claims and entitlement appeals. In general, and subject to the 
exceptions listed in Sec. Sec.  405.1006(d)(2) through (6), Sec.  
405.1006(d)(1) provides that the AIC is computed as the amount that the 
provider or supplier bills (``the actual amount charged the 
individual'') for the items and services in the disputed claim, reduced 
by any Medicare payments already made or awarded for the items or 
services, and further reduced by ``any deductible and/or coinsurance 
amounts that may be collected for the items or services.''
    For Medicare Part C appeals under part 422, subpart M, Sec.  
422.600(b) provides that the AIC is computed in

[[Page 6050]]

accordance with the part 405 rules (concerning appeals of initial 
determinations under original (fee-for-service) Medicare). However, we 
stated in the proposed rule that while original Medicare uses 
deductibles and coinsurance (where the beneficiary pays a percentage of 
the cost for an item or service) as forms of cost sharing, MA plans may 
also use copayments (where the enrollee pays a flat fee for an item or 
service) as a form of cost sharing. We stated in the proposed rule that 
because Sec.  405.1006(d)(1) provides that the AIC excludes ``any 
deductibles and/or coinsurance amounts that may be collected for the 
items or services,'' questions have arisen regarding whether it is also 
appropriate to exclude any copayment amounts that may be collected for 
the items or services when applying the part 405 rules to appeals of 
Part C organization determinations made under part 422, subpart M. To 
resolve ambiguity on the proper calculation of the AIC and to help 
ensure that the AIC in Part C appeals is reflective of the actual 
amount at issue for the enrollee, we proposed to revise Sec.  
422.600(b) to clarify that the AIC, which can include any combination 
of Part A and Part B services, is computed in accordance with part 405, 
and that any references to coinsurance in the part 405 regulations, for 
purposes of computing the AIC under Sec.  422.600, should be read to 
include both coinsurance and copayment amounts.
    We also proposed a revision to the regulations for appeals of Part 
D plan sponsor coverage determinations and at-risk determinations made 
under part 423, subpart M. The AIC for these appeals is addressed in 
Sec.  423.2006, which does not reference cost-sharing amounts. To 
clarify the AIC calculation for Part D appeals and help ensure that the 
AIC in Part D appeals is reflective of the actual amount at issue for 
the enrollee, we proposed to redesignate paragraphs Sec.  
423.2006(c)(1) and (2) to (2) and (3), and to amend (c)(1) to provide 
general AIC calculation provisions for Part D appeals, specifying that 
the AIC calculation would be reduced by any cost-sharing amounts, 
including deductible, coinsurance, or copayment amounts, that may be 
collected from the enrollee for the Part D drug(s).
    We received no comments on these proposals and are finalizing 
amendments to Sec. Sec.  422.600 and 423.2006 without modification to 
clarify application of the AIC rules to Part C and Part D appeals, for 
the reasons outlined in the proposed rule.

K. Stipulated Decisions in Part C (Sec.  422.562)

    The regulations for Medicare fee-for-service (FFS) (Part A and Part 
B) claims and entitlement appeals at part 405, subpart I provide for 
stipulated decisions at Sec.  405.1038(c). This provision permits 
Office of Medicare Hearings and Appeals (OMHA) adjudicators to issue 
abbreviated, stipulated decisions if CMS or one of its contractors 
submits a written statement or makes an oral statement at a hearing 
indicating the item or service should be covered or payment may be 
made.\85\ In this situation, an ALJ or attorney adjudicator may issue a 
stipulated decision finding in favor of the appellant or other liable 
parties on the basis of the written or oral statement and without 
making findings of fact, conclusions of law, or further explaining the 
reasons for the decision. The MA appeal regulations at Sec.  422.562(d) 
provide that the FFS appeals procedures in part 405, subpart I apply to 
appeals of Part C organization determinations to the extent they are 
appropriate and identifies specific part 405 regulations that are not 
appropriate to apply to MA appeals. We explained in the proposed rule 
that because MA organizations are not generally included within the 
definition of ``contractors'' in Sec.  405.902, it was not readily 
apparent that the rules for stipulated decisions at Sec.  405.1038(c) 
apply to MA appeals. For consistency with the Part D regulations (which 
allow stipulations to be made by Part D plan sponsors under Sec.  
423.2038(c)), and to afford OMHA adjudicators the same flexibilities in 
Part C cases where the MA organization that issued the organization 
determination and plan reconsideration no longer disputes that an item 
or service should be covered or that payment should be made, we 
proposed to revise Sec.  422.562 by adding new paragraph (d)(3) to 
clarify that, for the sole purpose of applying the regulations at Sec.  
405.1038(c) to Part C appeals under part 422, subpart M, an MA 
organization is included in the Sec.  405.902 definition of 
``contractors'' as that definition relates to stipulated decisions 
issued by ALJs and attorney adjudicators. As we stated in the proposed 
rule, we believe this revision will permit OMHA adjudicators to more 
efficiently issue decisions where there is no longer any material issue 
in dispute, which would ultimately benefit MA enrollees because these 
decisions could potentially be issued, and effectuated by the MA 
organization, sooner.
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    \85\ For appeals in which the amount of payment is an issue 
before the ALJ or attorney adjudicator, Sec.  405.1038(c) further 
provides that the written or oral statement must agree to the amount 
of payment the parties believe should be made.
---------------------------------------------------------------------------

    We received no comments on this proposal and therefore are 
finalizing the proposed changes to Sec.  422.562 without modification 
for the reasons provided in the proposed rule.

L. Beneficiaries With Sickle Cell Disease (SCD) (Sec.  423.100)

    Section 1860D-4(c)(5)(C)(ii) of the Act contains exemptions from 
DMPs for certain beneficiaries, and provides the Secretary with the 
authority to elect to treat other beneficiaries as an exempted 
individual. As currently codified at Sec.  423.100, exempted 
beneficiaries include those receiving hospice or end-of-life care, 
residents of a long-term care facility, or those being treated for 
active cancer-related pain.
    Consistent with the statutory authority and current clinical 
literature detailed in the preamble of the proposed rule, CMS proposed 
to add beneficiaries with SCD to the categories of exempted 
beneficiaries in Sec.  423.100.
    Comment: CMS received a number of comments on this proposal, which 
were unanimously supportive of adding beneficiaries with SCD to the 
list of individuals exempted from DMPs.
    Response: CMS thanks the commenters for their support.
    Comment: Several commenters suggested that individuals with other 
disease states also should be exempt from DMPs, including: Chronic pain 
in cancer survivors, any chronic pain, complex regional pain syndrome, 
fibromyalgia, rare chronic pain diseases, Ehlers Danlos syndrome, 
degenerative disc disease, osteoarthritis, rheumatoid arthritis, 
ankylosing spondylitis, common variable immunodeficiency, and non-pain 
syndromes for which opioids are utilized, such as dyskinesias and 
autoimmune conditions affecting the excretory system.
    Response: CMS appreciates these suggestions but disagrees that 
additional exemptions from DMPs are warranted at this time. In the 
April 2018 final rule establishing DMPs (83 FR 16454), CMS stated that 
if exemptions are crafted too broadly or are too numerous, they would 
risk undermining the purpose of DMPs, which serve as a patient safety 
tool for beneficiaries who use opioids. CMS believes it is appropriate 
to narrowly tailor exemptions, distinguish between different clinical 
scenarios, and account for differences in coordinating care in distinct 
patient populations. The clinical presentation of SCD is such that 
individuals with this condition regularly require access to opioid pain 
medications when experiencing acute

[[Page 6051]]

crises in addition to treatment for chronic pain and are more likely to 
have additional prescribers due to frequent visits to emergency 
rooms.\86\ These factors lead to beneficiaries with SCD being 
identified as PARBs by OMS criteria while case management, care 
coordination, and DMP coverage limitations are less practicable for 
them. Thus, while CMS appreciates commenters' feedback on additional 
disease states to be considered for exemption from DMPs, at this time 
CMS does not have sufficient data to demonstrate that the clinical 
presentation and factors affecting care coordination for the other 
disease states mentioned in comments make DMP activities of similarly 
limited value. However, CMS will continue to evaluate OMS response 
data, other available data sources, and medical literature for 
consideration in future policy development. In addition, CMS monitors 
DMPs to ensure they are functioning in the positive ways CMS 
anticipates will support appropriate pain management.
---------------------------------------------------------------------------

    \86\ James, CV and Wilson-Frederick, SM. The Invisible Crisis: 
Understanding Pain Management in Medicare Beneficiaries with Sickle 
Cell Disease. CMS Office of Minority Health Data Highlight, No. 12. 
Baltimore, MD. 2018. Available from: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/CMS-OMH-September2018-Sickle-Cell-Data-Highlight.pdf.
---------------------------------------------------------------------------

    Comment: A commenter stated that disease-specific exemptions are 
discriminatory against beneficiaries with other diseases that involve 
pain and may require opioid therapy, such as inherited autoimmune 
disorders like ankylosing spondylitis and rheumatoid arthritis and 
generalized osteoarthritis.
    Response: CMS disagrees that the sickle cell disease exemption we 
proposed is discriminatory. As background, section 1860D-4(c)(5)(C)(ii) 
of the Act defines an exempted individual as one who (I) receives 
hospice care, (II) is a resident of a long-term care facility, of a 
facility described in section 1905(d), or of another facility for which 
frequently abused drugs are dispensed for residents through a contract 
with a single pharmacy, or (III) the Secretary elects to treat as an 
exempted individual. While the first two exemptions are required under 
CARA, CMS previously exercised the authority in section 1860D-
4(c)(5)(C)(ii)(III) of the Act to establish the exemption for a 
beneficiary who is being treated for active cancer-related pain and is 
exercising that authority in this rule to exempt beneficiaries with 
SCD. These discretionary exemptions are not discriminatory toward 
beneficiaries with other diseases that may require opioid therapy 
because inclusion in a DMP is not a punitive step. Inclusion means that 
a beneficiary's opioid use will be reviewed during case management for 
medical necessity and safety, and DMPs do not dictate the amount or 
length of opioid use for a beneficiary that is deemed medically 
necessary. Additionally, CMS adopts discretionary exemptions as part of 
our ongoing efforts to minimize identification of ``false positives,'' 
that is, beneficiaries are exempted who may meet OMS criteria but are 
unlikely to need case management for their safety and medical necessity 
review.
    Comment: A few commenters requested additional flexibilities to 
include SCD patients in DMPs if case management suggested intervention 
would benefit them or if they were previously identified as an ARB and 
a coverage limitation was applied.
    Response: Plan sponsors are not permitted to include exempted 
individuals in their DMPs. Based on the statutory language at section 
1860D-4(c)(5)(C) of the Act, current CMS guidance \87\ states that: (1) 
Exempted beneficiaries cannot be placed in a Part D sponsor's DMP, (2) 
a sponsor must remove an exempted beneficiary from a DMP as soon as it 
reliably learns that the beneficiary is exempt, whether that be via the 
beneficiary, the facility, a pharmacy, a prescriber, or an internal or 
external report, and (3) a beneficiary's identification as an ARB 
terminates as soon as a sponsor discovers that the beneficiary is 
exempted. Other than adding individuals with SCD to the existing 
exemptions starting January 1, 2022, this final rule does not change 
existing policy with respect to exempted individuals.
---------------------------------------------------------------------------

    \87\ https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/2019-Part-D-Drug-Management-Program-Policy-Guidance-Memo-November-20-2018-.pdf.
---------------------------------------------------------------------------

    Comment: A few commenters requested that CMS update OMS technical 
elements (for example, response codes) consistent with the final 
provision.
    Response: CMS appreciates this comment and intends to update OMS 
response forms and technical guidance accordingly.
    After consideration of the comments received and for the reasons 
provided in the proposed rule and preceding responses to comments, CMS 
is finalizing the exemption for beneficiaries with SCD as proposed with 
one modification to clarify that this definition is applicable starting 
in plan year 2022 instead of plan year 2021.

M. Drug Management Programs (DMPs): Additional Requirements (Sec. Sec.  
423.100 and 423.153)

    In order to improve the clarity of the DMP regulations, CMS 
proposed a number of technical wording and reference changes. CMS 
received no comments on these proposed revisions and are finalizing 
them without modification for the reasons given in the proposed rule. 
In response to a comment received on the provision to include 
beneficiaries with a history of opioid-related overdose in DMPs in 
section III.B., CMS is making an additional technical change to add 
``who is not an exempted beneficiary'' to the PARB definition at Sec.  
423.100. This change makes the definitions for PARB and ARB consistent 
and codifies existing guidance that once a PARB is determined to be an 
exempt beneficiary, they are no longer to be included in DMPs. CMS also 
noticed a grammatical error at Sec.  423.153(f)(15)(ii)(D). In order to 
improve the clarity of the statement at this citation, CMS is changing 
the two occurrences of ``no later than 7 days of the date'' to ``no 
later than 7 days from the date'' in this statement.

VIII. 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 information,'' as 
defined under 5 CFR 1320.3(c) of the PRA's implementing regulations, is 
submitted to the Office of Management and Budget (OMB) for review and 
approval. In order to fairly evaluate whether an information collection 
requirement 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.
    Our February 2020 proposed rule solicited public comment on our 
proposed information collection requirements, burden, and assumptions. 
Summaries of the public comments on the proposed information collection 
requirements, burden, and assumptions for the policies being 
implemented in this final rule are included in this

[[Page 6052]]

section with our responses under: (1) ICRs Regarding Information on the 
Safe Disposal of Prescription Drugs (Sec.  422.111), (2) ICRs Regarding 
Eligibility for Medication Therapy Management Programs (MTMPs) (Sec.  
423.153), (3) ICRs Regarding Beneficiaries' Education on Opioid Risks 
and Alternative Treatments (Sec.  423.128), (3) ICRs Regarding 
Establishing Pharmacy Performance Measure Reporting Requirements (Sec.  
423.514), and (4) ICRs Regarding PACE.
    We did not receive PRA-related comments pertaining to: (1) ICRs 
Regarding Improvements to Care Management Requirements for Special 
Needs Plans (SNPs) (Sec.  422.101), (2) ICRs Regarding Mandatory Drug 
Management Programs (DMPs) (Sec.  423.153), (3) ICRs Regarding 
Beneficiaries with History of Opioid-Related Overdose Included in Drug 
Management Programs (DMPs) (Sec.  423.153), (4) ICRs Regarding 
Information on the Safe Disposal of Prescription Drugs (Sec.  422.111), 
(5) ICRs Regarding Suspension of Pharmacy Payments Pending 
Investigations of Credible Allegations of Fraud and Program Integrity 
Transparency Measures (Sec. Sec.  405.370, 422.500, 422.503, 423.4, 
423.504, and 455.2), (6) ICRs Regarding Beneficiary Real Time Benefit 
Tool (RTBT) (Sec.  423.128), and (7) ICRs Regarding Stipulated 
Decisions in Part C (Sec.  422.562).
    The following provisions of the February 2020 proposed rule were 
finalized in our June 2020 final rule (85 FR 33796) and are thereby 
excluded from this final rule: (1) ICRs Regarding Special Supplemental 
Benefits for the Chronically Ill (SSBCI) (Sec.  422.102), (2) ICRs 
Regarding Contracting Standards for Dual Eligible Special Needs Plan 
(D-SNP) Look-Alikes (Sec.  422.514), (3) ICRs Regarding Medicare 
Advantage (MA) Plan Options for End-Stage Renal Disease (ESRD) 
Beneficiaries (Sec. Sec.  422.50, 422.52, and 422.110), (4) ICRs 
Regarding Medical Loss Ratio (MLR) (Sec.  422.2440), and (5) ICRs 
Regarding Special Election Periods (SEPs) for Exceptional Conditions 
(Sec. Sec.  422.62 and 423.38).

A. Wage Data

    To derive mean costs, we are using data from the most current U.S. 
Bureau of Labor Statistics' (BLS's) National Occupational Employment 
and Wage Estimates for all salary estimates (http://www.bls.gov/oes/current/oes_nat.htm), which, at the time of publication of this rule, 
provides May 2019 wages. In this regard, Table H1 presents the mean 
hourly wage, the cost of fringe benefits and overhead (calculated at 
100 percent of salary), and the adjusted hourly wage.

                          Table H1--National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
                                                                                      Fringe
                                                    Occupation      Mean hourly    benefits and      Adjusted
                Occupation title                       code         wage ($/hr)    overhead ($/   hourly wage ($/
                                                                                        hr)             hr)
----------------------------------------------------------------------------------------------------------------
Compliance Officer..............................         13-1041           35.03           35.03           70.06
Computer Programmers............................         15-1251           44.53           44.53           89.06
Computer Systems Analysts.......................         15-1211           46.23           46.23           92.46
Dietician.......................................         29-1031           29.97           29.97           59.94
General Operations Manager......................         11-1021           59.15           59.15          118.30
Health Technician, All Other....................         29-9098           28.17           28.17           56.34
Healthcare Social Workers.......................         21-1022           28.51           28.51           57.02
Management Analyst..............................         13-1111           45.94           45.94           91.88
Occupational Therapist..........................         29-1122           41.45           41.45           82.90
Office and Administrative Support...............         43-9199           18.41           18.41           36.82
Medical and Health Services Managers (PACE               11-9111           55.37           55.37          110.74
 Center Manager)................................
Passenger Vehicle Driver........................         53-3058           15.97           15.97           31.94
Personal Care Aides.............................         31-1120           12.71           12.71           25.42
Pharmacist......................................         29-1051           60.34           60.34          120.68
Physical Therapist..............................         29-1123           43.35           43.35           86.70
Physician.......................................         29-1216           96.85           96.85          193.70
Recreational Therapist..........................         29-1125           24.58           24.58           49.16
Registered Nurse................................         29-1141           37.24           37.24           74.48
----------------------------------------------------------------------------------------------------------------

    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.
    Revised Wage and Cost Estimates: While our proposed rule's costs 
were based on BLS's May 2018 wage estimates, this final rule uses BLS's 
more recent May 2019 wage estimates. Changes to the wage estimates 
represent shifts in average wages of occupations between 2018 and 2019 
and are presented in Table H2. The table also reflects occupation 
titles used in both the proposed rule and this final rule with 
corresponding changes in wages and changes in occupation codes.

                                                Table H2--Comparison of Proposed and Final Rule Wage Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       CMS-4190-P:        CMS-4190-F2       CMS-4190-P:    CMS-4190-F2:
                         Occupation title                            Occupation code    Occupation code   (BLS: May 2018  (BLS: May 2019  Difference ($/
                                                                     (BLS: May 2018)    (BLS: May 2019)       ($/hr))         ($/hr))           hr)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Compliance Officer................................................            13-1041          No change           69.72           70.06           +0.34
Computer Programmers..............................................            15-1131            15-1251           86.14           89.06           +2.92
Computer Systems Analysts.........................................            15-1121            15-1211           90.02           92.46           +2.44
Dietician.........................................................            29-1031          No change           58.86           59.94           +1.08

[[Page 6053]]

 
General Operations Manager........................................            11-1021          No change          119.12          118.30           -0.82
Healthcare Social Workers.........................................            21-1022          No change           56.22           57.02           +0.80
Management Analyst................................................            13-1111          No change           90.76           91.88           +1.12
Occupational Therapist............................................            29-1122          No change           82.08           82.90           +0.82
Office and Administrative Support.................................            43-9199          No change           36.04           36.82           +0.78
Medical and Health Services Managers (PACE Center Manager)........            11-9111          No change          109.36          110.74           +1.38
Personal Care Aides...............................................            31-1011            31-1120           24.36           25.42           +1.06
Pharmacist........................................................            29-1051          No change          118.90          120.68           +1.78
Physical Therapist................................................            29-1123          No change           85.46           86.70           +1.24
Physician.........................................................            29-1069            29-1216          196.04          193.70           -2.34
Recreational Therapist............................................            29-1125          No change           48.68           49.16           +0.48
Registered Nurse..................................................            29-1141          No change           72.60           74.48           +1.88
--------------------------------------------------------------------------------------------------------------------------------------------------------

B. Information Collection Requirements (ICRs)

    The following ICRs are listed in the order of appearance within the 
preamble (see sections II through VII) of this final rule.
1. ICRs Regarding Improvements to Care Management Requirements for 
Special Needs Plans (SNPs) (Sec.  422.101)
    The following changes will be submitted to OMB for approval under 
control number 0938-1296 (CMS-10565). Subject to renewal, the control 
number is currently set to expire on June 30, 2022. It was last 
approved on June 30, 2019 and remains active.
    This rule amends Sec.  422.101(f) to implement the new requirements 
legislated by the BBA of 2018 to section 1859(f) of the Act for C-SNPs 
and to extend them to all SNP types. Specifically, we are adding the 
following new regulations to account for new requirements governing SNP 
enrollee care management and SNP MOC submissions. The new regulations 
impacting MA SNP MOCs consist of the following:
     We are amending the end of Sec.  422.101(f)(1)(i) by 
adding the following language: ``. . . and ensure that results from the 
initial and annual reassessment conducted for each individual enrolled 
in the plan are addressed in the individual's individualized care plan 
as required under paragraph (f)(1)(ii) of this section.'' To comply 
with this provision, MA SNPs will have to provide the necessary 
guidance to SNP plan staff and develop related internal processes for 
employees of the SNP that are responsible for incorporating this 
requirement into their MOC.
     New Sec.  422.101(f)(3)(ii)(A) through (C) will implement 
the requirement that: As part of the evaluation and approval of the SNP 
MOC, NCQA must evaluate whether goals were fulfilled from the previous 
MOC; plans must provide relevant information pertaining to the MOC's 
goals as well as appropriate data pertaining to the fulfillment the 
previous MOC's goals; plans submitting an initial MOC must provide 
relevant information pertaining to the MOC's goals for review and 
approval; and if the SNP MOC did not fulfill the previous MOC's goals, 
the plan must indicate in the MOC submission how it will achieve or 
revise the goals for the plan's next MOC. Under this change, each 
plan's MOC must provide relevant information pertaining to the MOC's 
goals as well as appropriate data pertaining to the fulfillment the 
previous MOC's goals. Note, all SNPs are currently required to identify 
and clearly define measurable goals and health outcomes as part of 
their MOC under MOC 4, Element B: Measurable Goals and Health Outcomes 
for the MOC.
     Lastly, new Sec.  422.101(f)(3)(iii) will implement the 
requirements that each SNP MOC submitted to CMS will be evaluated by 
NCQA based on a minimum benchmark (of 50 percent) for each of the 
existing four elements.
    At the time SNP applications are due, MA organizations wishing to 
offer a new SNP will submit a MOC with their SNP application in the 
Application module in HPMS for NCQA review and approval. MA 
organizations wishing to renew their current SNP will submit a MOC in 
the MOC module in HPMS for NCQA review and approval. Based on their MOC 
scores, I-SNPs and D-SNPs receive an approval for a period of 1, 2, or 
3 years. C-SNPs must renew their MOCs annually per section 
1859(b)(6)(B)(iii) of the Act. For calendar year 2020, CMS received 273 
SNP MOCs during the annual submission process and received 11 off-cycle 
submissions during the following time period. We believe these figures 
are representative of future SNP MOC submission totals going forward.
    The burden related to these new requirements for SNP MOCs reflect 
the time and effort needed to adhere to the new requirements under the 
amendments to Sec.  422.101(f), and as listed in the bullets in this 
section, and collect the information as previously described, as well 
as all other MOC data, and report this information to CMS. To derive 
average costs, we selected the position of registered nurse because the 
SNP nurse usually develops and submits the MOC to CMS and typically 
interacts with the health plan quality registered nurse in matters 
related to the MOC after it is submitted to CMS.
    As is current practice, the MA organization/SNP will click on the 
Application or MOC module in HPMS and download the SNP MOC Matrix 
document. The SNP will complete the document, and then upload its MOC 
matrix document with the MOC narrative. The SNP MOC Matrix upload 
document outlines the CMS SNP MOC standards and elements that must be 
addressed in the MOC narrative. The document also serves as a table of 
contents for the MOC narrative.
    Training to use the MOC module will be minimal at 3 hours annually, 
and training materials and non-mandatory webinar sessions are provided 
by CMS at no cost to the SNPs except for the time (and cost) to 
participate. While the training is not mandatory, SNP personnel (we 
believe this is a SNP compliance officer at $70.06/hr) normally attend 
the full 3-hour session. In aggregate, we estimate an ongoing annual 
burden of 819 hours (273 SNPs

[[Page 6054]]

* 3 hr) at a cost of $57,379 (819 hr * $70.06/hr).
    Using HPMS contract year 2020 submission data, for annual 
submissions under 42 CFR 422.101(f)(3) we estimate that each year 273 
SNPs will submit MOCs. Note, this calculation is based on estimates 
that include annual MOC submissions for C-SNPs and semi-annual 
submissions for I-SNPs and D-SNPs. I-SNPs and D-SNPs submitting a MOC 
can receive MOC approval for one, two, or three year terms. For each 
SNP, we assume an additional 6 hours at $74.48/hr for a registered 
nurse. In aggregate, we estimate an ongoing annual burden of 1,638 
hours (273 SNPs x 6 hr) at a cost of $121,998 (1,638 hr x $74.48/hr).
    For plans seeking to revise their MOC based on qualifying events 
during the off-cycle season, we estimate that approximately 11 SNPs (D-
SNPs/I-SNPs) will submit off-cycle MOC changes based on historical 
submission rates. For each SNP submitting off-cycle MOC changes, we 
assume an additional 4 hours at $74.48/hr for a registered nurse. In 
aggregate, we estimate an ongoing annual burden of 44 hours (11 SNPs x 
4 hr) at a cost of $3,277 (44 hr x $74.48/hr).
    Since Sec.  422.101(f)(3)(iii) sets a minimum benchmark for each 
MOC element, we anticipate that there will be some impact to the number 
of MOC submissions that will not pass NCQA's initial MOC review. 
Looking at data for contract year 2020, our element benchmark of 50 
percent would have impacted 20 of the 273 MOCs submitted, or 7.3 
percent. For contract year 2020, 7 plans required submitting their MOCs 
for revision based on the current scoring system and an additional 7 
plans decided to withdraw their MOCs before the revision process for a 
total of 14 MOCs. The 14 SNPs must resubmit, taking 3 hours, or half 
the full 6-hour estimate. In aggregate, we estimate an added ongoing 
annual burden of 42 hours (14 SNPs * 3 hr) at a cost of $3,128 (42 hr * 
$74.48/hr).
    For the aforementioned MOC requirements under the amended 42 CFR 
422.101(f)(3), we estimate an added annual burden of 2,543 hours (819 
hr for training to use the MOC module + 1,638 hr for MOC submissions + 
44 hr for MOC revisions + 42 hr for MOC resubmissions) at a cost of 
$185,782 ($57,379 + $121,998 + $3,277 + $3,128, respectively).
    Separate from the MOC process, newly added Sec.  422.101(f)(1)(iv) 
will implement a new requirement that plans provide face-to-face 
encounters with consenting individuals enrolled in the plan not less 
frequently than on an annual basis. The new regulation requires an 
annual face-to-face visit, that is, in-person or by visual, real-time, 
interactive telehealth technology, to occur starting within the first 
12 months of enrollment within the plan. CMS will consider a visit to 
or by employed and/or contracted staff that perform clinical functions, 
such as direct enrollee care, as a qualifying encounter. Such 
activities may include, but are not limited to, annual wellness visits 
and/or physicals, HRA completion, meeting with the interdisciplinary 
team (IDT), care plan review, health-related education, and care 
coordination activities. It is also the expectation that any concerns 
related to physical, mental/behavioral health, and overall health 
status, including functional status, are addressed and any appropriate 
referrals, follow-up, and care coordination activities are provided or 
scheduled as necessary.
    We believe that most, if not all, SNP enrollees will have a 
qualifying face-to-face encounter under Sec.  422.101(f)(1)(iv) through 
an initial or annual HRA, a qualifying encounter with an IDT member, or 
an annual wellness visit. We estimate that approximately 734 SNPs that 
have at least 11 members will need to track face-to-face encounters for 
their enrollees annually. For each SNP tracking face-to-face 
encounters, we assume 4 hours of work by SNP personnel, typically a 
registered nurse. In aggregate, we estimate 2,936 hours (734 SNPs x 4 
hr) at a cost of $ 218,673 (2,936 hr x $74.48/hr).
    Section 422.101(f)(1)(iii) will also require that MA organizations 
offering a SNP must provide each enrollee with an IDT in the management 
of care that includes a team of providers with demonstrated expertise, 
including training in an applicable specialty, in treating individuals 
similar to the targeted population of the plan. Plans must develop and 
implement this requirement into their MOC components to assure an 
effective management structure. We believe this requirement is 
consistent with currently approved information tracking practices for 
all existing SNPs, and thus, does not impose any new or revised 
requirements and/or burden beyond what is currently approved by OMB 
under the aforementioned control number.
    The remaining changes under Sec.  422.101(f)(2) and (3), will 
codify current guidance governing SNP MOC submission practices, which 
is captured under our active information collection request.
    We received no comments on our proposed burden estimates. 
Consequently, we are finalizing them without modification.
2. ICRs Regarding Mandatory Drug Management Programs (DMPs) (Sec.  
423.153)
    The following changes will be submitted to OMB for approval under 
control number 0938-0964 (CMS-10141). Subject to renewal, the control 
number is currently set to expire on November 30, 2021.
    As discussed in section III.A. of this final rule, we are codifying 
the requirement under section 2004 of the SUPPORT Act that Part D plan 
sponsors establish DMPs by 2022 at Sec.  423.153(a).
    For context, in general, the required elements of a DMP are 
codified at Sec.  423.153(f). The provisions require Part D sponsors to 
conduct case management of PARBs identified by OMS through contact with 
their prescribers to determine if a beneficiary is at-risk for abuse or 
misuse of opioids and benzodiazepines.\88\ After case management is 
completed, if a plan sponsor intends to limit a beneficiary's access to 
coverage of opioids and benzodiazepines, the sponsor must provide an 
initial written notice to the beneficiary. After the beneficiary has a 
30-day time period to respond, the plan sponsor sends a second notice 
to the beneficiary, if the sponsor determines the beneficiary is an at-
risk beneficiary (ARB), that the sponsor is implementing a coverage 
limitation on opioids and/or benzodiazepines, or an alternative second 
notice if the plan sponsor determines that the beneficiary is not an 
ARB. Thus, every beneficiary who receives an initial notice receives a 
second or alternate second notice.
---------------------------------------------------------------------------

    \88\ CMS currently designates both opioids and benzodiazepines 
as ``Frequently Abused Drugs'' for purposes of DMPs. See ``Part D 
Drug Management Program Policy Guidance'', November 20, 2018, p. 6; 
https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/2019-Part-D-Drug-Management-Program-Policy-Guidance-Memo-November-20-2018-.pdf.
---------------------------------------------------------------------------

    In 2019, a CMS internal analysis found that a majority of Part D 
contracts (669 of 779, or 85.9 percent) voluntarily included a DMP. Our 
requirement that sponsors adopt DMPs would only affect the remaining 
minority of sponsors currently not offering such programs. There are 
111 contracts (plan sponsors) run by 79 parent organizations that would 
be involved. Furthermore, we estimate that only 158 additional PARBs 
will be identified by these 111 contracts due to meeting the minimum 
OMS criteria. We estimate burden at the parent organization level 
because we believe that is a closer reflection of the

[[Page 6055]]

number of systems that will need to be updated versus the contract 
level.
    The estimated reporting burden to these sponsors has four aspects. 
Under Sec.  423.153(f), sponsors must: (1) Design a DMP; (2) conduct 
case management, which includes sending written information about PARBs 
to prescribers; (3) program and issue written notices to PARBs and 
ARBs; and (4) report data to CMS about the outcome of case management 
via OMS and about any coverage limitation information into MARx.
    For one-time initial development, we estimate it would take each 
parent organization without a DMP 80 hours for a team of four clinical 
and non-clinical staff to design its DMP. Thus the burden for one 
parent organization is 320 hours (80 hr x 4 staff). Therefore, the 
aggregate burden for the 79 remaining parent organizations to develop 
DMPs consistent with the requirements of Sec.  423.153(f) is 25,280 
hours (79 parent organizations x 320 hr).
    With regard to costs, we estimate that development, as just 
indicated, will require a development team consisting of four staff, 
two pharmacists (working at $120.68/hr) and two general operation 
managers (working at $118.30/hr) per organization. Thus, the average 
hourly wage for the organization's development team is $119.49/hr 
($477.96/hr/4 staff). The rates for the development team are summarized 
in Table H3. Consequently, the aggregate cost to develop the DMPs is 
$3,020,707 ($119.49/hr * 25,280 hr) or $38,237 per parent organization 
($3,020,707/79 organizations).

                                 Table H3--Labor Rates for the Development Team
----------------------------------------------------------------------------------------------------------------
                                                                  Hourly wage ($/    Number of    Total wages ($/
                           Occupation                                   hr)            staff            hr)
----------------------------------------------------------------------------------------------------------------
General operations manager......................................          118.30               2          236.60
Pharmacist......................................................          120.68               2          241.36
                                                                 -----------------------------------------------
    Total (for hourly wage and total wages).....................        * 119.49               4          477.96
----------------------------------------------------------------------------------------------------------------
* Note: 119.49 is the average wage per hour (477.96/4) and equals total wages for four staff (477.96) divided by
  total staff (4). The 119.49 is a weighted average representing the hourly wage of the team; that is a team of
  four working on average at $119.49/hr. incur a total cost of $477.96. The reason an average is taken is
  because not all four members are working all the time. This number is important since it enters the summary
  table and is the only number that when multiplied by number of hours (4 staff * 1 hr) will give the correct
  total wage. Since this number is not a total, the ``Totals'' row header has been clarified to indicate that
  totals only apply ``hourly wage'' and ``total wages''. This is a standard practice.

    The 79 Part D parent organizations affected by this requirement 
also will have to upload beneficiary notices into their internal claims 
systems before they can issue them. We estimate that it will take each 
organization, on average, 5 hours at $89.06/hr for a computer 
programmer to upload all of the notices into their claims systems 
(note, this is an estimate to upload all of the documents in total, not 
per document). In aggregate, we estimated a one-time burden of 395 
hours (5 hr * 79 sponsors) at a cost of $35,179 (395 hr * $89.06/hr).
    Once a DMP is developed and in place, the primary operations for 
impacted sponsors will involve case management by the sponsor to assess 
those enrollees reported as PARBs by CMS's OMS. The 111 contracts run 
by 79 parent organizations that did not voluntarily establish a DMP are 
generally smaller plans that in some cases offered alternative means of 
managing comprehensive beneficiary care, such as through PACE. They 
enroll only 410,000 Part D beneficiaries (less than 1 percent of total 
Part D enrollment in 2019). Accordingly, based on internal analysis of 
the first 3 quarters (January-March, April-June, and July-September of 
2019) of the OMS report data, we found that only 127 beneficiaries 
(about 0.7 percent) who met the minimum OMS criteria were not reported 
thus far in 2019 by CMS to the sponsors, because the sponsors did not 
have a DMP. Using this estimate of 0.7 percent of beneficiaries 
extrapolated over the entire year, CMS can project that annually that 
about 158 beneficiaries would not be reported to their plan sponsors 
due to not having a DMP until DMPs become mandatory no later than 
January 1, 2022.
    Once required DMP policies are developed and operational, sponsors 
would have to case-manage their PARBs (as outlined in Sec.  
423.153(f)(2)). The case management requirement includes a requirement 
that sponsors send written information to prescribers about PARBs. The 
burden for sending this information, which may be accomplished by any 
of several means (such as mail or fax), is already included in the case 
management burden estimates provided earlier in this section and does 
not need to be separately accounted for.
    The case management team would consist of a pharmacist (such as 
initial review of medication profiles, utilization, etc.) working 2 
hours at $120.68/hr; one health technician working 2 hours at $56.34/
hr; and one physician working 1 hour at $193.70/hr to work directly 
with providers on discussing available options and determining the best 
course of action. The case management team would require 5 hours at a 
cost of $547.74 per PARB case managed ([2 hr x $120.68/hr] + [2 hr * 
$56.34/hr] + [1 hr * $193.70/hr]). Therefore, the case management 
team's wage is $109.55/hr ($547.74/5 hr). This is summarized in Table 
H4. In aggregate, we estimate an annual burden of 790 hours (5 hr x 158 
beneficiaries at a cost of $86,545 per year (790 hr x $109.55/hr).

                                  Table H4--Hourly Wage of Case Management Team
----------------------------------------------------------------------------------------------------------------
                           Occupation                              Time (hours)    Wages ($/hr)   Labor cost ($)
----------------------------------------------------------------------------------------------------------------
Health Technician...............................................               2           56.34          112.68
Pharmacist......................................................               2          120.68          241.36
Physician.......................................................               1          193.70          193.70
                                                                 -----------------------------------------------

[[Page 6056]]

 
    Totals (For hours and labor cost)...........................               5        * 109.55          547.74
----------------------------------------------------------------------------------------------------------------
* Note: 109.55 is the average wage per hour (547.74/5) and equals total wages for five staff (547.74) divided by
  total staff (5). The 109.55 is a weighted average representing the hourly wage of the team; that is a team of
  five working on average at $109.55/hr. incur a total cost of $547.74. The reason a weighted average is being
  used is because not all team members are working at each instant. This number is important since it enters the
  summary table and is the only number that when multiplied by number of hours (5 staff * 1 hr) will give the
  correct total wage. Since this number is not a total, the ``Totals'' row header has been clarified to indicate
  that totals only apply ``hours'' and ``labor cost''. This is a standard practice.

    Since currently 5 percent of PARBs receive an initial and second 
notice (or alternate second notice), we estimated that 8 beneficiaries 
(158 beneficiaries * 0.05) would receive an initial notice and 8 would 
receive a second notice (or alternate second notice). At most, 8 
sponsors would be responsible for sending the notices to these 8 
beneficiaries. CMS estimates it will take 10 minutes (0.1667 hr) at 
$56.34/hr for a health technician to send two notices (each notice 
would require 5 minutes). In aggregate, CMS estimates an annual burden 
for sending notices to beneficiaries of 1.3336 hours (8 beneficiaries x 
0.1667 hr) at a cost of $75 (1.3336 hr x $56.34/hr).
    Under Sec.  423.153(f)(15), as stated earlier, the plan sponsors 
newly impacted by a mandatory DMP policy will be required to report to 
CMS the outcome of case management via OMS and any associated coverage 
limitation information into MARx. CMS estimates that it will take 
sponsors on average 1 minute (0.0167 hr) to report this information to 
OMS and MARx. In aggregate, we estimate an annual burden of 2.6386 
hours (158 newly identified PARBs annually x 0.0167 hr) at a cost of 
$149 (2.6386 hr x $56.34/hr).
    Table H5 summarizes the burden associated with the mandatory DMP 
provision.

                                                          Table H5--Summary for Mandatory DMPs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             Total cost
                                                                      Number of    Number of     Time per    Total    Labor    Total cost        in
         Regulatory citation                     Subject             respondents   responses     response     time   cost ($/  in 1st year   subsequent
                                                                                                   (hr)       (hr)     hr)         ($)        years ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec.   423.153......................  Creating DMP................            79           79          320   25,280   119.49     3,020,707             0
Sec.   423.153......................  Upload Model Notices........            79           79            5      395    89.06        35,179             0
Sec.   423.153......................  Conduct Case Management.....            79          158            5      790   109.55        86,545        86,545
Sec.   423.153......................  Send Model Notices..........             8            8       0.1667   1.3336    56.34            75            75
Sec.   423.153......................  Report to CMS...............            79          158       0.0167   2.6386    56.34           149           149
                                                                   -------------------------------------------------------------------------------------
    Total...........................  ............................            79          482       varies   26,469   varies     3,142,655        86,769
--------------------------------------------------------------------------------------------------------------------------------------------------------

    CMS received no comments on the proposed burden estimates and 
assumptions. In the proposed rule, CMS had estimated the cost 
associated with case management of PARBs by combining the wage for all 
of the case management team members into one unit of case management 
time with the associated wage being the total of wages for the entire 
case management team to carry out case management ($547.74). This was 
reflected as 1 hour of burden in the proposed rule. While this 
intermediate presentation did not ultimately affect the estimate of 
cost associated with case management, CMS realized that this was not an 
accurate representation of the true time associated with case 
management. Case management of each of the 158 PARBs requires 5 hours 
of work (2 from a pharmacist, 2 from a health technician and 1 from a 
physician). Therefore, CMS is revising the burden calculations for case 
management to reflect 5 hours of burden and calculated the case 
management team's hourly wage, prorated according to the number of 
hours contributed by each team member ($109.55). CMS is revising the 
number of hours from 158 to 790 (158 PARBs x 5 hr) as this is more 
accurate. It should be noted, however, that the total cost estimates 
associated with case management does not change between the proposed 
rule and this final rule. CMS is finalizing everything else without 
modification.
3. ICRs Regarding Beneficiaries With History of Opioid-Related Overdose 
Included in Drug Management Programs (DMPs) (Sec.  423.153)
    The following changes will be submitted to OMB for approval under 
control number 0938-0964 (CMS-10141). Subject to renewal, the control 
number is currently set to expire on November 30, 2021.
    In this rule, CMS is finalizing the proposed changes to Sec.  
423.153(f)(16) to identify and report beneficiaries with a history of 
opioid-related overdose through OMS to Part D plan sponsors as required 
by section 2006 of the SUPPORT Act. As a result of this requirement, 
additional beneficiaries will be reported by OMS as PARBs meeting CMS' 
proposed criteria for having a history of opioid-related overdose. In 
producing the estimates below, the burden per affected enrollee for 
case management (5 hr/response), notification of enrollees (10 min/
response), and report to CMS (1 min/response) are identical with those 
estimated in section VIII.B.2. (ICRs Regarding Mandatory Drug 
Management Programs (DMPs) (Sec.  423.153)) of this final rule. That 
is, the overall burden associated with management of each PARB is the 
same whether the PARB is identified based on the current clinical 
guidelines or the updated clinical guidelines which include the 
criteria for identifying PARBs with a history of opioid-related 
overdose. The updated clinical guideline criteria to incorporate 
history of opioid-related overdose increase the total number of 
beneficiaries identified and included in DMPs. The estimates that 
follow outline the burden associated with these additional PARBs.

[[Page 6057]]

    Model beneficiary notices \89\ provided by CMS, as well as the 
required written information sent by sponsors to prescribers of PARBs 
as part of the case management process, will need to be revised to 
incorporate language specific to a PARB having a history of opioid-
related overdose. For the model beneficiary notices, this includes 
updates to the sections defining DMPs and possible justifications for 
applying a coverage limitation. Additionally, sponsors may need to 
update their DMP prescriber written communications to include history 
of opioid-related overdose as a possible reason for a beneficiary 
meeting the OMS criteria. The changes needed to align the model 
beneficiary notices and the written communication are expected to be 
minimal. CMS estimates it will take no more than 1 hour at $56.34/hr 
for a health technician to draft and implement such changes. In 
aggregate, CMS estimates a one-time burden of 288 hours (288 parent 
organizations x 1 hr/response) at a cost of $16,226 (288 hr x $56.34/
hr).
---------------------------------------------------------------------------

    \89\ Notice documents available at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Part-D-Drug-Management-Program-Notices-.zip.
---------------------------------------------------------------------------

    Based on July 2017 through June 2018 opioid-related overdose data, 
CMS's internal analysis estimates that about 18,268 enrollees meet the 
criteria of an opioid-related overdose and would be PARBs. All of these 
PARBs will require case management. Using the wage and cost data 
outlined for the case management team in Table H4, in aggregate, CMS 
estimates an annual burden of 91,340 hours (5 hr x 18,268 PARBs) at a 
cost of $10,006,297 (91,340 hr x $109.55/hr).
    In order to estimate the number of beneficiary notices needed to be 
sent, CMS compared two populations: (1) Part D beneficiaries projected 
to be potentially at-risk, by meeting the OMS criteria (which CMS 
estimates as 22,516 PARBs, based on internal data); and (2) 
beneficiaries with a history of opioid-related overdose (which CMS 
estimates as 18,268 PARBs, based on internal data). CMS believes the 
population of beneficiaries with a history of opioid-related overdose 
would have a much higher rate of coverage limitations imposed by 
sponsors, due to the history of overdose being the risk factor most 
predictive for another overdose or suicide-related event.\90\ CMS 
estimates that about 47.5 percent or 8,677 beneficiaries (18,268 
beneficiaries x 0.475) of this population will receive an initial 
notice from the plan sponsor, informing the beneficiary of the 
sponsor's intention to limit their access to coverage of opioids and/or 
benzodiazepines. Thus, the beneficiary will also receive a second or 
alternate second notice informing them whether the limitation was in 
fact implemented. CMS estimates it will take 10 minutes (0.1667 hr) at 
$56.34/hr for a health technician to send two notices (each notice 
would require 5 minutes). In aggregate, CMS estimates an annual burden 
of 1,446 hours (8,677 enrollees x 0.1667 hr) at a cost of $81,468 
(1,446 hr x $56.34/hr). Evaluation of the use of point-of-sale (POS) 
claim edits under OMS since 2013 does not demonstrate a steady increase 
or decrease in edits. The OMS and POS edit reporting systems commenced 
in 2013 and 2014, and then between 2015 and 2018 the number of 
beneficiaries with opioid POS claim edits only ranged from 1,152 to 
1,351 annually. As such, given that the vast majority of Part D 
enrollees are in a plan already offering a DMP, including the majority 
of Part D enrollees with a history of opioid-related overdose, CMS does 
not anticipate major shifts in the baseline average number of annual 
POS edits (and related initial notices). This stability in the annual 
number of ARBs and related notices to date appears largely unaffected 
by the baseline population of identified PARBs. However, CMS recognizes 
that this change is projected to approximately double the number of 
beneficiaries CMS identifies to sponsors as PARBs.
---------------------------------------------------------------------------

    \90\ Bohnert KM, Ilgen MA, Louzon S, McCarthy JF, Katz IR. 
Substance use disorders and the risk of suicide mortality among men 
and women in the US Veterans Health Administration. Addiction. 2017 
Jul; 11/2(7):1193-1201. doi: 10.1111/add.13774.
---------------------------------------------------------------------------

    With respect to the reporting of DMP data to CMS for PARBs 
identified based on history of opioid-related overdose, CMS estimates 
it will take sponsors (on average) 1 minute (0.0167 hr) at $56.34/hr 
for a health technician to report in OMS and/or MARx the outcome of 
case management and any applicable coverage limitations. In aggregate, 
CMS estimates an annual burden of 305 hours (18,268 PARBs x 0.0167 hr) 
at a cost of $17,184 (305 hr x $56.34/hr).
    Table H6 summarizes the burden associated with the inclusion of 
PARBs with a history of opioid-related overdose in DMPs.

                          Table H6--Summary for Identification of Additional PARBs Based on History of Opioid-Related Overdose
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             Total cost
                                                                      Number of    Number of     Time per    Total    Labor    Total cost        in
         Regulatory citation                     Subject             respondents   responses     response     time   cost ($/  in 1st year   subsequent
                                                                                                   (hr)       (hr)     hr)         ($)        years ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec.   423.153(f)(16)...............  Revise Model Notices........           288          288            1      288    56.34        16,226             0
Sec.   423.153(f)(16)...............  Conduct Case Management.....           288       18,268            5   91,340   109.55    10,006,297    10,006,297
Sec.   423.153(f)(16)...............  Send Model Notices..........           288        8,677       0.1667    1,446    56.34        81,468        81,468
Sec.   423.153(f)(16)...............  Reporting to CMS............           288       18,268       0.0167      305    56.34        17,184        17,184
                                                                   -------------------------------------------------------------------------------------
    Total...........................  ............................           288       45,501       Varies   93,379   Varies    10,121,175    10,104,949
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We received no comments on our proposed burden estimates and 
assumptions. In the proposed rule, CMS had estimated the cost 
associated with case management of PARBs by combining the wage for all 
of the case management team members into one unit of case management 
time with the associated wage being the total of wages for the entire 
case management team to carry out case management ($547.74). This was 
reflected as 1 hour of burden in the proposed rule. While this 
intermediate presentation did not ultimately affect the estimate of 
cost associated with case management, CMS realized that this was not an 
accurate representation of the true time associated with case 
management. Case management of each of the 18,268 PARBs identified 
based on the definition of opioid-related overdose requires 5 hours of 
work (2 from a pharmacist, 2 from a health technician and 1 from a 
physician). Therefore, CMS is revising the burden calculations for case 
management to reflect 5 hours of burden and calculated the case 
management team's hourly wage, prorated according to the number of

[[Page 6058]]

hours contributed by each team member ($109.55). CMS is revising the 
number of hours from 18,268 to 91,340 (18,268 PARBs x 5 hr) as this is 
more accurate. It should be noted, however, that the total cost 
estimates associated with case management does not change between the 
proposed rule and this final rule. We are finalizing everything else 
without modification.
4. ICRs Regarding Information on the Safe Disposal of Prescription 
Drugs (Sec.  422.111)
    Section 6103 of the SUPPORT Act amended section 1852 of the Act by 
adding a new subsection (n). Section 1852(n)(1) requires MA plans to 
provide information on the safe disposal of prescription drugs when 
furnishing an in-home health risk assessment. Section 1852(n)(2) 
requires CMS to establish, through rulemaking, criteria that we 
determine appropriate with respect to information provided to an 
individual during an in-home health risk assessment to ensure that he 
or she is sufficiently educated on the safe disposal of prescription 
drugs that are controlled substances. In order to implement the 
requirements of section 1852(n)(1) for MA plans, CMS revised the Sec.  
422.111, Disclosure Requirements, to add a paragraph (j), which would 
require MA plans that furnish an in-home health risk assessment on or 
after January 1, 2022, to include both verbal (when possible) and 
written information on the safe disposal of prescription drugs that are 
controlled substances in such assessment. Consistent with section 
1852(n)(1), we proposed that information must include details on drug 
takeback programs and safe in-home disposal methods.
    In educating beneficiaries about the safe disposal of medications 
that are controlled substances, we proposed that MA plans would 
communicate to beneficiaries in writing and, when feasible, verbally. 
We proposed that MA plans must do the following to ensure that the 
individual is sufficiently educated on the safe disposal of controlled 
substances: (1) Advise the enrollee that unused medications should be 
disposed of as soon as possible; (2) advise the enrollee that the US 
Drug Enforcement Administration allows unused prescription medications 
to be mailed back to pharmacies or other authorized sites using 
packages made available at such pharmacies or other authorized sites; 
(3) advise the enrollee that the preferred method of disposing of 
controlled substances is to bring them to a drug take back site; (4) 
identify drug take back sites that are within the enrollee's MA plan 
service area or that are nearest to the enrollee's residence; and (5) 
instruct the enrollee on the safe disposal of medications that can be 
discarded in the household trash or safely flushed. Although we did not 
propose to require MA plans to provide more specific instructions with 
respect to drug disposal, we did propose that the communication to 
enrollees would provide the following additional guidance: If a drug 
can be safely disposed of in the enrollee's home, the enrollee should 
conceal or remove any personal information, including Rx number, on any 
empty medication containers. If a drug can be discarded in the trash, 
the enrollee should mix the drugs with an undesirable substance such as 
dirt or used coffee grounds, place the mixture in a sealed container 
such as an empty margarine tub, and discard in the trash.
    We also proposed that the written communication include a web link 
to the information available on the United States Department of Health 
and Human Services website identifying methods for the safe disposal of 
drugs available at the following address: https://www.hhs.gov/opioids/prevention/safely-dispose-drugs/index.html. We noted in our proposed 
rule that the safe disposal of drugs guidance at this website can be 
used for all medications not just medications that are controlled 
substances. We stated in our proposed rule that we believed that plan 
communications consistent with the standard on this website would 
furnish enrollees with sufficient information for proper disposal of 
controlled substances in their community.
    The statute specifically limited this educational requirement to 
those situations when MA plans elect to perform in-home health risk 
assessments (HRAs) of MA enrollees. We note that while SNP plans are 
required to perform enrollee health risk assessments all other MA plan 
types are not required to perform health risk assessments. In addition, 
SNPs may conduct HRAs over the phone. Since the performance of in-home 
heath risk assessment is not a specific requirement for MA plans we do 
not track or have data on the number of in-home HRAs that MA plans 
elect to perform. As we will further discuss while there is a burden 
imposed by the law and our regulation MA plans can almost entirely 
avoid this burden by choosing to not perform an in-home HRA. As 
previously discussed the burden for an MA plan when electing to conduct 
an in-home HRA is that consistent with CMS guidelines as previously 
described it must develop written guidance for the enrollee and also 
furnish when possible a verbal summary of the main options for the safe 
disposal of unused controlled medications.
5. ICRs Regarding Eligibility for Medication Therapy Management 
Programs (MTMPs) (Sec.  423.153)
    The following changes will be submitted to OMB for approval as a 
reinstatement under control number 0938-10396 (CMS-1154). We received 
one comment in response to our proposed changes. A summary of this 
comment, along with our response, is provided below.
    In developing the burden estimates for this final rule, we removed 
the exclusion of beneficiaries enrolled in the Part D Enhanced MTM 
model because it will end before 2022, and the deadline for plans to 
come into compliance with the new Part D MTM program requirements 
finalized in this rule is January 1, 2022.
    Since the inception of the Medicare Part D benefit, the Act has 
required that all Part D plans offer a MTM program to eligible 
beneficiaries. The Act also established criteria for targeting 
beneficiaries for MTM program enrollment and a minimum set of services 
that must be included in MTM.
    Under Sec.  423.153(d), all MTM enrollees must be offered a 
Comprehensive Medication Review (CMR) at least annually and Targeted 
Medication Reviews (TMRs) no less than quarterly. A CMR is an 
interactive, person-to-person, or telehealth consultation performed by 
a pharmacist or other qualified provider that includes a review of the 
individual's medications and may result in the creation of a 
recommended medication action plan. An individualized, written summary 
in CMS's Standardized Format must be provided following each CMR. The 
SUPPORT Act expanded the population of beneficiaries that must be 
targeted for Part D MTM, and added a requirement that information on 
the safe disposal of prescription drugs that are controlled substances 
be furnished to all MTM program enrollees. This final rule modifies our 
Part D regulations to incorporate those changes to the MTM 
requirements. The new requirements will affect the number of 
beneficiaries enrolled in MTM programs and potentially some of the 
content for the Standardized Format for the CMR and, therefore, the 
burden. In this regard, we are estimating burden for:
    a. The expanded population of beneficiaries that must be targeted 
for enrollment in MTM programs;
    b. Mailing safe disposal information as part of the CMR summary; 
and

[[Page 6059]]

    c. Mailing safe disposal information once a year as part of a TMR 
or other MTM correspondence or service.
a. The Expanded Population of Beneficiaries That Must Be Targeted for 
Enrollment in MTM Programs
    We estimate that in 2022 there will be 50,684,424 beneficiaries 
enrolled in Part D plans with MTM programs (line 1 of Table H7). 
According to internal data, we estimate that section 6064 of the 
SUPPORT Act requires targeting 10,366 ARBs for MTM in 2022 (line 2). 
Based on our experience with the MTM program, we estimate that 71.8 
percent of beneficiaries targeted for MTM under the existing 
requirements will accept the offer of a CMR (line 3). This number has 
been updated based on more recent data which became available after the 
proposed rule was published. We assume this percentage will also apply 
to beneficiaries who will be enrolled in MTM programs under the new 
criteria; therefore, 7,443 ARBs (line 4) (10,366 targeted ARBs x 0.718) 
are expected to accept a CMR under the new provision.
    To estimate the burden on Part D plans of furnishing CMRs to the 
7,443 ARBs who would be expected to accept the offer of a CMR under the 
final policy, we separately calculate the labor cost of preparing the 
CMR and packaging it, and the non-labor cost of mailing.
    To estimate the labor cost of preparing the CMR, we note that the 
CMR is a clinical consultation service and therefore must be 
administered by a pharmacist, physician, nurse practitioner, or other 
qualified provider. Currently, 100 percent of MTM programs employ 
pharmacists to conduct CMRs, which is the basis of the hourly rate 
estimate. Stakeholder comments that were received outside of this 
rulemaking effort and responded to in a previous collection of 
information request indicate that an average CMR requires 40 minutes or 
0.6667 hours (line 5) at $120.68/hr (line 7) for a pharmacist to 
complete. This results in an annual labor burden of 4,962 hours (line 
6) (7,443 ARBs x 0.6667 hr) at a cost of $598,814 (line 8) (4,962 hr x 
$120.68/hr).
    To estimate the cost of mailing, we note that paper costs $2.50 per 
ream (500 sheets) of paper (at $0.005 per sheet) and toner costs $50.00 
per cartridge and lasts for 10,000 sheets (at $0.005 per sheet). We 
estimate that the average CMR summary will be 6 pages in length based 
on revisions which would streamline the Standardized Format; therefore, 
the paper and printing costs for each CMR summary will be $0.06. Since 
CMR summaries contain private health information, they must be mailed 
first class, for which postage costs $0.70 per mailing. Based on 
industry standards, we assume envelopes cost $0.08 each, while folding 
and stuffing costs about $0.08 per document. We therefore estimate the 
non-labor cost to print and mail a CMR summary in CMS's Standardized 
Format will be $0.92 per mailing (line 9). This results in a cost of 
$6,848 (line 10) ($0.92 cost per mailing x 7,443 ARBs).
    Therefore, we estimate that the total annual cost of providing CMRs 
to 7,443 ARBs is $605,662 (line 11) ($598,814 labor costs + $6,848 non-
labor mailing costs). These figures and calculations are summarized in 
Table H7. The Line ID column contains identifiers for each row 
following the flow of logic and calculations. Where applicable, the 
calculations are described in the ``Source'' column.

                              Table H7--Estimated Burden of Targeting ARBs for MTM
----------------------------------------------------------------------------------------------------------------
          Line ID                         Item                  Number                     Source
----------------------------------------------------------------------------------------------------------------
(1)........................  Part D enrollees in 2022.....      50,684,424  Internal CMS Data.
(2)........................  Part D enrollees expected to           10,366  Internal CMS data.
                              meet the ARB criteria.
(3)........................  Percent of enrollees under              71.8%  Internal CMS data.
                              the existing program
                              targeted for a CMR who
                              accept the offer.
(4)........................  ARBs targeted for MTM                   7,443  (2) * (3).
                              expected to accept CMR offer.
(5)........................  40 minutes is the industry             0.6667  Industry data.
                              standard for conducting a
                              CMR.
(6)........................  Number of hours needed to               4,962  (4) * (5).
                              fulfill the preparation of
                              CMRs under the new provision
                              including stuffing and
                              mailing.
(7)........................  Wage for a pharmacist to              $120.68  BLS Wage data.
                              prepare a CMR.
(8)........................  Cost to send CMRs to ARBs            $598,814  (6) * (7).
                              under the new provision.
(9)........................  Non-labor cost of mailing one           $0.92  See narrative.
                              CMR: 6 pages * ($2.50 * 500
                              cost per page + $50/10000
                              cost of toner) + $0.08
                              stuffing + $0.08 envelope +
                              $0.70 for postage.
(10).......................  Non-labor cost of mailing....          $6,848  (8) * (9).
(11).......................  Total cost for preparing and         $605,662  (8) + (10).
                              mailing the CMR to ARBs.
----------------------------------------------------------------------------------------------------------------

b. Mailing Safe-Disposal Information as Part of the CMR Summary
    Under the revisions to Sec.  423.153(d)(1) adopted in this final 
rule, Part D plans will be required to provide all MTM enrollees with 
information about safe disposal of prescription medications that are 
controlled substances. The provision will allow plans to mail the newly 
required safe disposal information either as part of the CMR summary, a 
TMR, or other MTM correspondence or service. We estimate the safe 
disposal information will take one page, may include personal 
information, and can be mailed out as a standalone correspondence if 
not included in the annual CMR.
    However, for those enrollees receiving a CMR, we believe it will be 
most economical to include the one page with the already existing CMR 
summary. We solicited comments regarding this assumption, but did not 
receive any feedback. Therefore, we are estimating that the cost of 
mailing one extra page per enrollee is $0.01 (line 21 ([1 page x $2.50/
ream of 500 sheets] + [1 page x $50 toner/10,000 sheets]). We note that 
the envelope to mail the CMR is already being paid for under current 
regulations (although folding and stuffing of 7 pages versus 6 pages 
might require some extra effort, we do not believe this will raise the 
$0.08 current cost estimate and we did not receive any comments on this 
assumption); the $0.70 first class postage for 2 ounces is sufficient 
for 7 pages (there would be no increase in postage).
    To estimate total mailing cost, we add the estimates of (i) total 
number of Part D enrollees who are not ARBs who will receive a CMR 
under the existing criteria and (ii) total number of ARBs who will 
receive a CMR under the new criteria we are adopting in this final 
rule.
    As shown in Table H7, lines (1) and (2), we estimate that in 2022 
there will be 50,684,424 Part D enrollees and, as previously 
determined, 10,366 of those

[[Page 6060]]

will meet the new MTM targeting criteria, leaving 50,674,058 Part D 
enrollees (Table H8, line 14) (50,684,424 Part D enrollees minus 10,366 
enrollees meeting the ARB criteria) that must be targeted for MTM if 
they meet the existing criteria. Our internal data shows that 6.54 
percent (line 15) of Part D enrollees will be targeted for MTM programs 
under the existing criteria. Hence, this leaves 3,314,083 Part D 
enrollees (0.0654 * 50,674,058) who will be targeted for MTM under the 
existing criteria (line 16). Of the 3,314,083 targeted enrollees, as 
stated previously, based on internal CMS data, we estimate 71.8 percent 
will accept the annual CMR offer (line 17). Therefore 2,379,512 
beneficiaries (3,314,083 * 0.718) will receive a CMR under the existing 
criteria (line 18).
    Hence, in 2022 a total of 2,386,955 enrollees will receive a CMR 
under the existing and new criteria (7,443 ARBs under the new criteria 
+ 2,379,512 under the existing criteria) (line 20), at a total non-
labor mailing cost of $23,870 (2,386,955 enrollees x $0.01 mailing cost 
per enrollee) to add an additional page containing safe disposal 
information to all CMRs (line 22).
    The figures and calculations are summarized in Table H8.

               Table H8--Estimated Burden for Mailing Safe Disposal Information as Part of the CMR
----------------------------------------------------------------------------------------------------------------
          Line ID                         Item                  Number                     Source
----------------------------------------------------------------------------------------------------------------
(12).......................  Part D enrollees in 2022.....      50,684,424  (1).
(13).......................  Enrollees estimated to meet            10,366  (2).
                              ARB criteria under the new
                              provision.
(14).......................  Part D enrollees who do not        50,674,058  (12)-(13).
                              meet ARB criteria.
(15).......................  Percentage of Part D                    6.54%  Internal CMS data.
                              enrollees who meet the
                              existing criteria for MTM.
(16).......................  Estimated number of Part D          3,314,083  (14) * (15).
                              enrollees not meeting ARB
                              criteria who are targeted
                              for MTM under the existing
                              criteria.
(17).......................  Percent of enrollees under              71.8%  Internal CMS data.
                              the current program targeted
                              for an MTM who accept the
                              offer.
(18).......................  Estimated number of Part D          2,379,512  (16) * (17).
                              enrollees under the existing
                              criteria who will receive a
                              CMR.
(19).......................  Estimated number of Part D              7,443  (4).
                              enrollees under the new
                              provision meeting ARB
                              criteria who will elect to
                              receive a CMR.
(20).......................  Total number of Part D              2,386,955  (18) + (19).
                              enrollees (under the
                              existing and new criteria)
                              who will receive a CMR.
(21).......................  Non-labor costs of one extra            $0.01  See narrative.
                              page (2.50/500) and toner
                              for one page ($50/10000).
(22).......................  Estimated cost of mailing             $23,870  (20) * (21)
                              safe disposal information
                              with a CMR.
----------------------------------------------------------------------------------------------------------------

c. Mailing Safe Disposal Information Once a Year as Part of a TMR or 
Other MTM Correspondence or Service
    All targeted beneficiaries who have not opted out of the MTM 
program must receive TMRs at least quarterly, and we are allowing Part 
D sponsors the flexibility of choosing whether to include safe disposal 
information in the CMR, through a TMR or other MTM correspondence or 
service at least once annually. Since we assume that 71.8 percent of 
targeted enrollees accept an offer of a CMR (Table H7, line 3), it 
follows that 28.2 percent (100 percent-71.8 percent) (Table H9, line 
26) of Part D enrollees who are targeted for enrollment in an MTM 
program refuse the CMR offer but do not opt out of the MTM program 
completely. As discussed previously, 10,366 ARBs (Table H7, line (2)) 
under the new criteria and 3,314,083 enrollees (Table H8, line (16)) 
under the existing criteria, for a total of 3,324,449 enrollees 
(3,314,083 + 10,366) (line 25) will be targeted to receive a CMR. 
Therefore 937,495 enrollees (3,324,449 total enrollees x 0.282 who 
refuse a CMR) would need to be mailed the safe disposal information as 
part of a TMR or other MTM correspondence or service (line 27). For 
purposes of calculating the burden, we are assuming that any safe 
disposal information that is not included in a CMR is either (i) being 
mailed in a TMR, which may be as short as one page and may contain 
private health information or (ii) is mailed as a stand-alone document 
which does not contain any private health information. For purposes of 
impact, (i) if one additional page is included in the TMR, then there 
is no additional postage; (ii) if the safe disposal information is 
mailed separately, there would be no private health information, and 
the burden would be the cost of one page plus bulk postage. Due to a 
lack of data in regard to what percentage of safe disposal information 
will be mailed as a CMR, TMR, or other MTM correspondence or service, 
we are assuming the maximum amount, which is that all safe disposal 
information not sent with a CMR will be one page that is mailed 
separately using bulk postage. The cost to mail one page of safe 
disposal information is $0.01095 per enrollee if the letter does not 
contain private health information and thus bulk mailing is used (line 
28) [1 page x $2.50 per ream of paper/500 sheets] + [1 page x $50 per 
toner/10,000 pages] + [$0.19/200 items]). Therefore, we estimate that 
the cost of mailing safe disposal information to those MTM enrollees 
who do not receive it in a CMR summary is $10,266 (line 29) (937,495 
enrollees x $0.01095 mailing cost per page).
    These calculations are summarized in Table H9.

             Table H9--Burden of Mailing Safe Disposal Information to Enrollees Not Receiving a CMR
----------------------------------------------------------------------------------------------------------------
          Line ID                         Item                  Number                     Source
----------------------------------------------------------------------------------------------------------------
(23).......................  The number of Part D                3,314,083  (16).
                              enrollees who meet the
                              existing criteria for MTM.
(24).......................  The number of Part D                   10,366  (2).
                              enrollees who meet the
                              criteria for ARB under the
                              new provision.
(25).......................  The number of Part D                3,324,449  (23) + (24).
                              enrollees meeting existing
                              or new criteria for being
                              targeted for a CMR.
(26).......................  The percentage of enrollees             28.2%  100%-(17).
                              estimated to refuse the
                              offer of a CMR (100-87%).

[[Page 6061]]

 
(27).......................  Number of enrollees to whom           937,495  (25) * (26).
                              safe disposal information
                              must be mailed even though
                              they don't receive a CMR.
(28).......................  Non-labor cost of mailing a          $0.01095  See narrative.
                              one page correspondence (at
                              $2.50/500 cost per page +
                              $50/10,000 cost of toner for
                              one page + $0.19/200 cost of
                              bulk mailing).
(29).......................  Cost of mailing safe disposal         $10,266  (27) * (28).
                              information to those who do
                              not receive a CMR.
----------------------------------------------------------------------------------------------------------------

d. Summary for Eligibility for MTMPs and Information on the Safe 
Disposal of Prescription Drugs
    As discussed in section (b) (Table H8, line (22)), we estimate a 
cost of $23,870 for mailing safe disposal information to those 
beneficiaries receiving a CMR (under the assumption that the plan will 
bundle the safe disposal and CMR). In section (c) (Table H9, line 29), 
we estimate a total cost of $10,266 for mailing safe disposal 
information to those beneficiaries who do not receive a CMR. Thus, the 
total cost of mailing safe disposal information to all Part D 
beneficiaries enrolled in MTM programs is estimated to be $34,136. This 
is summarized in Table H10.

        Table H10--Burden of Mailing Safe Disposal Information to Beneficiaries Enrolled in MTM Programs
----------------------------------------------------------------------------------------------------------------
          Line ID                         Item                  Number                     Source
----------------------------------------------------------------------------------------------------------------
(30).......................  Estimated cost of mailing             $23,870  (22).
                              safe disposal items to those
                              receiving a CMR (under
                              assumption that the plan
                              will bundle the safe
                              disposal and CMR).
(31).......................  Cost of mailing safe disposal          10,266  (29).
                              to those who do not receive
                              a CMR.
(32).......................  Total cost of mailing safe            $34,136  (30) + (31).
                              disposal information.
----------------------------------------------------------------------------------------------------------------

    The total additional annual cost for 288 parent organizations to 
provide CMRs to ARBs and to send information on safe disposal of 
prescription medications that are controlled substances to all MTM 
program enrollees is $663,668. Table H11 provides a compact summary of 
the bottom lines of impact by activity.

                Table H11--Summary for Eligibility for MTMPs (Sec.   423.153) and Information on the Safe Disposal of Prescription Drugs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                       Non
                                                                                                             Total    labor
                                                                      Number of    Number of     Time per    annual    cost    Labor cost   Total annual
         Regulatory citation                     Subject             respondents   responses     response     time     for       ($/hr)       cost ($)
                                                                                                   (hr)       (hr)   mailing
                                                                                                                       ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec.   423.153......................  Targeting ARBs for CMR......           288        7,443       0.6667    4,962      N/A        120.68       598,814
Sec.   423.153......................  Mailing ARBs CMR............           288        7,443          N/A      N/A    6,848           N/A         6,848
Sec.   423.153......................  Safe Disposal Page in CMR...           288    2,386,995          N/A      N/A   23,870           N/A        23,870
Sec.   423.153......................  Safe Disposal Page as part             288      937,495          N/A      N/A   10,266           N/A        10,266
                                       of TMR or other MTM
                                       correspondence or service.
                                                                   -------------------------------------------------------------------------------------
    Total...........................  ............................           288    3,339,376       Varies    4,962   40,984        Varies       639,798
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As indicated above, one PRA-related comment was received. The 
following summarizes the comment and sets out our response.
    Comment: CMS received a comment stating that the percent of Part D 
enrollees who accept the offer of a CMR (87 percent) was overestimated.
    Response: We appreciate the comment and have updated our estimate 
based on more recent data. We are now estimating the acceptance rate of 
a CMR to be closer to 71.8 percent in 2022.
    As previously stated, we updated our estimates to no longer exclude 
beneficiaries enrolled in the Part D Enhanced MTM model because the 
model will end before 2022, and the deadline for plans to come into 
compliance with the new Part D MTM program requirements finalized in 
this rule is January 1, 2022. We also updated the estimates for 
enrollment and CMR rates based on more current data. We did not receive 
any comments in response to our estimates regarding the cost of mailing 
a CMR with information on safe disposal of prescription drugs, nor did 
stakeholders object to our assumption that the distribution of 
information on safe disposal of prescription drugs would be most 
economically distributed as part of the CMR summary.
6. ICRs Regarding Beneficiaries' Education on Opioid Risks and 
Alternative Treatments (Sec.  423.128)
    The following changes will be submitted to OMB for approval under 
control number 0938-0964 (CMS-10141). Subject to renewal, the control 
number is currently set to expire on November 30, 2021.
    With regard to our proposed changes, comments were received and are 
responded to below.
    In this rule, Sec.  423.128 will require Part D sponsors to 
disclose, beginning in 2022, information about the risks of prolonged 
opioid use to enrollees. In addition to this information, Part D 
sponsors of MA-PDs must disclose coverage of non-pharmacological 
therapies, devices, and non-opioid medications under their plans and 
under Medicare Part C. Part D sponsors of PDPs must disclose coverage 
of non-pharmacological therapies, devices, and non-opioid medications 
under their plans and under Medicare Parts A and B.
    Before Part D sponsors can send this information, they would have 
to create

[[Page 6062]]

and upload materials into their internal systems. Based on 2019 CMS 
data, there are 608 Part D legal entities (sponsors) with which CMS 
contracts, associated with 288 parent organizations that these 
contracts identified in their initial applications, which is confirmed 
annually. Based on our knowledge of the way parent organizations and 
their Part D legal entities are structured, we believe it is 
appropriate to estimate burden at the parent organization level, as it 
is a closer reflection of the number of systems that will need to be 
updated versus at the contract level.
    We estimate that 288 Part D sponsors would be subject to this 
requirement, based on 2019 data. We estimate a one-time burden of 2 
hours at $120.68/hr for a pharmacist to develop the materials(s) to be 
sent to the beneficiaries. In aggregate, we estimate a one-time burden 
of 576 hours (288 parent organizations x 2 hr) at a cost of $69,512 
(576 hr x $120.68/hr). Although there might be the need for updates in 
future years (if opioid risk and/or coverage information changes), we 
believe the burden to making such updates to existing materials will be 
negligible as the changes will be minor and may only occur in some 
future years. Hence, the more accurate approach adopted here is to 
estimate this as a one-time update.
    We also estimate that it will take on average 2 hours at $89.06/hr 
for a computer programmer to upload the information into the systems. 
This would result in a one-time burden of 576 hours (2 hr x 288 parent 
organizations) at a cost of $51,299 (576 hr x $89.06/hr). Once the 
information is uploaded into the parent organization's database, we 
anticipate no further burden associated with this task, as the process 
will be automated after the initial upload with the same information on 
subsequent materials that are sent. The automation will include the 
sending of information to those enrollees who wish to receive an 
electronic copy. The automation will also cover updates in future years 
as the plan enrollment changes.
    We proposed that Part D sponsors be permitted to disclose the 
opioid and coverage information in electronic form. Some enrollees 
preferred electronic notification and some preferred paper mailing. We 
had no way of estimating the proportions for each preference, but our 
experience suggests that most enrollees expect a paper mailing. 
Therefore, we assumed 75 percent (the average of 50 percent and 100 
percent) would prefer a paper mailing, while the remaining 25 percent 
would prefer electronic notification.
    There are several Part D enrollee groups presented in section 
III.D. of this final rule that we suggested could be sent the required 
information and thus, several approaches to estimate the burden. These 
enrollee group estimates ranged from sending the information to 
2,698,064 to 46,759,911 enrollees.
    In making estimates on the burden of sending out notices, we 
assumed that the IT systems of the plan would generate and mail the 
documents once a template is produced. Thus, the only costs are paper, 
toner, and postage. We also assumed one page per notice. We therefore 
estimate:
     Cost of paper: Typical wholesale costs of paper are 
approximately $2.50 for a ream of 500 sheets. The cost for one page is 
$0.005 ($2.50/500).
     Cost of toner: Toner costs can range from $50 to $200 and 
each toner cartridge can last from 4,000 to 10,000 sheets of paper. In 
this rule, we assume a cost of $50 for 10,000 pages. In that regard, 
the cost per page is $0.005 ($50/10,000 pages).
     Cost of postage: Currently, the bulk postage rates are 
$0.19 per 200 pages. The cost per page is $0.00095 ($0.19/200 pages).
    Thus, the aggregate cost per page is $0.01095 ($0.005 for paper + 
$0.005 for toner + $0.00095 for postage). Note that mailing costs are 
annual while the programming updates and the development of materials 
are first-year costs with minimal or no costs in future years. The 
product of the cost per page (at $0.01095) times the number of 
enrollees (35,069,933) plus the one time first year costs $120,811 
($51,299 + $69,512) equals $504,827 ([$0.01095 x 35,069,933 enrollees] 
+ $120,811) as shown in Table H12.
[GRAPHIC] [TIFF OMITTED] TR19JA21.042


[[Page 6063]]


    The following summarizes the PRA-related public comments that we 
received and sets out our response to those comments. We are finalizing 
our proposed provisions, burden estimates, and assumptions without 
change.
    Comment: We received two comments that suggested a specific subset 
to send this information to. The commenters also recommended focusing 
on any beneficiary who received an opioid fill in the last 7 days, but 
also appreciated the flexibility provided in this rule.
    Response: We thank the commenters for their feedback. Although some 
commenters offered their opinion on the subset that might be the best 
group to receive the information, there was no consensus to inform 
sponsors' ultimate decisions on a specific enrollee population. Because 
there was no consensus, CMS will continue to maintain flexibility for 
plans and therefore are not committing to any specific approach.
7. ICRs Regarding Suspension of Pharmacy Payments Pending 
Investigations of Credible Allegations of Fraud and Program Integrity 
Transparency Measures (Sec. Sec.  405.370, 422.500, 422.503, 423.4, 
423.504, and 455.2)
    The following changes will be submitted to OMB for approval under 
control number 0938-1383 (CMS-10724) for Medicare Advantage Plans and 
0938-1262 (CMS-10517) for Part D Plans.
    Sections 422.503(b)(4)(vi)(G)(4) and 423.504(b)(4)(vi)(G)(4) will 
require the MA organization or Part D plan sponsor, respectively, to 
have procedures to identify and report to CMS or its designee: (1) Any 
payment suspension implemented by a plan, pending investigation of 
credible allegations of fraud by a pharmacy, which must be implemented 
in the same manner as the Secretary does under section 1862(o)(1) of 
the Act; and (2) any information related to the inappropriate 
prescribing of opioids and concerning investigations, credible evidence 
of suspicious activities of a provider of services (including a 
prescriber) or supplier, and other actions taken by the plan.
    CMS initiated a reporting pilot program in December 2016 with six 
plan sponsors to test the effectiveness of mandatory reporting of 
fraud, waste, and abuse. The pilot collected all external or internal 
Medicare complaints and referrals submitted to the plan's Special 
Investigations Unit (SIU). The data collected as part of the pilot 
program was time limited, but broader than the scope of reporting 
required by sections 2008 and 6063 of the SUPPORT Act. The scope of 
that pilot tested the reporting of all types of health care fraud, 
waste, and abuse that the plan sponsors could encounter in their 
operations and, therefore, could be utilized as a reasonable estimate 
of burden involved with the quarterly plan reporting to CMS that CMS 
will use to implement sections 2008 and 6063 of the SUPPORT Act. The 
pilot program analyzed information that was reported from five of six 
plan participants on time spent collecting three quarterly data 
submissions. Based on the results of the pilot study, if every Part C 
plan reported, we estimate it will take 605 MA plans 149,435 hours (605 
plans * 247 hr/plan) at a cost of $13,730,088 (149,435 hr * $91.88/hr 
for a management analyst using 2019 BLS wage estimates) to fulfill the 
reporting and procedure preparation in the first year as shown in Table 
H13. In subsequent years, we estimate an annual burden of 94,380 hours 
(605 plans *156 hr/plan) at a cost of $8,671,634 (94,380 hr * $91.88/
hr) as shown in Table H13.
    Based on the results of the pilot study, if every Part D plan 
reported, we estimate it will take 63 Part D plans 15,561 hours (63 
plans * 247 hr/plan) at a cost of $1,429,745 (15,561 hr * $91.88/hr) to 
fulfill the reporting and procedure preparation in the first year as 
shown in Table H14. In subsequent years, we estimate an annual burden 
of 9,828 hours (63 plans * 156 hr/plan) at cost of $902,997 (9,828 hr * 
$91.88/hr) as shown in Table H14.
    The first-year burden consist of the time and effort needed to 
prepare the procedures and report the inappropriate prescribing 
information. Subsequent effort consists solely of the ongoing time and 
cost to report the inappropriate prescribing information to CMS. We 
could not anticipate how many plans will need to report any payment 
suspension to pharmacies in the plans' network or information on 
inappropriate opioid prescribing to CMS.
[GRAPHIC] [TIFF OMITTED] TR19JA21.043


[[Page 6064]]


[GRAPHIC] [TIFF OMITTED] TR19JA21.044

    We received no comments on our proposed provisions, burden 
estimates, and assumptions. Consequently, we are finalizing without 
change.
8. ICRs Regarding Beneficiary Real Time Benefit Tool (RTBT) (Sec.  
423.128)
    The following changes will be submitted to OMB for approval under 
control number 0938-0763 (CMS-R-262). Subject to renewal, the control 
number is currently set to expire on April 30, 2022.
    As described in section IV.G. of this final rule, the new 
paragraphs at Sec.  423.128(d)(4) and (5) require each Part D plan to 
implement a beneficiary RTBT no later than January 1, 2023. This tool 
will allow enrollees to view the information included in the prescriber 
RTBT system which includes complete, accurate, timely, and clinically 
appropriate patient-specific real-time formulary and benefit 
information (including cost, formulary alternatives, and utilization 
management requirements). Plans will be able to use existing secure 
patient portals to fulfill this requirement, to develop a new portal, 
or to use a computer application.
    In estimating the cost impact of this provision it is important to 
bear in mind that the rewards and incentives are optional for each Part 
D sponsor. Additionally, based on our conversations with the industry, 
participation on industry workgroups, and research, we understand that 
most Part D plans have already created beneficiary portals that satisfy 
existing privacy and security requirements. We believe that the few 
plans that have yet to create a portal or web application will have one 
in place by January 1, 2023. Finally, some Part D Sponsors who wish to 
use such a portal may find it cheaper to rent an existing portal from a 
third party vendor. Consequently, the impacts below are maximum 
impacts; they overestimate the impact of the provision by assuming that 
all Part D sponsors must create a completely new RTBT.
    We estimate it will take 104 hours at $89.06/hr for a computer 
programmer to program this information into the beneficiary portal and 
an additional 52 hours to put this information into a user interface 
that is easily understood by enrollees. The time estimates are based on 
consultation with the healthcare industry and their IT staff to 
determine the time that it takes for minor changes in programming. 
Thus, the burden for implementing RTBT is 44,928 hours (288 
organizations * 156 hr) at a cost of $4,001,288 (44,928 hr * $89.06/
hr).
    This is a maximum one-time first year cost. We are not estimating 
ongoing maintenance costs because: (1) Many plan sponsors already have 
a beneficiary portal and (2) the total maintenance costs per plan 
sponsor tend to be stable from year because although there is variation 
in what software needs maintenance, some software needs more usage, 
some needs less, and some needs routine. The average absorbs and 
stabilizes this variability. Adding one more software cost that is not 
excessively above the average would not change that average beyond 
rounding or uncertainty error.
    We next estimated the cost of implementing the rewards and 
incentives program for use of RTBT. We estimated three items: (A) 
Development of policies for the new program, (B) updating of systems, 
and (C) maintaining the program. We solicited stakeholder feedback on 
all of our proposed assumptions. We informally questioned stakeholders 
who believe that only 10 percent of parent part D sponsors would create 
such a program. Since there are 288 Part D sponsors we expect 29 (288 * 
0.10) organizations to develop and use a reward and incentive program.
    (A) Development of policy: We estimate that for each parent 
organization an operations manager and compliance officer working 
together at a combined hourly wage of $188.36/hr ($118.30/hr + $70.06/
hr) would take 40 hours. Therefore, the impact is 1,160 hours (40 hr * 
29 parent organizations) at a cost of $218,498 (1,160 hr * $188.36/hr).
    (B) Since systems already exist to collect enrollee data, they will 
only have to be updated to collect data on use of RTBT and most of this 
work will be done when creating the RTBT. We therefore estimate, per 
parent organization, an extra 40 hours for a computer programmer. 
Therefore, the impact is 1,160 hours (40 hr * 29 organizations) at a 
cost of $103,310 (1,160 hr * $89.06/hr).
    (C) We estimate that 2 administrative support workers each working 
at $36.82/hr will take 15 hours every month to maintain the program. 
The impact is 10,440 hours (15 hr/month * 12 months * 2 workers * 29 
organizations) at a cost of $384,401 (10,440 hr * $36.82/hr).
    The aggregate impact for implementing the rewards and incentives 
for RTBT among those Part D sponsors who wish to do so is 57,688 hours 
(44,928 hr + 1,160 hr + 1,160 hr

[[Page 6065]]

+ 10,440 hr) at a cost of $4,707,497 ($4,001,288 + $218,498 + $103,310 
+ $384,401).
    Since plans are in the best position to estimate their 
implementation costs, we solicited comment on the accuracy of this 
burden estimate and on any measures that CMS can take to decrease the 
impact of this provision, while maintaining its utility for enrollees. 
In addition, because plans are in the best position to estimate any 
information collection implications, since they will be the 
stakeholders implementing this provision, we solicited comment on any 
other potential information collection implications. We received no 
comments on our proposed provisions and burden estimates. Consequently, 
we are finalizing them without change.
9. ICRs Regarding Establishing Pharmacy Performance Measure Reporting 
Requirements (Sec.  423.514)
    The following changes will be submitted to OMB for approval under 
control number 0938-0992 (CMS-10185). Subject to renewal, the control 
number is currently set to expire on December 31, 2021. It was last 
approved on December 7, 2018, and remains active.
    This rule amends Sec.  423.514(a) by giving CMS the authority to 
collect Part D sponsors' pharmacy performance measures data that is 
used to evaluate pharmacy performance, as established in their network 
pharmacy agreement. Given the growing practice of Part D sponsors 
measuring the performance of pharmacies that service Part D 
beneficiaries to determine the final cost of a drug under Part D, this 
reporting requirement will enable CMS to monitor the impact of these 
recoupment practices. We estimate a collection of less than 15 data 
elements. As noted in section IV.G of this final rule, the Part D 
reporting requirements data elements, consistent with our standard, 
will be specified through the standard non-rule PRA process after 
publication of this final rule. The standard non-rule process includes 
the publication of 60- and 30-day Federal Register notices. At that 
time, the data elements, timeline, and method of submission will be 
made available for public review and comment.
    Although the data elements will be made available for public review 
through the standard PRA process, we are providing the interested 
parties with an initial projection of the potential burden estimates. 
In this regard there are currently 627 contracts that would be required 
to report their pharmacy performance measures' data. Part D sponsors 
currently report 6 sections of data to CMS in accordance with the Part 
D reporting requirements. Therefore, CMS does not expect compliance to 
these reporting requirements will result in additional start-up costs. 
Anticipated staff time spent performing these data collection 
activities would be 30 minutes for a data analyst and/or IT analyst at 
a rate of $92.46/hr. We will require this information to be reported at 
the plan level once annually. Reporting at the plan level would 
generate 5,234 responses since there are currently 5,234 plans. In 
aggregate, we estimate an annual plan sponsor burden of 2,617 hours 
(5,234 plans x 1 report/year x 0.5 hr/report) at a cost of $241,968 
(2,617 hr x $92.46/hr). We solicited input from stakeholders on the 
accuracy of these estimates and on any measures that CMS could take to 
decrease the burden of this provision. The following comment was 
received.
    Comment: We received one comment stating that we had underestimated 
the financial burden of Part D plans reporting their pharmacy 
collection measures.
    Response: We appreciate the comment. However, we believe that based 
on current wages from the Bureau of Labor Statistics, and from our long 
current history of collecting other Part D plan reporting requirements, 
that our burden estimate is fair and reasonable.
    We did not receive any other comments related to the projected 
burden for this provision. As a result, we are finalizing our proposed 
provisions and burden without change.
10. ICRs Regarding PACE
    Subsequent to the publication of the proposed rule, we revised the 
burden estimates in this final rule by: (1) Incorporating service 
determination request (formerly ``service delivery request'') data from 
2019 PACE audits which was not available at the time the estimates were 
published in the proposed rule, (2) updating enrollment data from 
40,040 participants to 42,800 participants based on 2017-2019 
enrollment data from the CMS Office of the Actuary (OACT), (3) updating 
PACE organization contract data from 131 PACE organizations to 133 PACE 
organizations based on data from the Health Plans Management System 
(HPMS), and (4) updating wage figures based on May 2019 BLS data.
    The following changes in subsections 10a through 10e will be 
submitted to OMB for approval under control number 0938-0790 (CMS-R-
244). Subject to renewal, the control number is currently set to expire 
on December 31, 2023.
a. ICRs Regarding Service Determination Request Processes Under PACE 
(Sec. Sec.  460.104 and 460.121)
    Section 460.121(i)(2) will require that PACE organizations provide 
written notification to participants when the interdisciplinary team 
extends the timeframe for processing service determination requests. 
Based on our experience with PACE audits during 2017, 2018, and 2019, 
during which time we reviewed all operating PACE organizations at least 
once, we found a total of 30,173 service determination requests. The 
average total PACE enrollment during that same period was 42,800. Thus 
the average number of service determination requests per 1,000 
enrollees was 705 (30,173/42,800). This service determination request 
ratio or intensity (705 service determination requests per 1,000 
enrollees) is used to estimate the number of service determination 
requests PACE organizations will receive from 2022-2024. The service 
determination request ratio is an intuitive way of capturing the rate 
of service determination requests per thousand enrollees and is used to 
estimate the burden associated with service determination requests for 
2022-2024.
    Based on the same audit experience and data collected, we further 
estimate that:
     Approximately 10.16 percent of all service determination 
requests currently received are extended, and
     Of those 705 service determination requests currently 
received per 1,000 enrollees, 77.53 percent are approved (546.6 
requests per 1,000 enrollees), while 22.47 percent are denied (158.4 
requests per 1,000 enrollees).
    With respect to the final service determination request 
requirements in the new Sec.  460.121, we estimate that half of all 
approved service determination requests (that is, 50 percent of the 
546.6 approved requests per 1,000 enrollees or 273.3 requests per 1,000 
enrollees) could be approved in full by an IDT member at the time the 
request is made. Because those approval decisions could be made 
immediately, extension notifications would not be needed for those 
service determination requests.
    Therefore, the requirement to provide written notification when a 
service determination request is extended will apply to:
     The 2.28 percent of service determination requests which 
are extended and subsequently denied (22.47 percent of service 
determination requests that are denied * 10.16 percent of service 
determination requests that are extended); and

[[Page 6066]]

     The 3.94 percent of service determination requests that 
are approved and not routine (that is, a member of the IDT cannot 
approve the service determination request in full at the time the 
request is made) and are extended (77.53 percent of service 
determination requests that are approved * 50 percent of requests that 
are not routine * 10.16 percent of requests that are extended).
    Thus the requirement will apply to 6.22 percent (2.28 percent of 
denied service determination requests and 3.94 percent of approved 
service determination requests) of all service determination requests. 
Based on OACT estimates, the average projected PACE enrollment for 
2022-2024 is 53,549 per year or an increase of 10,749 enrollments from 
2017-2019 (53,549-42,800). The multiplication of the estimated 2022-
2024 PACE enrollment (53,549 enrollees) by the current service 
determination request intensity of 705 per 1,000 enrollees gives a 
reasonable estimate of the number of service determination requests 
PACE organizations will receive for 2022-2024. Based on our audit 
experience, we estimate that it would take the IDT approximately 1 hour 
to prepare and issue notification of the extension to a participant or 
the designated representative.
    Consequently, the total annual burden for providing written 
notification to participants when the interdisciplinary team extends 
the timeframe for processing service determination requests in 
accordance with Sec.  460.121(i)(2) is 2,350 hours (705 requests per 
1,000 enrollees x 53,549 projected enrollment for 2022-2024 x 6.22 
percent of requests that require extensions x 1 hour to process each 
service determination request extension) at a cost of $133,997 (2,350 
hr x $57.02/hr for a Master's-level Social Worker (MSW) (BLS: 
Healthcare social worker) to process them).
    To meet the notification requirements finalized in Sec.  
460.121(i)(2), we expect most PACE organizations will develop a 
template letter to notify the appropriate parties of an extension. We 
estimate a burden of 1 hour at a cost of $70.06/hr for a compliance 
officer (quality improvement coordinator) to create an extension letter 
template.
    In addition to the one-time burden associated with creating an 
extension letter template, we also anticipate a one-time burden 
associated with the requirements we are finalizing in Sec.  
460.121(j)(2), which clarify the required content of denial 
notifications. As a result of these requirements, we expect that PACE 
organizations will need to revise their denial notification letter 
templates. We estimate a burden of 1 hour at a cost of $70.06/hr for a 
compliance officer (quality improvement coordinator) to revise any 
existing denial letter templates.
    In aggregate, for the development and revision of both the 
extension notification and denial notification, we estimate it will 
take of 2 hours at $70.06/hr for a compliance officer (quality 
improvement coordinator) to create and revise the materials. We 
estimate a one-time burden of 266 hours (133 PACE organizations x 2 hr) 
at a cost of $18,636 (266 hr x $70.06/hr).
    We received no comments on our proposed burden estimates in 
Sec. Sec.  460.121 and 460.104. In this final rule, we revised the 
burden estimate for these provisions using updated data previously 
discussed in the introductory paragraph to section VIII.B.10. of this 
final rule. The updated data used to revise the burden estimates 
includes: (1) Service determination request data from 2019 PACE audits, 
(2) 2017-2019 enrollment data, (3) PACE organization contract data, and 
(4) wage data. Based on this updated data, we have revised the burden 
estimate for service determination request extension notification in 
new Sec.  460.121(j)(2), which resulted in a decrease of 578 hours 
(from 2,928 hr to 2,350 hr) and $30,615 (from $164,612 to $133,997) 
from the proposed rule. We have also revised the burden estimate for 
service determination request denial notification requirements in new 
Sec.  460.121(i)(2), which resulted in an increase of 4 hours (from 262 
hr to 266 hr) and $369 (from $18,267 to $18,636) from the proposed 
rule.
b. ICRs Regarding Appeals Requirements Under PACE (Sec. Sec.  460.122 
and 460.124)
    Section 460.122 currently states the requirements for implementing 
an appeals process in PACE. In this rule we are finalizing requirements 
for PACE organizations to develop and distribute written materials that 
will explain the PACE requirements to the third party reviewers that 
are responsible for making appeal determinations. Additionally, we are 
finalizing requirements for appeal decision notifications, which we 
expect will require PACE organizations to revise their current appeal 
notification materials.
    For the development and distribution of materials to the third 
party reviewer, we estimate it will take 4 hours at $70.06/hr for a 
compliance officer (quality improvement coordinator) at each PACE 
organization to create and distribute these materials (3 hr to create 
and 1 hr to distribute). For the revision of the written appeal 
notices, we estimate it will take 1 hour at $70.06/hr for a compliance 
officer (quality improvement coordinator) at each PACE organization to 
revise the current notices.
    In aggregate, we estimate a one-time burden of 665 hours [133 PACE 
organizations * (4 hr + 1 hr)] at a cost of $46,590 (665 hr * $70.06/
hr).
    We received no comments on our proposed burden estimates for this 
provision. In this final rule, we revised the burden estimate for 
developing and distributing written materials to third party reviewers 
using updated data previously discussed in the introductory paragraph 
to section VIII.B.10. of this final rule. The updated data used to 
revise the burden estimate includes: (1) 2017-2019 enrollment data, (2) 
PACE organization contract data, and (3) wage data. Updated service 
determination request data was not utilized to revise this burden 
estimate since the data does not impact appeals notifications. Based on 
the updated data, we have revised the burden estimate for this 
provision which resulted in an increase of 10 hours (from 655 hr to 665 
hr) and $923 (from $45,667 to $46,590) from the proposed rule.
c. ICRs Regarding Documenting and Tracking the Provision of Services 
Under PACE (Sec.  460.98)
    As discussed in section VI.D. of this final rule, we are amending 
Sec.  460.98(b)(5) in part to require PACE organizations to document, 
track and monitor the provision of services across all care settings, 
regardless of whether services are formally incorporated into a 
participant's plan of care.
    We estimate a one-time burden of 50 hours at $56.34/hr for 
technical staff at each PACE organization to develop the necessary 
procedures and written materials. We estimate a one-time burden of 
6,650 hours (133 PACE organizations * 50 hr) at a cost of $374,661 
(6,650 hr * $56.34/hr) for the first year. Since PACE organizations are 
currently required to document all services furnished in the medical 
record in accordance with Sec.  460.210(b)(2), we believe the one-time 
burden of 50 hours is a reasonable estimate for developing the 
necessary procedures and written materials to document, track, and 
monitor the provision of services.
    We also estimate this provision will result in increased ongoing 
costs to PACE organizations. To estimate the increased burden, we use 
the following assumptions about the documentation, tracking and 
monitoring of services,

[[Page 6067]]

based on our experience monitoring and auditing PACE organizations.
    As discussed above, PACE organizations are already required to 
document services furnished in the participant's medical record; 
however, PACE organizations will need to devote time to monitoring and 
tracking the provision of services. We therefore estimate a burden of 
50 hours at $56.34/hr for technical staff to complete these activities, 
including, when warranted, revision of the aforementioned program 
procedures and monitoring measures. We estimate an annual burden of 
6,650 hours (133 PACE organizations * 50 hr) at a cost of $374,661 
(6,650 hr * $56.34/hr).
    In aggregate, we estimate a burden of 13,300 hours (6,650 hr + 
6,650 hr) at a cost of $749,322 ($374,661 + $374,661) for the first 
year of implementation. In subsequent years, we estimate a burden of 
6,650 hours at a cost of $374,661 for the ongoing documentation, 
monitoring and tracking of services.
    We received the following comments on the estimated burden for this 
provision.
    Comment: The majority of commenters expressed concern with to the 
use of the term ``track.'' These commenters suggested that requiring a 
PACE organization to track the provision of services could imply that 
PACE organizations would be required to establish and maintain specific 
logs, universes or data sets, and that such a requirement would 
potentially increase burden and conflict with CMS' Patients Over 
Paperwork initiative.
    Response: As we discussed in greater detail in section VI.D. of 
this final rule, we understand from commenters' concerns that the use 
of the word ``track'' could be interpreted to suggest that PACE 
organizations would be required to maintain a real time ``log'' of 
services which could potentially be burdensome to implement. As we 
stated in the proposed rule, we believe that PACE organizations should 
document that a service has been ordered as well as when and how the 
approved service was provided. It was not our intention in the proposal 
to dictate how an organization implements this provision, and we agree 
with the commenter that PACE organizations should have flexibility in 
how they operationalize the requirement to track, monitor and document 
the provision of services. We expect that PACE organizations will 
create their own methods for tracking and monitoring services. We note 
that while commenters expressed concerns regarding the potential 
burden, no one commented on our estimates related to the burden. We 
believe this indicates that we were accurate in predicting the 
potential burden associated with this provision.
    Therefore, in this final rule, we did not revise the estimates 
based on comments received, but revised the burden estimate for these 
provisions using updated data previously discussed in the introductory 
paragraph to section VIII.B.10. of this final rule. The updated data 
used to revise the burden estimates includes: (1) 2017-2019 enrollment 
data, (2) PACE organization contract data, and (3) wage data. Updated 
service determination request data was not utilized to revise this 
burden estimate since the data does not impact documenting and tracking 
the provision of services. Based on the updated data, we have revised 
the first year burden estimate for this provision which resulted in an 
increase of 200 hours (from 13,100 hr to 13,300 hr) and $82,532 (from 
$666,790 to $749,322) from the proposed rule. We have also revised the 
ongoing burden estimate for this provision which resulted in an 
increase of 100 hours (from 6,550 hr to 6,650 hr) and $41,266 (from 
$333,395 to $374,661) from the proposed rule.
d. ICRs Regarding Documentation in Medical Records Under PACE (Sec.  
460.210)
    Subsequent to the publication of our proposed rule and based on 
public comment, this final rule revises the proposed requirements in 
Sec.  460.210(b)(6) to require PACE organizations to maintain original 
documentation, or an unaltered electronic copy, of any written 
communication the PACE organization receives relating to the care, 
health or safety of a participant, in any format (for example, emails, 
faxes, letters, etc.) and including, but not limited to the following: 
(i) Communications from the participant, his or her designated 
representative, a family member, a caregiver, or any other individual 
who provides information pertinent to a participant's health or safety 
or both and (ii) Communications from an advocacy or governmental agency 
such as Adult Protective Services.
    Section 460.210 currently sets out the requirements relating to 
medical records for PACE participants. This includes the minimum 
content of participant medical records. Under Sec.  460.210(b) of this 
final rule, CMS requires PACE organizations to maintain additional 
information and documentation in the medical record, including 
documentation of all recommendations for services made by employees or 
contractors of the PACE organization, the reasons for not approving or 
providing any service recommended by an employee or contractor of the 
PACE organization, and original documentation, or an unaltered 
electronic copy, of any written communication the PACE organization 
receives relating to the care, health or safety of a participant.
    We expect that PACE organizations will have to revise their 
policies and procedures and re-train staff on the new requirements. We 
believe that a compliance officer (quality improvement coordinator) 
will be responsible for ensuring the necessary materials are updated 
and that staff are trained. For revising materials and training staff, 
we estimate a one-time burden of 10 hours at $70.06/hr for a compliance 
office (quality improvement coordinator) to revise materials and lead 
training. Therefore, the one-time burden to implement this provision is 
1,330 hours (133 PACE organizations * 10 hr) at a cost of $93,180 
(1,330 hr * $70.06/hr).
    We also estimate this provision will result in increased ongoing 
costs to PACE organizations. To estimate the increased burden, we use 
the following assumptions about medical record documentation. These 
assumptions are based on our monitoring and oversight experience.
    Each of the new requirements discussed above may require the 
involvement of any IDT occupation. Therefore, to determine the cost 
associated with this provision, we took the wages for the full IDT 
($846.48/hr) and divided it by the 11 occupations included in the IDT 
(see Table H15) to determine an average wage of $76.95/hr ($846.48/hr/
11 occupations). We believe this is the most accurate estimate as it 
will be unlikely all occupations will be working on the medical record 
at the same time, and we are unable to estimate how much any one 
occupation will work in comparison to the other occupations.
    In the proposed rule, we estimated that the proposed requirement to 
maintain original documentation of any written communication the PACE 
organization receives relating to the care, health or safety of a 
participant, would not create a significant burden, as organizations 
would only be required to store existing documentation within a medical 
record. Therefore, we estimated that the burden for this part of the 
provision would be 5 hours per PACE organization or 665 total hours (5 
hr * 133 organizations) at a cost of $51,172 (665 hr * $76.95/hr).
    Following publication of the proposed rule, while we did not 
receive any comments specific to our burden

[[Page 6068]]

estimates for this requirement, we did receive general comments that 
expressed concern regarding the potential burden associated with 
storing written communications in a participant's medical record. Based 
on these comments, we believe we underestimated the burden for this 
provision. In response to comments received we revised the requirements 
at Sec.  460.210(b)(6) to permit PACE organizations to maintain 
original documentation, or an unaltered electronic copy, of any written 
communication the PACE organization receives relating to the care, 
health or safety of a participant. This change means that PACE 
organizations would be required to maintain all covered written 
communications in Sec.  460.210(b)(6)(i) and (ii), but that they can be 
maintained in either their original form or as an unaltered electronic 
copy. In addition to revising the regulatory text to permit PACE 
organizations to maintain unaltered electronic copies of affected 
written communications, we are also revising our burden estimates for 
Sec.  460.210(b)(6). In this final rule, we estimate that the burden 
for maintaining original documentation, or an unaltered electronic 
copy, of any written communication the PACE organization receives 
relating to the care, health or safety of a participant will be 10 
hours per PACE organization or 1,330 total hours (10 hr * 133 
organizations) at a cost of $102,344 (1,330 hr * $76.95/hr). This 
burden is an ongoing burden in all years.
    This final rule at Sec.  460.210 also requires a PACE organization 
to document all recommendations for services from employees or 
contractors of the PACE organization, including specialists, and 
require PACE organizations to document the reasons a service 
recommended by an employee or contractor of the PACE organization is 
not approved or provided .We considered several factors when 
determining the burden associated with these provisions. First, PACE 
organizations are already required under Sec.  460.104(b)(1) to 
document the rationale for not providing services in developing the 
plan of care; therefore, this provision will only apply to services 
recommended following the initial development of the plan of care. 
Second, PACE organizations will only have to document the rationale 
under Sec.  460.210(b)(5) when the PACE organization does not approve 
or provide a recommended service, so there will be no additional burden 
in situations where the PACE organization approves or provides a 
recommended service. Considering these two factors, we determined that 
each PACE organization will have to spend approximately 52 hours 
(approximately 1 hr per week) to implement this part of the regulation. 
Therefore, we estimate a total of 52 hours per organization per year, 
or a total of 6,916 hours (52 hr * 133 organizations) at a cost of 
$532,186 (6,916 hr * $76.95/hr).
    We therefore estimate the total ongoing burden of all aspects of 
this provision at Sec.  460.210 to be 8,246 hours (1,330 hr + 6,916 hr) 
at a cost of $634,530 ($102,344 + $532,186).

                 Table H15--Wages for IDT Staff Members
------------------------------------------------------------------------
                                                        Adjusted wage *
         Occupation title            Occupation code         ($/hr)
------------------------------------------------------------------------
Dietician.........................            29-1031              59.94
Driver (Passenger Vehicle Driver).            53-3058              31.94
Home Care Coordinator (often a RN)            29-1141              74.48
Masters of Social Work............            21-1022              57.02
Occupational Therapist............            29-1122              82.90
PACE Center Manager (Medical and              11-9111             110.74
 Health Services Manager).........
Personal Care Attendant...........            31-1120              25.42
Physical Therapist................            29-1123              86.70
Primary Care Provider.............            29-1216             193.70
Recreational Therapist............            29-1125              49.16
Registered Nurse..................            29-1141              74.48
                                   -------------------------------------
    Total.........................  .................             846.48
                                   -------------------------------------
    Average IDT Cost Per Hour       .................              76.95
     (846.48/11 occupations)......
------------------------------------------------------------------------
* See section VIII.A. of this final rule for additional wage
  information.

    We received the following comments on the estimated burden 
resulting from this provision in the proposed rule.
    Comment: Commenters expressed concerns that maintaining original 
documentation of any written communication relating to the care, health 
or safety of a participant in any format in the medical record would 
increase burden for PACE organizations as well as increase burden on 
providers that may be responsible for transferring these communications 
to the medical record. As a solution, these commenters recommended 
permitting PACE organizations to scan written documentation and copy 
and paste communications received via email or text into electronic 
medical records.
    Response: In response to commenters' concerns, we reviewed our 
initial burden estimate and determined that we had underestimated the 
burden for maintaining this documentation in its original format within 
the medical record. We increased the burden estimate in the final rule 
accordingly. In determining what an appropriate estimate for this 
provision would be, we considered both that we may have underestimated 
the original burden in the proposed rule, as well as the additional 
operational flexibility that we are allowing for in the final rule, as 
discussed in greater detail in section VI.F. of this final rule. Given 
these two factors, we estimate that the burden for maintaining original 
documentation, or an unaltered electronic copy, of any written 
communication the PACE organization receives relating to the care, 
health or safety of a participant will be 10 hours per PACE 
organization instead of the 5 hours we initially proposed.
    In this final rule, we revised the burden estimate for these 
provisions using updated data previously discussed in the introductory 
paragraph to section VIII.B.10. of this final rule. The updated data 
used to revise the burden estimates includes: (1) 2017-2019 enrollment 
data, (2) PACE organization contract data, and (3) wage data. Updated 
service determination request data was not utilized to revise this 
burden estimate since the data does

[[Page 6069]]

not impact medical record documentation. The estimates were also 
revised to account for additional burden for the requirements in Sec.  
460.210(b)(6). Based on this updated data, we have revised the burden 
estimate for revising materials and training related to the changes in 
this provision which resulted in an increase of 20 hours (from 1,310 hr 
to 1,330 hr) and $1,847 (from $91,333 to $93,180) from the proposed 
rule. We have also revised the burden estimate for the ongoing 
implementation of this provision which resulted in an increase of 910 
hours (from 7,336 hr to 8,246 hr) and $75,453 (from $559,077 to 
$634,530) from the proposed rule.
e. ICRs Regarding PACE Participant Rights: Contact Information and 
Access Requirements (Sec.  460.112)
    Section 460.112 currently includes the specific rights to which 
PACE participants are entitled. As discussed above in section VI.G., 
this final rule amends the participant rights to identify three 
additional rights, specifically, the participant's right to have 
reasonable and timely access to specialists as indicated by the 
participant's health condition and consistent with current clinical 
practice guidelines, the right to call 1-800-MEDICARE for information 
and assistance, and the right to receive necessary care in all care 
settings, up to and including placement in a long-term care facility 
when the PACE organization can no longer maintain the participant 
safely in the community. PACE organizations are currently required to 
provide a copy of the participant rights to participants at the time of 
enrollment and to post a copy of the rights in the center. Under this 
rule, PACE organizations will be required to revise the current 
participant rights to account for the three new requirements and post a 
copy of the revised document.
    We estimate it will take 2 hours at $70.06/hr for a compliance 
officer (quality improvement coordinator) to update the participant 
rights information included in the enrollment information and post the 
new participant rights in the center. In aggregate, we estimate a one-
time burden of 266 hr (133 PACE organizations * 2 hr) at a cost of 
$18,636 (266 hr * $70.06/hr).
    We did not receive any comments related to our projected burden 
estimates for this provision. With the exception of the adjusted number 
of organizations, we are finalizing the proposed burden without change.
11. ICRs Regarding Stipulated Decisions in Part C (Sec.  422.562)
    In order to permit OMHA adjudicators to more efficiently issue 
decisions where there is no longer any material issue in dispute, we 
are providing in Sec.  422.562(d) that, for the sole purpose of 
applying Sec.  405.1038(c), MA organizations are included in the 
definition of ``contractors'' as that definition relates to stipulated 
decisions issued by ALJs and attorney adjudicators under Sec.  
405.1038. We are scoring this impact as negligible for several reasons. 
The total number of favorable decisions in MA for contract year 2018, 
the most recent year for which we have complete appeals data, was 578. 
The number of these overturned denials that were stipulated decisions 
is not currently quantifiable as it is not data that existing appeals 
systems are equipped to track, and ALJs do not track this data on their 
own.
    We consulted with OMHA for its opinion on stipulated decisions. 
OMHA estimated that the number of contractors submitting oral or 
written statements in an ALJ hearing or attorney adjudicator review was 
in the single digits as plans typically prefer an alternate, informal 
approach that removes the claim from the appeals process altogether: 
Requesting that the beneficiary withdraw their appeal and resubmit 
their claim for payment.
    CMS estimates that while this change would positively impact 
beneficiaries both in receipt of their items or services, and afford 
beneficiaries due process protections in a formalized stipulated 
decisions process, the number of beneficiaries that would be affected 
is minimal. Despite this estimation of negligible impact, we included 
this change to promote regulatory uniformity in OMHA's approach to 
stipulated decisions as far as Medicare contractors are concerned. The 
submission of a written or oral statement seeking a stipulated decision 
is associated with an administrative action pertaining to specific 
individuals or entities (5 CFR 1320.4(a)(2) and (c)). Consequently, the 
burden for preparing and filing the oral or written statement for use 
in the appeal is exempt from the requirements of the PRA.
    We received no comments on the assumptions related to our proposed 
provisions. We are finalizing the burden assessment on these provisions 
without modification.

C. Summary of Information Collection Requirements and Associated Burden 
Estimates

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IX. Regulatory Impact Analysis

A. Statement of Need

    The provisions in this final rule implement specific provisions of 
the BBA of 2018 and the SUPPORT Act. The statutory need for these 
policies is clear. However, this rule also contains discretionary 
policies, including enhancements to the Programs of All-Inclusive Care 
for the Elderly (PACE) requirements, hence we provide economic 
justification for some of these noteworthy provisions in the following 
paragraphs.
    Based on industry feedback over the course of several years, and 
our experiences auditing PACE organizations, we proposed to modify 
certain PACE requirements to enhance stakeholders' understanding of our 
requirements and reduce administrative burden. Stakeholders have 
suggested that the existing processes for addressing service 
determination requests is burdensome for PACE organizations, and can 
delay participants' access to services. We are finalizing several 
changes to the PACE regulations to streamline these processes while 
ensuring that important participant protections remain intact. We 
estimate these changes will save PACE organizations, as a whole, 
approximately $16.8 million in the first year, increasing (due to 
expected increased PACE enrollment), to $21.3 million in ten years.
    Summaries of the public comments that are within the scope of the 
provisions' proposed regulatory impact analyses implemented in this 
final rule are included in this section with our responses under the 
appropriate headings.

B. Overall Impact

    We examined the impact of this final 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), Executive Order 13272 on Proper Consideration of 
Small Entities in Agency Rulemaking (August 13, 2002), section 1102(b) 
of 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. 
801-808), and Executive Order 13771 on Reducing Regulation and 
Controlling Regulatory Costs (January 30, 2017). This rule is 
economically significant under Executive Order 12866, as it may result 
in over $100 million in costs, benefits, or transfers annually. The 
Office of Information and Regulatory Affairs has designated this rule 
as a major rule pursuant to the Congressional Review Act, 5 U.S.C. 
804(2).
    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 2020, that threshold is approximately $156 
million. This final rule is not anticipated to have an unfunded effect 
on state, local, or tribal governments, in the aggregate, or on the 
private sector of $156 million or more.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a final rule that imposes 
substantial direct requirement costs on state and local governments, 
preempts state law, or otherwise has federalism implications. Since 
this final rule does not impose any substantial costs on state or local 
governments, preempt state law or have federalism implications, 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 final rule, then we should 
estimate the cost associated with regulatory review. There are 
currently 795 contracts (which includes MA, MA-PD, and PDP contracts), 
55 state Medicaid Agencies, and 300 Medicaid MCOs. We also expect a 
variety of other organizations to review (for example, consumer 
advocacy groups, major Pharmacy Benefit Managers). We expect that each 
organization will designate one person to review the rule. A reasonable 
maximal number is 2,000 total reviewers. We note that other assumptions 
are possible.
    Using the BLS wage information for medical and health service 
managers (code 11-9111), we estimate that the cost of reviewing this 
final rule is $110.74 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 19 hours for 
each person to review this final rule. For each entity that reviews the 
rule, the estimated cost is therefore $2,100 (19 hours x $110.74). 
Therefore, we estimate that the maximum total cost of reviewing this 
final rule is $4.2 million ($2,104 x 2,000 reviewers). However, we 
expect that many reviewers, for example pharmaceutical companies and 
PBMs, will not review the entire rule but just the sections that are 
relevant to them. We expect that on average (with fluctuations) 10 
percent of the rule will be reviewed by an individual reviewer; we 
therefore estimate the total cost of reviewing to be $0.4 million.
    Note that this analysis assumed one reader per contract. Some 
alternatives include assuming one reader per parent organization. Using 
parent organizations instead of contracts will reduce the number of 
reviewers. However, we believe it is likely that review will be 
performed by contract. The argument for this is that a parent 
organization might have local reviewers assessing potential region-
specific effects from this final rule.
    In accordance with the provisions of Executive Order 12866, this 
final rule was reviewed by OMB.

C. Impact on Small Businesses--Regulatory Flexibility Analysis (RFA)

    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 final rule has several dozen provisions. Although several 
provisions are technical or codify existing guidance, and therefore are 
not expected to have economic impact beyond current operating expenses, 
there are other provisions with paperwork or other costs. These 
provisions are analyzed in both this section and in section VIII of 
this final rule. A compact summary of burdens by year and provision are 
summarized in Tables H16 and I14 of this final rule. Also, where 
appropriate the cost burdens and cost savings of groups of provisions 
that are related are summarized in this section. For example, Table H16 
of section VIII of this final rule lists eight paperwork burdens 
related to PACE organizations which are summarized in Table I7 of this 
section. Table I7 is then used in Table I9 to give total savings 
related to PACE organizations, the total savings reflecting all costs 
and savings of the various provisions whether paperwork or not.
    This rule has several affected stakeholders. They include (1) 
insurance companies, including the five types of Medicare health plans, 
MA organizations, PDPs, cost plans, PACE organizations, and 
demonstration projects, (2) providers, including institutional 
providers, outpatient providers, clinical laboratories, and

[[Page 6074]]

pharmacies, and (3) enrollees. Some descriptive data on these 
stakeholders are as follows:
     Pharmacies and Drug Stores, NAICS 446110, have a $30 
million threshold for ``small size'' with 88 percent of pharmacies, 
those with under 20 employees, considered small.
     Direct Health and Medical Insurance Carriers, NAICS 
524114, have a $41.5 million threshold for ``small size,'' with 75 
percent of insurers having under 500 employees meeting the definition 
of small business.
     Ambulatory Health Care Services, NAICS 621, including 
about 2 dozen sub-specialties, including Physician Offices, Dentists, 
Optometrists, Dialysis Centers, Medical Laboratories, Diagnostic 
Imaging Centers, have a threshold ranging from $8 to $35 million 
(Dialysis Centers, NAICD 621492, have a $41.5 million threshold). 
Almost all firms are big, and this also applies to sub-specialties. For 
example, for Physician Offices, NAICS 621111, receipts for offices with 
under 9 employees exceed $34 million.
     Hospitals, NAICS 622, including General Medical and 
Surgical Hospitals, Psychiatric and Substance Abuse Hospitals, 
Specialty Hospitals have a $41.5 million threshold for small size, with 
half of the hospitals (those with between 20-500 employees) considered 
small.
     Skilled Nursing Facilities (SNFs), NAICS 623110, have a 
$30 million threshold for small size, with half of the SNFs (those with 
under 100 employees) considered small.
    We are certifying that this final rule does not have a significant 
economic impact on a substantial number of small entities. To defend 
our position, we first describe at a high level the cash flows related 
to the Medicare program. We then provide more specific details.
    The high-level underlying idea in creating the MA, Medicare cost 
plan, and MA-PD Medicare health insurance programs, is to allow private 
insurers to coordinate care, resulting in efficiencies of cost. The 
high-level underlying idea in creating the non-government-managed 
Prescription Drug program (PDPs and drug portion of MA-PDs) is to allow 
beneficiaries to obtain prescription drugs in a competitive market to 
reduce costs. For MA, MA-PD, and cost plans, enrollees obtain the same 
original Medicare Part A and B services they would otherwise obtain in 
the original Medicare program, generally at reduced cost (however, for 
the small percentage of plans bidding above the benchmark, enrollees 
pay more, but this percentage of plans is not ``significant'' as 
defined by the RFA and as justified below).
    The savings achieved by the MA and the MA-PD plans, the amount of 
reduced cost, can then be used by the private insurers in a variety of 
ways, including providing supplemental benefits to the required 
original Part A and Part B Medicare services. Some examples of these 
supplemental benefits include vision, dental, and hearing; in addition, 
MA plans may provide supplemental benefits in the form of reductions in 
cost sharing compared to the Medicare FFS program. The cost for 
furnishing these supplemental benefits comes from a combination of the 
Medicare Trust Fund and enrollee premiums.
    Part D plans submit bids and are paid by the Medicare Trust Fund 
for their projected costs in the form of direct premium subsidy and 
reinsurance. For any enrolled low-income beneficiaries, plans receive 
and additional low-income premium subsidy and low-income cost sharing 
subsidy. The national average monthly bid amount, or NAMBA, determines 
the base premium. A plan's premium is the sum of the base premium and 
the difference between its bid amount and the NAMBA.
    Thus the cost of providing services by these insurers is met by a 
variety of government funding and in some cases by enrollee premiums.
    In order to achieve these goals, the government pays the MA health 
plans a portion of the funds that would have been paid had plan 
enrollees remained in original Medicare. These funds are then used to 
provide additional benefits on behalf of the health plans' enrollees. 
This unique insurance relationship has several consequences beneficial 
to all parties: First, the various insurance programs are not expected 
to suffer burden or losses since the government subsidizes them; 
second, the government often incurs savings because health plans, by 
virtue of coordinating care, are furnishing the same services, albeit 
often at a reduced cost. This lack of expected burden applies to both 
large and small health plans. As a consequence of this design, the 
unique MA regulations, such as those in this final rule, are defined so 
that small entities are not expected to incur additional burden since 
the cost of complying with any final rule is passed on to the 
government.
    We next examine in detail each of the stakeholders and explain how 
they can bear cost. (1) For Pharmacies and Drug Stores, NAICS 446110; 
(2) for Ambulatory Health Care Services, NAICS 621, including about two 
dozen sub-specialties, including Physician Offices, Dentists, 
Optometrists, Dialysis Centers, Medical Laboratories, Diagnostic 
Imaging Centers, and Dialysis Centers, NAICD 621492; (3) for Hospitals, 
NAICS 622, including General Medical and Surgical Hospitals, 
Psychiatric and Substance Abuse Hospitals, and Specialty Hospitals; and 
(4) for SNFs, NAICS 623110: Each of these are providers (inpatient, 
outpatient, or pharmacy) that furnish plan-covered services to plan 
enrollees. Whether these providers are contracted or, in the case of 
PPOs, PFFS, and MSA, not contracted with the MA plan, their aggregate 
payment for services is the sum of the enrollee cost sharing and plan 
payments. For non-contracted providers, Sec.  422.214 and sections 
1852(k)(1) and 1866(a)(1)(O) of the Act require that a non-contracted 
provider accept payment that is at least what they would have been paid 
had the services been furnished in a fee-for-service setting. For 
contracted providers, Sec.  422.520 requires that the payment is 
governed by a mutually agreed upon contract between the provider and 
the plan. Consequently, for these providers, there is no additional 
cost burden above the already existing burden in original Medicare.
    For Direct Health and Medical Insurance Carriers, NAICS 524114, 
plans estimate their costs for the coming year and submit bids and 
proposed plan benefit packages. Upon approval, the plan commits to 
providing the proposed benefits, and CMS commits to paying the plan 
either (1) the full amount of the bid, if the bid is below the 
benchmark, which is a ceiling on bid payments annually calculated from 
original Medicare data; or (2) the benchmark, if the bid amount is 
greater than the benchmark.
    Theoretically, there is additional burden if plans bid above the 
benchmark. However, consistent with the RFA, the number of these plans 
is not substantial. Historically, only 2 percent of plans bid above the 
benchmark, and they contain roughly 1 percent of all plan enrollees. 
Since the CMS criteria for a substantial number of small entities is 3 
to 5 percent, the number of plans bidding above the benchmark is not 
substantial.
    The preceding analysis shows that meeting the direct cost of this 
final rule does not have a significant economic impact on a substantial 
number of small entities, as required by the RFA. There are certain 
indirect consequences of these provisions which also create impact. We 
have already explained that 98 percent of the plans bid below the 
benchmark. Thus, their estimated costs

[[Page 6075]]

for the coming year are fully paid by the government. However, the 
government also pays the plan a ``beneficiary rebate'' amount that is 
an amount equal to a percentage (between 50 and 70 percent depending on 
a plan's quality rating) multiplied by the amount by which the 
benchmark exceeds the bid. The rebate is used to provide additional 
benefits to enrollees in the form of reduced cost sharing, lower Part B 
or Part D premiums, or supplemental benefits. (Supplemental benefits 
may also partially be paid by enrollee premiums if the plan chooses to 
use premiums or offers optional supplemental benefits that enrollees 
may elect to purchase.) It would follow that if the provisions of this 
final rule cause the bid to increase and if the benchmark remains 
unchanged or increases by less than the bid does, then the result would 
be a reduced rebate and possibly fewer supplemental benefits for the 
health plans' enrollees.
    CMS has observed that from year to year MA organizations prefer to 
reduce their profit margins, rather than substantially change their 
benefit package. This is due to marketing forces; a plan lowering 
supplemental benefits even for one year may lose its enrollees to 
competing plans that offer these supplemental benefits. Thus, it is 
advantageous for the MA Organization to temporarily reduce margins, 
rather than reduce benefits.
    We note that we do not have definitive data on this. That is, we 
can at most note the way profit margins and supplemental benefits vary 
from year to year. The thought processes behind the plan are not 
reported. More specifically, when supplemental benefits are reduced, we 
have no way of knowing the cause for this reduction, whether it be new 
provisions, market forces, or other causes.
    A second indirect impact arises from effects on the MLR. More 
specifically, several provisions of this final rule have non-benefit, 
administrative classification. For example, the RTBT provision is a 
requirement for plans to utilize or create certain software; the cost 
of this creation is classified as administrative and hence is entered 
in the bid as a non-benefit expense. Similarly, the cost of rewards and 
incentives is being codified at Sec.  422.134(g)(3) as a non-benefit 
expense in the plan bid. Several other provisions, including those 
related to models of care, call centers, and marketing standards, 
represent non-benefit administrative cost. A non-benefit expense 
contributes to the denominator of the MLR but not the numerator.
    If the costs of complying with a particular provision are 
excessive, then the MLR could be adversely impacted and MLR 
requirements could possibly not be met. For contract year 2014 and 
subsequent contract years, MA organizations, Part D sponsors, and cost 
plans are required to report their MLRs and are subject to financial 
and other penalties for failure to meet the statutory requirement that 
they have an MLR of at least 85 percent (Sec. Sec.  422.2410 and 
423.2410). The statute imposes several levels of sanctions for failure 
to meet the minimum MLR requirement, including remittance of funds to 
CMS, a prohibition on enrolling new members, and ultimately contract 
termination.
    There are two ways of showing that this burden is not substantial 
for at least one provision. As noted in section VIII.B.7. of this final 
rule, the estimated cost of creating and maintaining an RTBT is $4.7 
million. We explicitly requested stakeholder impact on this specific 
estimate and received none. The experience of OACT is that for almost 
all plans, an extra burden of $0.7 million is unlikely to affect the 
MLR.
    Additionally, the RTBT provision addresses multiple possibilities 
of implementation, some of them significantly less costly than others. 
Plans, in implementing the RTBT have the following options: (1) Whether 
they want to develop a new portal, or use an existing computer 
application, (2) whether they want to offer rewards and incentives to 
their enrollees who log onto the beneficiary RTBT, (3) whether they 
want to exclude certain clinically appropriate formulary alternatives 
from the RTBT, and (4) whether they want to include the negotiated 
price.
    By both allowing exclusions from the RTBT and also by not requiring 
that plans build their own portals, the RTBT cost may be significantly 
less than $4.7 million.
    Based on the previous discussion, we certify that this final rule 
does not have a significant economic impact on a substantial number of 
small entities.

D. Anticipated Effects

    Some provisions of this final rule have negligible impact either 
because they are technical provisions or are provisions that codify 
existing guidance. Other provisions have an impact although it cannot 
be quantified or whose estimated impact is zero. Throughout the 
preamble, we have noted when we estimated that provisions have no 
impact. Additionally, this Regulatory Impact Analysis discusses several 
provisions with either zero impact or impact that cannot be quantified. 
The remaining provisions are estimated in section VIII of this final 
rule and in this Regulatory Impact Analysis. Where appropriate, when a 
group of provisions have both paperwork and non-paperwork impact, this 
Regulatory Impact Analysis cross-references impacts from section VIII 
of this final rule in order to arrive at total impact. Additionally, 
this Regulatory Impact Analysis provides pre-statutory impact of 
several provisions whose additional current impact is zero because 
their impact has already been experienced as a direct result of the 
statute. For further discussion of what is estimated in this Regulatory 
Impact Analysis, see Table I13 and the discussion afterwards.
1. Beneficiaries With History of Opioid-Related Overdose Included in 
Drug Management Programs (DMPs) (Sec.  423.153)
    This provision requires that CMS identify beneficiaries enrolled in 
Medicare Part D with a history of opioid-related overdose (as defined 
by the Secretary) and include such individuals as PARBs for 
prescription drug abuse under the Part D sponsor's drug management 
program. We projected a list of approximately 18,000 beneficiaries that 
met the criteria for this provision between July 2017 and June 2018, 
but did not meet other criteria for classification as a potential at-
risk beneficiary. Under this provision, this population is projected to 
(1) increase the population of enrollees requiring case management by 
plan sponsors (see section IX.B.3. of this final rule), and (2) reduce 
Part D drug cost.
    We evaluated their Prescription Drug Event (PDE) data for the same 
July 2017 and June 2018 period to determine the effects of this 
provision. After examining the PDE data, we found that these 
beneficiaries had an average gross drug cost per beneficiary per year 
of $9,675. Because this amount is high relative to the typical Part D 
spending and because they do not meet other at-risk criteria, it is 
likely that many of these beneficiaries have conditions that require 
expensive specialty medications. These drugs have complex clinical 
criteria that are difficult to alter through utilization management. 
Accordingly, and because there is no directly pertinent information 
available on the potential savings for increased prescription drug 
management on this segment of the population, we have, based on the 
actuarial judgment of staff with pharmaceutical experience as well as 
based on discussions with pharmacists, assumed that 5 percent of their 
Part D drug cost would be reduced

[[Page 6076]]

through additional plan management. We note that the we received no 
comments on this estimate as a result of its publication in the 
proposed rule and therefore believe it reasonable. Our estimated fiscal 
year federal savings rounded to the nearest million are shown in Table 
I1. Since these drugs would not be purchased as a result of efficient 
case management, they represent reduction in goods consumed and are 
true savings to the Medicare Trust Fund.
[GRAPHIC] [TIFF OMITTED] TR19JA21.048

    Table I2 summarizes the aggregate impact of the changes to DMPs. It 
reflects all the estimates related to DMPs in section IX of this final 
rule (which incur costs) and the savings due to reduction in drug costs 
discussed in this Regulatory Impact Analysis.
[GRAPHIC] [TIFF OMITTED] TR19JA21.049

2. Automatic Escalation to External Review Under a Medicare Part D Drug 
Management Program (DMP) for At-Risk Beneficiaries (Sec. Sec.  423.153, 
423.590, and 423.600)
    The SUPPORT Act requires automatic escalation of drug management 
program appeals to the independent outside entity contracted with the 
Secretary for review and resolution. We are finalizing our proposal to 
codify that provision, with a modification to permit plan sponsors up 
to 24 hours after the expiration of the applicable adjudication 
timeframe to assemble and forward the administrative case file to the 
IRE. We do not believe the modification reflected in this final rule 
impacts our previous estimate. To estimate the impact, we first 
determined how many Part D sponsors had implemented drug management 
plans. As of July 9, 2019, we found that 60 Part D sponsors had 
implemented drug management plans. Next, we estimated of the number of 
CARA-appeals per 1,000 enrollees and the percentage of plan denials 
related to CARA. To do this, we contacted nine Part D sponsors and 
asked how many CARA related appeals they had received from January 1, 
2019 through July 31, 2019.
    Of those nine, eight plans responded they had have not received any 
CARA appeals. One Part D sponsor responded to say they had received 
CARA related appeals. That plan reported a rate of 0.014 CARA related 
appeals per 1000 enrollees. This accounted for 0.08 percent of plan 
denials. Since there are about 28,600 appeals per year, therefore there 
are only about 23 cases (0.08 percent * 28,600) affected by this 
provision. Since most IRE cases are judged by a physician at a wage of 
$202.46 and typically an IRE will take at most 1 hour to review most 
cases, the total burden is about $4,656.58 (23 cases

[[Page 6077]]

* $202.46 * 1 hour) which is entered as $0.0 million in the summary 
table since regulatory accounting standards impose a rounding to the 
nearest tenth of a million.
3. Suspension of Pharmacy Payments Pending Investigations of Credible 
Allegations of Fraud and Program Integrity Transparency Measures 
(Sec. Sec.  405.370, 422.500, 422.503, 423.4, 423.504, and 455.2)
    We were unable to determine the overall impact of implementing 
sections 2008 and 6063 of the SUPPORT Act because we do not have 
adequate data to support an estimate of the potential costs and 
savings. While we do have access to estimates of overall Medicare Part 
D opioid spending, sections 2008 and 6063 of the SUPPORT ACT are not 
expected to impact all Part D opioid prescriptions, nor do we expect 
that they would impact all pharmacies that dispense those medications. 
For example, section 2008 of the SUPPORT Act requires Part D plan 
sponsors to report to CMS any payment suspension pending investigation 
of credible allegations of fraud by a pharmacy, which must be 
implemented in the same manner as the Secretary does under section 
1862(o) of the Act. In addition, section 6063 of the SUPPORT Act 
requires MA organizations and Part D plan sponsors to report 
information on the investigations, credible evidence of suspicious 
activities of a provider of services (including a prescriber) or 
supplier related to fraud, and other actions taken by the plan related 
to inappropriate prescribing of opioids. In both cases, these 
provisions would directly impact a percentage of all opioid 
prescriptions written by prescribers and dispensed by pharmacies. While 
we believe there may be savings generated through actions taken by Part 
D plan sponsors that will conduct their own due diligence from the 
reporting and sharing of administrative actions between CMS, MA 
organizations and Medicare Part D plan sponsors (including MA 
organizations offering MA-PD plans), as well as additional law 
enforcement actions, we cannot estimate the impact at this time. We 
welcomed comment and suggestions for data that could be relied upon for 
this purpose.
    We received no comments on the proposed regulatory impact and 
consequently we are finalizing them without modification.
4. Medicare Advantage (MA) and Part D Prescription Drug Program Quality 
Rating System (Sec. Sec.  422.162, 422.164, 422.166, 422.252, 423.182, 
423.184, and 423.186)
    We are finalizing measure updates, clarifying and codifying 
policies in this final rule. These changes are routine and are not 
expected to 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 PDPs). These types of routine 
changes have historically had very little or no impact on the highest 
ratings. Hence, there will be no, or negligible, impact on the Medicare 
Trust Fund from the routine changes.
    We are also clarifying some of the current rules around assigning 
Quality Bonus Payment (QBP) ratings and codifying the rules around 
assigning QBP ratings for new contracts under existing parent 
organizations. We are not finalizing any changes to our current QBP 
policies, so there will be no impact on the Medicare Trust Fund from 
these provisions.
5. Permitting a Second, ``Preferred,'' Specialty Tier in Part D 
(Sec. Sec.  423.104, 423.560, and 423.578)
    The option for Part D sponsors to offer a second, ``preferred'' 
specialty tier has the potential to impact Part D drug costs in at 
least two ways. First, a Part D sponsor may have additional negotiating 
power with brand drug manufacturers by offering a preferential tier 
position relative to the current single specialty tier. Second, Part D 
sponsors may promote lower-cost biosimilar biological products on a 
preferred specialty tier. We consider each of these possibilities in 
the following discussion.
    For a Part D sponsor to be able to negotiate better formulary 
position and lower beneficiary cost sharing for a particular specialty-
tier drug, there must be a substantial difference between the cost 
sharing on the preferred specialty tier and the higher cost-sharing, 
specialty tier. Because the regulation limits the maximum allowable 
cost sharing to the range of 25 to 33 percent, Part D sponsors must 
achieve this difference by lowering the cost sharing on the preferred 
specialty tier. For example, because of the high cost for specialty-
tier drugs and the structure of the Part D benefit, Part D enrollees 
and prescribers might not significantly alter their behavior in 
response to a five percent change in coinsurance. A substantial 
reduction in the cost sharing for preferred specialty tier would 
necessitate a substantial increase in cost sharing for other tiers to 
maintain an actuarially equivalent benefit, which may unfavorably 
change the competitive position of the Part D sponsor's plan offering. 
In particular, a plan that offers lower cost sharing on high-cost 
specialty-tier drugs and higher cost sharing on conventional drugs 
would risk adverse selection from Part D enrollees.
    In addition, allowing tiering exceptions between the preferred 
specialty tier and the higher cost-sharing, specialty tier creates a 
risk for the Part D sponsor that may exceed the benefit of being better 
able to negotiate with respect to brand drugs. A portion of the higher 
cost-sharing, specialty-tier drugs may be granted exceptions as the 
clinical criteria for such Part D drugs is complex and can lead to 
different prescriptions for beneficiaries with similar conditions. 
These Part D drugs are often more complicated chemically and apply to 
complex conditions, such as Rheumatoid Arthritis or Multiple Sclerosis. 
This added complexity requires greater specialized knowledge than a 
traditional small molecule drug would for denying an exception. This 
will be known to manufacturers, who will be less inclined to provide 
additional incentives for the preferred placement given that a 
significant amount of non-preferred use will limit any market share 
gains from their enhanced formulary position. Part D sponsors would 
also face additional liability from the difference in cost sharing 
between the preferred and the higher cost-sharing, specialty tiers on 
prescriptions that are granted tiering exceptions. This dynamic serves 
as a disincentive for Part D sponsors to place specialty-tier-eligible 
drugs on a non-specialty, non-preferred drug tier under current 
regulation.
    Regarding savings from biosimilar biological products that could be 
promoted through a preferred specialty tier, some of the same 
previously discussed issues still apply. For example, Part D sponsors 
may expect a portion of a non-preferred reference biological product's 
utilization to be given an exception to the preferred tier for a 
biosimilar biological product if such biosimilar biological product is 
not licensed for all of the same indications as the reference 
biological product. Furthermore, the selection of these products is 
often largely determined by the behavior of the prescriber rather than 
the formulary status of the Part D sponsor. If the prescriber prefers 
the reference biological product, they are more likely to prescribe it 
rather than the biosimilar biological product, regardless of the 
formulary position.

[[Page 6078]]

This is particularly true for specialty-tier drugs, where the 
differences in total drug cost and the cost-sharing requirements of the 
plan are not as extreme as the differences between conventional brand 
and generic drugs. Finally, it is worth noting that several large Part 
D sponsors do not currently promote biosimilar biological products. For 
example, Zarxio[supreg], a biosimilar biological product to 
Neupogen[supreg], is not included on the formulary for several large 
Part D plans.
    Our conclusion is that the provisions of the final rule to allow 
Part D sponsors to structure their benefits with a second, 
``preferred'' specialty tier are unlikely to have a material impact on 
Part D costs. While it is possible that a small savings to the Part D 
program could result from the enhanced flexibility, particularly for 
MA-PD plans with greater prescriber integration, broad adoption of a 
second specialty tier is unlikely. Nevertheless, we believe there are 
reasons for a second specialty tier. As discussed in more detail in 
section IV.E. of this final rule, stakeholders requesting this change 
have posited that it might lead to better rebates on certain Part D 
drugs and reduced costs for Part D enrollees and CMS. Most importantly, 
we are currently not aware of any major adverse effects that could 
result to Part D enrollees by allowing Part D sponsors to structure 
their benefits with a second, ``preferred'' specialty tier. For 
example, concern for undue financial burden on some Part D enrollees 
has prompted us to retain the current maximum allowable cost sharing 
(that is, 25/33 percent, as discussed in more detail in section IV.E. 
of this final rule). Additionally, we solicited comment regarding 
whether negative consequences to Part D enrollees could result from 
this proposal. If there were no foreseeable notable harms to Part D 
enrollees, it would seem reasonable to provide the requested 
flexibility to Part D sponsors and see if additional benefits do 
result, while monitoring implementation for adverse effects and 
responding as necessary.
    As discussed in section IV.E. of this final rule, improving Part D 
enrollee access to needed drugs, including lowering drug costs, are 
central goals for CMS. While this regulatory impact analysis assesses 
the potential impact this policy will have on Part D drug costs, we 
also believe this policy has the potential to impact patient access and 
lower drug costs more broadly, by providing further incentives for 
manufacturers to develop generic drugs and biosimilar and 
interchangeable biological products. Even if notable savings for the 
Part D program were not to materialize, individual Part D enrollees 
might save a great deal on rebated Part D drugs. Or, the policy might 
result in the benefit of (1) more formulary choices, or (2) more 
choices at a lower cost than might have otherwise been the case. These, 
in turn, might lead to positive health outcomes with associated 
indirect savings to Part D enrollees or the government. We solicited 
comment on any other unforeseen benefits that might result. And, again, 
in finalizing this proposal, we will closely monitor for any adverse 
effects and take any necessary action including warranted changes for 
future rulemaking.
    Comment: Some commenters suggested that CMS should conduct 
additional research on the impact of specialty tiers on Part D 
enrollees, generally, before enacting this policy.
    Response: In finalizing our proposals to permit Part D sponsors to 
maintain up to two specialty tiers, we intend to monitor the uptake of 
the use of a second specialty tier. We are unclear about, generally, 
what the commenters believe we should research, given the Part D 
enrollee protections we are finalizing as part of this final rule.
    Comment: Some commenters suggested that the specialty tier(s) serve 
as perverse ``reverse insurance,'' reasoning that the sickest patients 
who need specialty-tier eligible drugs subsidize the benefit to keep 
premiums and cost sharing on non-specialty tiers lower for the rest of 
the benefit.
    Some commenters stated that CMS's proposals exacerbate an existing 
lack of transparency and the impact of misaligned rebate incentives in 
the Part D program because CMS's proposal provides no incentive or 
imposes no requirement that the rebates on these high-cost drugs be 
passed on to Part D enrollees at the point of sale. They suggested that 
these misaligned incentives lead to inappropriate tier placements as 
Part D sponsors choose higher negotiated prices in exchange for higher 
rebates, and may prefer a drug with a higher net cost over a less 
expensive alternative. These commenters suggested that CMS's proposals, 
due to this inappropriate tier placement, could increase costs to Part 
D enrollees and the government in two ways: First, as Part D enrollees 
enter catastrophic coverage more quickly; and second, because Part D 
enrollees could pay more for preferred products, despite a lower 
coinsurance percentage, because the coinsurance percent is calculated 
from a higher list price. These commenters also suggested that 
misaligned rebate incentives in the Part D program will discourage plan 
use of newer market alternatives.
    Response: We disagree with the sentiment that the specialty tier(s) 
serve as a perverse, ``reverse insurance'' whereby the sickest patients 
who need specialty-tier eligible drugs subsidize the benefit to keep 
premiums and cost sharing on non-specialty tiers lower for the rest of 
the benefit. We believe this reasoning is flawed because the specialty 
tier is aligned with the Defined Standard benefit, and the Part D plan 
bid requirements also necessitate that the benefit structure below the 
specialty tier also be actuarially equivalent to the Defined Standard 
benefit. Therefore, the use of specialty-tier eligible drugs has no 
differential impact on lowering the premiums and cost sharing on non-
specialty tiers for the rest of the benefit. Finally, our proposals 
would not change the role of rebates in the Part D program.
    Comment: Relative to the Part D enrollee and governmental impacts 
of CMS's proposals, some commenters urged CMS to ensure premiums do not 
go up, and others expressed concern that cost sharing on other (in 
other words, non-specialty) tiers would increase as Part D sponsors are 
required to maintain actuarial equivalence. Some commenters suggested 
that plans will utilize a second specialty tier to shift more risk of 
financial exposure to Part D enrollees, leading to higher coinsurance 
for enrollees who use specialty-tier drugs.
    Relative to the Part D sponsor impacts of our proposals, some 
suggested that CMS's proposals would increase costs to Part D sponsors 
due to increases in administrative burden from tiering exceptions 
requests. Others disagreed with CMS's assertion that without any 
specialty tiers, plan costs would increase, and stated that CMS 
provided no data to suggest that specialty tier drugs at lower cost 
sharing could cause increases to premiums or cost sharing for non-
specialty tiers.
    Some commenters were concerned that CMS's proposals would increase 
costs to Part D enrollees, the government, and Part D sponsors. These 
commenters suggested that if the higher cost-sharing, specialty tier 
were kept at the current specialty tier cost threshold (in other words, 
25/33 percent) with no changes (in other words, permitting the higher 
cost-sharing, specialty tier to have cost sharing greater than 25/33 
percent), the Part D sponsor's costs for specialty drugs would 
increase, leading, in turn, to higher bids, and higher premiums and 
cost sharing for Part D enrollees.
    Response: Substantial reductions in cost sharing below the 25/33 
percent

[[Page 6079]]

maximum for the preferred specialty tier necessitate substantial 
increases in cost sharing for non-specialty tiers in order to meet 
actuarial equivalence requirements. Therefore, we recognize that, in 
order for Part D sponsors to offer competitive plan benefit designs, 
Part D sponsors may not offer plan benefit designs with cost sharing 
for the preferred specialty tier far below the 25/33 percent maximum 
for the higher cost-sharing, specialty tier, and consequently, Part D 
enrollee savings for drugs on the preferred specialty tier may be 
limited. However, because Sec.  423.104(d)(2)(iv)(D) maintains the 
existing 25/33 percent maximum allowable cost sharing for the specialty 
tiers, Part D enrollees will not pay more for specialty-tier drugs 
under our proposals than they do now. Therefore, we disagree that our 
proposals will increase Part D enrollees' cost sharing for specialty-
tier drugs.
    We do not understand the commenter's assertion that plans will 
utilize a second specialty tier to shift more risk of financial 
exposure to Part D enrollees, leading to higher coinsurance for 
enrollees who use specialty-tier drugs. While this may be the case in 
the commercial market, which does not, as a matter of policy, establish 
or maintain either a specialty-tier cost threshold or a maximum 
allowable cost sharing, and thus, may have incentives to place more 
drugs on the specialty tier(s), the methodologies to establish an 
increase the specialty-tier cost threshold that we are finalizing in 
this rule will serve to limit the specialty tier(s) to only the 
highest-cost Part D drugs. We welcome further input on this matter.
    Because specialty-tier drugs are playing an increasing role in the 
prescription drug marketplace, and we have concern about the impact 
this will have on the Part D program, we believe that the increase in 
volume of specialty-tier drugs, but not our proposals, could increase 
costs to the government.
    Regarding administrative burden, tiering exceptions are requested 
at a much lower volume than formulary exception requests and coverage 
determinations in general. Based on 2019 Part D plan reported data, 
tiering exceptions accounted for only 10.8 percent of all exception 
requests received at the coverage determination level, and 5.6 percent 
of all coverage determination requests. We do not anticipate that our 
proposals to permit Part D sponsors to maintain up to two specialty 
tiers will significantly impact this volume.
    Although implementation will be delayed until coverage year 2022, 
we are finalizing as proposed our proposals to permit a second 
specialty tier, except that we are not finalizing our proposal to 
specify a specialty tier threshold of $780. Additionally, in response 
to comments, we are finalizing new paragraph Sec.  
423.104(d)(2)(iv)(A)(6) which describes the eligibility for placement 
on the specialty tier of newly-FDA-approved Part D drugs.
    To retain the policies in effect before coverage year 2022, we are 
amending the definition of specialty tier at Sec.  423.560 by adding 
paragraph (i) to clarify that the existing definition will apply before 
coverage year 2022, and paragraph (ii) to cross reference the 
definition which appears in Sec.  423.104(d)(2)(iv), which will apply 
beginning coverage year 2022. Additionally, as discussed in section 
IV.E.2. of this final rule, we are amending Sec.  423.578(a)(6)(iii) by 
adding paragraph (A) to cross reference the definition of specialty 
tier which will apply before coverage year 2022, and paragraph (B) to 
cross reference placement of the definition of specialty tier at Sec.  
423.104(d)(2)(iv) which will apply beginning coverage year 2022. 
Additionally, paragraph (A) will remove the phrase ``and biological 
products,'' and paragraph (B) will (1) reflect the possibility of a 
second specialty tier, and (2) clarify that Part D sponsors may design 
their exception processes so that Part D drugs on the specialty tier(s) 
are not eligible for a tiering exception to non-specialty tiers.
6. Service Determination Request Processes Under PACE (Sec. Sec.  
460.104 and 460.121)
    We have revised the estimated impact from that presented in the 
proposed rule in the following ways: (1) We adjusted our estimates to 
account for an increase in wages according to the May 2019 BLS, (2) we 
included 2019 PACE audit data which was not available at the time these 
estimates were published in the proposed rule, (3) we updated 
enrollment data based on 2017-2019 data from the CMS Office of the 
Actuary (OACT) and (4) we updated PACE organization contract data based 
on data from the Health Plans Management System (HPMS). Based on these 
revisions, we continue to estimate that the finalized provisions will 
result in savings to PACE organizations.
    To estimate the savings from the revisions we are finalizing to the 
service determination request provisions, we rely upon the assumptions 
described in the next section. These assumptions are based on our 
experience monitoring PACE organizations' compliance with current 
service determination request requirements and on data collected during 
those monitoring efforts.
    We estimate that under the current regulation, the aggregate total 
annual cost to all PACE organizations for processing service 
determination requests is approximately $33.2 million.
    We estimated that cost by using the following assumptions. First, 
we estimate the wages for each of the 11 Interdisciplinary team (IDT) 
members in order to better estimate a total cost. The eleven 
disciplines shown are the minimum disciplines required to compose the 
IDT under Sec.  460.102(b). The occupation codes and wages used come 
from the BLS's website. The wage for each discipline includes the mean 
hourly wage plus 100 percent of the mean hourly wage for overhead and 
fringe benefits. Table I3 allows us to estimate the mean hourly wage of 
the IDT as a whole.

                  Table I3--Wages for IDT Staff Members
------------------------------------------------------------------------
                                                            Mean hourly
                                                             wage with
         Occupation title              Occupation code     overhead and
                                                              fringe
                                                           benefits ($)
------------------------------------------------------------------------
Dietician.........................  29-1031.............           59.94
Driver............................  53-3058.............           31.94
Home Care Coordinator (often an     29-1141.............           74.48
 RN).
Masters of Social Work............  21-1022.............           57.02
Occupational Therapist............  29-1122.............           82.90
PACE Center Manager...............  11-9111.............          110.74

[[Page 6080]]

 
Personal Care Attendant...........  31-1120.............           25.42
Physical Therapist................  29-1123.............           86.70
Primary Care Provider.............  29-1216.............          193.70
Recreational Therapist............  29-1125.............           49.16
Registered Nurse..................  29-1141.............           74.48
                                   -------------------------------------
    Total.........................  ....................          846.48
                                   -------------------------------------
        Wages/hr (Total/11).......  ....................           76.95
------------------------------------------------------------------------

    Currently, when processing a service determination request, the IDT 
must determine the appropriate discipline(s) to conduct a reassessment 
under Sec.  460.104(d)(2) and is responsible for notifying the 
participant or designated representative of its decision to approve or 
deny a request under Sec.  460.104(d)(2)(iii). Based on our experiences 
monitoring PACE organizations, we estimate that the IDT takes 
approximately 1 hour to handle these responsibilities for each service 
determination request (1 x $846.48 = $846.48).
    Reassessments performed in response to service determination 
requests are varied and may be done by multiple disciplines. For 
purposes of this estimate, we assume a registered nurse (RN) and 
Master's-level social worker (MSW) conduct reassessments, and that the 
total hours for reassessments equals 1.5 hours per discipline. 
Therefore, we estimate that reassessments would cost (1.5 x $74.48 = 
$111.72) and (1.5 x $57.02 = $85.53). This is summarized in Table I4.

               Table I4--Cost per Service Determination Request for a Pace Organization Assessment
----------------------------------------------------------------------------------------------------------------
                                                    Occupation
                Occupation title                       code         Wage/hr ($)      Time (hr)    Total cost ($)
----------------------------------------------------------------------------------------------------------------
Masters of Social Work..........................         21-1022           57.02             1.5           85.53
Registered Nurse................................         29-1141           74.48             1.5          111.72
                                                 ---------------------------------------------------------------
    Total Cost..................................  ..............  ..............  ..............          197.25
----------------------------------------------------------------------------------------------------------------

    Additionally, once a decision has been rendered, one discipline 
(usually the MSW) notifies the applicable parties which we believe 
takes about 1 hour (1 x $57.02 = $57.02). This is summarized in Table 
I5.

              Table I5--Cost per Service Determination Request for a Pace Organization Notification
----------------------------------------------------------------------------------------------------------------
              Occupation title                Occupation code    Wage/hr ($)       Time (hr)      Total cost ($)
----------------------------------------------------------------------------------------------------------------
Masters of Social Work......................         21-1022            57.02                1            57.02
----------------------------------------------------------------------------------------------------------------

    Therefore, the processing of a service determination request under 
current regulations is $1,100.75 ($57.02 + $846.48 + $197.25) per 
request.
    Additionally, based on combined audit data collected from all PACE 
organizations in 2017, 2018, and 2019 we estimate there are 705.0 
service determination requests per 1,000 enrollees (30,173 total 
service determination requests for 2017, 2018, and 2019 divided by 
42,800, the average enrollment for that time period). Consequently, the 
total cost of processing service determination requests for 2017-2019 
under the current regulations was approximately $33.2 million (705.0 
service determination requests/1,000 enrollees x 42,800 enrollees x 
$1,100.75 per service determination request) per year.
    We anticipate the changes in Sec.  460.121 of this final rule will 
reduce burden on PACE organizations in the following ways. First, the 
final rule establishes a streamlined approval process for service 
determination requests when an IDT member can approve the request in 
full at the time the request is made, under new Sec.  460.121(e)(2). 
These approved requests will not need to be brought to the full IDT for 
review and will not require the IDT to conduct a reassessment. We also 
do not anticipate notification of the approval adding an additional 
burden because the IDT member would approve the request immediately and 
presumably satisfy the notification requirements under Sec.  
460.121(j)(1) at the time the request is made. As discussed in section 
VIII.B.10. of this final rule, we estimate:
     22.47 percent of all service determination requests are 
denied, while 77.53 percent are approved; and
     Of the 77.53 percent of service determination requests 
that are approved, 50 percent of those are routine (that is, can be 
approved in full by an IDT member), while 50 percent are not routine.
    Consequently,

[[Page 6081]]

     273 service determination requests/1,000 enrollees are 
routine and approved (50 percent routine x 77.5 percent approved x 
705.0 service determination requests/1,000 enrollees);
     158 service determination requests/1,000 enrollees are 
denied (22.5 percent x 705.0 service determination requests/1,000 
enrollees); and
     273 service determination requests/1,000 enrollees are 
approved but not routine (77.5 percent approved x 50 percent not 
routine x 705.0 service determination requests/1,000 enrollees).
    These estimates are summarized in Table I6.

      Table I6--Breakout of Service Determination Requests by Type
------------------------------------------------------------------------
                                                             Number or
      Row ID           Formula              Item            percentage
------------------------------------------------------------------------
(1)..............  ...............  Average enrollment            42,800
                                     PACE, 2017, 2018,
                                     2019.
(2)..............  ...............  Total unduplicated            30,173
                                     service
                                     determination
                                     requests (SDR) 2017-
                                     2019.
(3)..............  (2)/(1) * 1000.  Number of SDR per              705.0
                                     1000 enrollees.
(4)..............  ...............  Percentage of SDR              77.53
                                     Approved.
(5)..............  100%-(4).......  Percentage of SDR              22.47
                                     with denial.
(6)..............  ...............  Percentage of                     50
                                     approved SDR,
                                     easily approved.
(7)..............  (3) * (4)......  Total approved SDR               547
                                     per 1000 enrollees.
(8)..............  (3) * (5)......  Total SR with denial             158
                                     per 1000 enrollees.
(9)..............  (7) * (6)......  Total easily                     273
                                     approved SDR per
                                     1000 enrollees.
(10).............  (7)-(9)........  Total not-easily                 273
                                     approved SDR per
                                     1000 enrollees.
(11).............  (8) + (9) +      Aggregate SDR per              705.0
                    (10).            1000 enrollees per
                                     year.
------------------------------------------------------------------------

    We are finalizing the relevant PACE service determination request 
proposals without substantive modification, and our burden estimates 
for the final provisions are based on the following assumptions:
     Service determination requests that an IDT member is able 
to approve in full at the time the request is made under Sec.  
460.121(e)(2) will not require full IDT review, assessment, or a 
separate notification. Although some work is involved in such 
approvals, we are estimating the cost as $0 since: (i) No reassessment 
is needed consistent with Sec.  460.121(e)(2)(ii), (ii) no separate 
notification will generally be needed under Sec.  460.121(j)(1), (iii) 
review by the full IDT is not required under Sec.  460.121(e)(2)(ii) 
and (iv) the estimated time for an IDT member to approve an easily 
approved service determination request in full is small and hence the 
total cost is negligible and can be done as a part of the PACE 
organization's routine day to day activities.
     Denied service determination requests require review by 
the full IDT under Sec.  460.121(f), an in-person assessment pursuant 
to 460.121(h)(1), and notification.
     Service determination requests that are approved, but 
cannot be approved in full at the time the request is made, will 
require review by the full IDT under Sec.  460.121(f) and notification 
pursuant to Sec.  460.121(j)(1) but would not require an assessment.
    In section VIII.B. of this final rule, we identified eight 
requirements across five provisions anticipated to increase burden for 
PACE organizations. These eight requirements, their projected first 
year costs, and their projected annual costs after the first year are 
summarized in Table I7.

        Table I7--Paperwork Costs Associated With This Final Rule
------------------------------------------------------------------------
                                                          Cost for years
                  Item                     1st year cost      2-10 if
                                                 *          applicable
------------------------------------------------------------------------
Extension notification..................         133,997         133,997
Update for extension notification.......          18,636  ..............
Update Appeal Notices...................          46,590  ..............
Develop written materials for tracking..         374,661  ..............
Tracking services.......................         374,661         374,661
Medical record documentation training...          93,180  ..............
Medical record documentation............         634,530         634,530
Update for patients' rights.............          18,636  ..............
                                         -------------------------------
    Totals (in Millions $)..............             1.7             1.1
------------------------------------------------------------------------

    To estimate the total savings over 10 years we proceed as follows:
     We estimate the total savings without additional paperwork 
for 2017-2019 by subtracting the projected cost under the proposed 
provisions from the actual cost under the current provisions. Table I8 
presents these calculations, showing a $15.2 million savings, without 
considering paperwork, for 2017-2019.
     For any year between 2022 and 2031, we divide the 
projected enrollment for that year by the actual enrollment for 2017-
2019. Since costs are per 1000 enrollees, this quotient when multiplied 
by 15.2 million will give the savings for that year without considering 
paperwork requests.
     Finally, since paperwork requests are an additional 
burden, we subtract paperwork costs from the savings to ascertain the 
projected savings for that year. In subtracting paperwork costs, we 
must subtract an annual cost in all years and a special one-time first 
year cost in 2022. Table I9 presents this 10-year projection.
    We illustrate these calculations by deriving the $15.2 million 
savings estimated based upon the data 2017 through 2019, and presented 
in Table I9. That is, if the provisions of this rule had

[[Page 6082]]

been adopted between 2017 and 2019, there would have been a savings of 
$15.2 million. This can be shown as follows:
     Actual Cost (without paperwork) for 2017-2019: 33.2 
million.
     Cost (without paperwork) if these provisions were adopted: 
18.0 million.
     Total savings (Difference of the last two rows): 15.2 
million.
    As we explained previously, in order to arrive at the 33.2 million 
and the 18.0 million, we considered the following:

 $33.2 = 42,800 enrollees * 705.0 service determination 
requests/1,000 enrollees * $1,100.75 (IDT + assessment + notification)
 $18.0 = $10.6 (10.56) + $7.5 (7.44) + $0
 $10.6 = 42,800 enrollees * 273 service determination requests/
1,000 enrollees x ($1,100.75-$197.25)
 $7.4 = 42,800 enrollees * 158 service determination requests/
1,000 enrollees x ($1,100.75)
 $0 = 42,800 enrollees * 273 service determination requests/
1,000 enrollees x $0

    As can be seen, the savings comes from the fact that whereas 
current regulations require that all 705.0 service determination 
requests/1,000 enrollees be processed by the IDT (at a cost of 
$1,100.75), the draft final regulations only require that 431 service 
determination requests (158 service determination requests/1,000 
enrollees that are denied and 273 service determination requests/1,000 
enrollees that are approved but not routine) would go to the full IDT 
for processing, but another 273 service determination requests would be 
approved and routine and therefore would not impose any administrative 
cost on the PACE organization. Additionally, the 273 approved but not 
routine requests that would go to the IDT would be a reduced cost of 
$1,100.75-$197.25 since assessments would not be done for all of those 
approvals. We anticipate this final rule will reduce administrative 
burden on the PACE organization, and allow IDT members to focus more 
time on providing participant care.
[GRAPHIC] [TIFF OMITTED] TR19JA21.050


[[Page 6083]]


[GRAPHIC] [TIFF OMITTED] TR19JA21.051

To clarify Table I9, consider the following:
     As noted previously, the actual non-paper savings for the 
base year, had this provision been implemented between 2017 and 2019, 
would have been $15.2 million for the 42,800 enrollees.
     The OACT projects 52,181 PACE enrollees for 2022.
     Since enrollment is projected to increase by a factor of 
1.2191 (52,181/42,800), and we are estimating service determination 
requests per 1,000 enrollees, we project the non-paper savings for 2022 
to be 1.2191 x $15.2 = $18.5 million. In other words, the 2017-2019 
costs under the current regulation and proposed regulation would 
involve a product of 2017-2019 enrollment (about 42,800) times the 
number of service requests per 1,000. The 2022 costs use the same 
formula, however the 42,800 is replaced by 52,181. It follows that 
multiplying the 2017-2019 savings by 52,181/42,800 gives us the correct 
2022 savings. Since the difference between the current cost and the 
proposed cost is savings, it follows that multiplying this difference 
by the ratio of 52,181/42,800 gives the updated savings).
     However, these are savings without paperwork costs. Table 
I7 indicates an ongoing $1.1 million cost in all years. The extra cost 
in the first year $0.6 million (in addition to the $1.1 ongoing cost) 
is derived from Table I7 as the total first year cost of $1.7 million 
minus the ongoing cost in subsequent years of $1.1 million.
     Therefore, the total savings for 2022 would be $18.5-(1.1 
+ 0.6) = $16.8 million.
     The other rows are calculated similarly.
    Accordingly, the finalized provisions streamline the processes for 
addressing service determination requests in PACE are projected to save 
PACE organizations $16.8 million in 2022 with a gradual increase in 
savings to $21.5 million by 2031. The aggregate savings from 2022-2031 
is $193.8 million. These savings are to industry (PACE organizations) 
because administrative burden is being reduced. Additionally, each 
blank cell in Table I8 corresponds to a proposal to eliminate an 
unnecessary burden.
    We received no comments regarding the impact related to the 
proposed PACE provisions however we have revised our estimate in the 
following ways: (1) We updated our projected costs for Sec. Sec.  
460.121, 460.122, 460.124, 460.98, 460.210, and 460.112, (2) we 
adjusted estimates to account for an increase in wages according to the 
May 2019 BLS, (3) we included 2019 PACE audit data which was not 
available at the time these estimates were published in the proposed 
rule, (4) we updated enrollment data based on data from OACT and (5) we 
updated PACE organization contract data based on data from HPMS.
    Specifically, the projected costs for documenting and tracking the 
provision of services under PACE (Sec.  460.98), appeals requirements 
under PACE (Sec.  460.122), and participant rights (Sec.  460.112) 
provisions were updated to account for: (1) An increase in wages 
according to the May 2019 BLS, (2) updated enrollment data from OACT, 
and (3) updated PACE organization

[[Page 6084]]

contract data based on data from HPMS. Projected costs and savings 
associated with service determination request (Sec.  460.121) were 
updated to account for: (1) An increase in wages according to the May 
2019 BLS, (2) updated enrollment data based on data from OACT, (3) 
updated PACE organization contract data based data from HPMS, and (4) 
updated service determination request data from PACE audits conducted 
from 2017 through 2019. As a result of comments, we also revised costs 
for documentation in medical records under PACE (Sec.  460.210), which 
accounts for: (1) An increase in wages according to the May 2019 BLS, 
(2) updated enrollment data based on data from OACT, (3) updated PACE 
organization contract data based on data from HPMS, and (4) revisions 
to the proposed requirements for maintaining all written communications 
received from a participant or other parties in their original form, as 
discussed in section VIII.B.10. of this final rule.
7. Beneficiaries With Sickle Cell Disease (Sec.  423.100)
    Based on analysis of 2018 data, we found that about 683 
beneficiaries (1.3 percent) who met the minimum OMS criteria or who had 
a history of an opioid-related overdose had sickle cell disease and 
would be affected by the finalized exemption. Since we estimate that 
less than 10 percent of these 683 beneficiaries would have been 
targeted for case management, the resulting savings is $0.0 million (10 
percent x 683 enrollees x $542.46 for each case management).

E. Alternatives Considered

    CMS did not develop Alternatives Considered sections for most of 
the provisions in this final rule as they generally are direct 
implementations of federal laws or codifications of existing policy for 
the Part C and D programs. In this section, CMS includes discussions of 
Alternatives Considered for the provisions to which they are 
applicable.
1. Beneficiaries With History of Opioid-Related Overdose Included in 
Drug Management Programs (DMPs) (Sec.  423.153)
    As the Medicare Part D program is a prescription drug benefit and 
opioid-related overdoses can be due to both prescription opioids, which 
may be covered under Part D, and illicit opioids, this raises a 
question of how CMS should define history of opioid-related overdose. 
CMS considered two options for defining history of an opioid-related 
overdose plus two alternatives.
    Opioid overdose codes (ICD-10) were identified using Medicare FFS 
Claims data and Part C Encounter data. When considering overdose, we 
noted that prescription opioids can also be obtained through illegal or 
illicit means. The available overdose diagnosis codes describe the type 
of drug involved in the poisoning but do not specify how the drugs were 
obtained. There is also an unspecified opioid overdose code. Therefore, 
assumptions were made to classify an overdose code as prescription or 
illicit. For example, code 40.4 (other synthetic opioids) was 
classified as illicit opioid overdose but in some cases fentanyl may 
have been obtained by prescription. Conversely, code 40.2 (other 
opioids) may include poisoning due to oxycodone which was classified as 
prescription opioid overdose but may have been obtained illegally.
    Option 1: Include beneficiaries with either prescription or illicit 
opioid-related overdoses. This option would allow CMS to proactively 
identify the most potential at-risk beneficiaries with a history of 
opioid-related overdoses, regardless whether the opioid is prescription 
or illicit, so that they can be reported to the Part D sponsor and 
reviewed through a DMP. This option represents the largest program size 
of all of the options. Based on data between July 2017 and June 2018, 
CMS estimates that there were about 28,891 beneficiaries with 
prescription or illicit opioid-related overdoses who would have been 
identified and reported as potential at-risk beneficiaries through the 
OMS.
    Option 2: The program size for this option, as a subset of Option 
1, decreases by 37 percent to 18,268 if we were to identify only those 
beneficiaries reported to have at least one opioid prescription drug 
claim during the 6-month OMS measurement period (approximately 63 
percent had opioid Part D claim(s)), which means that they have at 
least one relatively current opioid prescriber.
    Option 3: Identify beneficiaries with only prescription opioid-
related overdoses. This approach would utilize a 12-month lookback 
period to identify beneficiaries with a history of prescription opioid 
overdoses. Based on data between July 2017 and June 2018, CMS estimates 
that there were about 21,037 beneficiaries with prescription opioid-
related overdoses who would be identified and reported by OMS.
    Option 4: Since about 72 percent of beneficiaries had at least one 
Part D opioid claim in the 6-month OMS measurement period, this option, 
as a subset of Option 3, decreases the program size to 15,217 
beneficiaries if we were to require beneficiaries reported to have at 
least one opioid prescription drug claim, which means that they have at 
least one relatively current opioid prescriber.
    As noted, the primary impact will result from needing to case 
manage the additional beneficiaries identified as meeting the proposed 
definition. At the proposed hour and skill levels defined, this 
introduces a projected cost of $547.74 per additional beneficiary 
undergoing case management. The various economic impacts for the 
alternatives considered are summarized in Table I10.

          Table I10--Economic Impact of Alternatives Considered
------------------------------------------------------------------------
                                             Number of
         Alternative (criteria)              enrollees      Total cost
                                             affected      (millions $)
------------------------------------------------------------------------
Option 1................................          28,891            15.8
Option 2 (finalized)....................          18,268            10.0
Option 3................................          21,037            11.5
Option 4................................          15,217             8.3
------------------------------------------------------------------------

    CMS is finalizing the proposal to define history of opioid-related 
overdose as defined in Option 2. This option incorporates the risk 
factor most predictive for another overdose or suicide-related event 
and is commensurate with the Administration's commitment to vigorously 
address the opioid epidemic. However, this approach keeps a clear tie 
between opioid-related overdoses and the Part D program by requiring a 
recent

[[Page 6085]]

prescription opioid prescriber, which simultaneously increases the 
likelihood for successful provider outreach through case management by 
the sponsor. We received no comments on this proposal and therefore are 
finalizing this provision without modification.
2. Eligibility for Medication Therapy Management Programs (MTMPs) 
(Sec.  423.153)
    We initially contemplated requiring that each plan as part of its 
MTM program develop educational materials regarding the safe disposal 
of prescription drugs that are controlled substances for its 
beneficiaries. Though each plan would have had a greater cost to 
develop such materials, the information might have included more local 
resources specific to individual plans. However, for the sake of 
consistency, and to reduce burden on MTM programs, we proposed that 
Part D plans would be required to furnish materials in their MTM 
programs that meet criteria specified in Sec.  422.111(j) as part of a 
CMR, TMR, or other MTM correspondence or service.
    We also considered whether we should extend MTM eligibility to 
potential at-risk beneficiaries (PARBs) instead of to just those 
determined to be at risk. We believe that providing MTM to PARBs might 
have been beneficial for this population. However, the SUPPORT Act is 
clear that the extended MTM eligibility criteria should apply only to 
at-risk beneficiaries.
    After careful consideration of all comments received, and for the 
reasons set forth in section III.E. of this final rule, we are 
finalizing our proposal to add a requirement that Part D sponsors 
target ARBs for enrollment in their MTM programs. Part D plan sponsors 
will be required to comply with this new requirement by January 1, 
2022. We are also finalizing the requirement that plans furnish 
information on safe disposal of prescription drugs that are controlled 
substances to MTM program enrollees at Sec.  423.153(d)(1)(vii)(E), 
with a modification to clarify that plans may do so through use of a 
CMR, TMR or other MTM correspondence or service. We did not receive any 
comments on our impact analysis.
3. Beneficiaries' Education on Opioid Risks and Alternative Treatments 
(Sec.  423.128)
    The provision regarding educating MA and Part D beneficiaries on 
opioid risks and alternative treatments is discussed in section III.D. 
of this final rule. In section IX.B.6. of this final rule, we estimated 
a maximum impact assuming that all plans would want to send all Part D 
enrollees information and that 75 percent of enrollees would request 
paper versus electronic communication.
    However, we emphasize that the SUPPORT Act does not require CMS to 
set a standard as to which enrollees receive the required information. 
As indicated in section III.D. of this final rule, the SUPPORT Act 
gives plans flexibility to choose which enrollees to send the 
information. To facilitate plan choice, we have provided a wide range 
of alternatives in Table I11. The alternatives are based on the number 
of days the enrollee has been on opioids, the possible gaps in opioid 
treatment, as well as the cause of the opioid treatment; we, for 
example, think it very reasonable that sponsors would not want to send 
notices to opioid users in hospice or with cancer as this could unduly 
alarm them; therefore, one alternative is to carve these populations 
out. Although not a policy alternative, we also consider two 
alternatives for paper estimates; a conservative approach is that only 
half (50 percent) of enrollees would request paper while the more 
aggressive approach assumes 75 percent so request. As can be seen, 
despite the wide range of differences, costs vary only between $0.1 and 
$0.5 million.

[[Page 6086]]

[GRAPHIC] [TIFF OMITTED] TR19JA21.052

    Comment: A few commenters suggested that sponsors send information 
on opioid alternatives to all Part D beneficiaries.
    Response: As noted earlier in this rule, the SUPPORT Act gives plan 
sponsors flexibility to choose which enrollees to send the information 
and sponsors have the most accurate beneficiary information and may 
wish to select a specific subset to send this information to.

[[Page 6087]]

    We are finalizing this provision with modification. As explained in 
section A of this final rule, while the statutory requirement begins 
with coverage year 2021, this regulation will be applicable beginning 
January 1, 2022 rather than January 1, 2021 as initially proposed. 
Although implementation will be delayed until coverage year 2022, we 
are finalizing without modification for our proposal to permit Part D 
sponsors to send information on opioid alternatives to all 
beneficiaries, or to a specific subset as determined by the sponsor.
4. Permitting a Second, ``Preferred'', Specialty Tier in Part D 
(Sec. Sec.  423.104, 423.560, and 423.578)
    We would allow Part D sponsors to have two specialty tiers, under 
the existing policy at Sec.  423.578(c)(3)(ii), Part D sponsors would 
be required to permit tiering exceptions between the two specialty 
tiers. We also considered permitting Part D sponsors to exempt tiering 
exceptions between the two specialty tiers, but we are concerned that 
removing the Part D enrollee protection requiring exceptions between 
the two specialty tiers could negate benefits that might otherwise have 
accrued to Part D enrollees under a two specialty-tier policy when 
there is a therapeutic alternative on the preferred specialty tier that 
a Part D enrollee is unable to take.
    Additionally, although we proposed to codify at Sec.  
423.104(d)(2)(iv)(E) the maximum allowable cost sharing under current 
policy, because we note that the deductible applies to all tiers and it 
is unclear that we should continue to differentiate the specialty tier 
from other tiers on the basis of the deductible, we also considered 
decreasing the maximum permissible cost sharing to the 25 percent 
Defined Standard coinsurance for Part D plans with decreased or no 
deductibles. As a result, we would anticipate that Part D sponsors 
would need to raise cost sharing on non-specialty-tier drugs to 
maintain actuarial equivalence. If this applies to all plans, then 
there should be no budget impact, as they must still return to a basic 
benefit design that is actuarially equivalent to the Defined Standard 
benefit, and there will be no adverse selection. Additionally, we do 
not expect impacts from this proposal to the private sector, as 
additional specialty tiers already exist in that market. Plans with a 
high proportion of dual-eligible enrollees are less likely to offer a 
second specialty tier, because the lower cost sharing would be less 
impactful for those beneficiaries. As a result, we don't expect 
material impacts to Medicaid costs.
    Finally, although we proposed at Sec.  423.104(d)(2)(iv)(B) to 
increase the specialty-tier cost threshold for all plan years in which 
CMS determines that no less than a ten percent increase in the 
specialty-tier cost threshold, before rounding ``to'' the nearest $10 
increment, in order to reestablish the 1 percent outlier threshold, CMS 
is also considering a change in this methodology such that CMS would 
always round ``up'' to the nearest $10 increment. This rounding up 
methodology would: (a) Ensure that the new specialty-tier cost 
threshold actually meets the 1 percent outlier threshold, and (b) 
provide more stability to the specialty-tier cost threshold. Although 
the $780 30-day equivalent ingredient cost we determined to be the 
specialty-tier cost threshold for this final rule did not require 
rounding, had we arrived at a 30-day equivalent ingredient cost of, for 
example, $772, rounding up to $780 30-day equivalent ingredient cost 
would have an insignificant impact on the number of drugs meeting the 
specialty-tier cost threshold.
    As noted above, because of conflicting forces, we have not 
estimated a quantitative cost to this provision and acknowledged at 
most a possible qualitative savings. Similarly, these alternatives 
would not change costs.
    Comment: We did not receive any comments regarding the alternative 
on which we solicited comment to always round ``up'' to the nearest $10 
increment.
    Response: Due to the balance of other comments, we are not 
finalizing this alternative.
    Comment: Some commenters preferred that CMS permit Part D sponsors 
to impose cost sharing on the higher-cost sharing, specialty tier 
higher than the current maximum allowable cost sharing of 25/33 
percent.
    Response: As discussed in section IV.E. of this final rule, we 
continue to have concerns that permitting Part D sponsors to impose 
cost sharing on the higher-cost sharing, specialty tier higher than the 
current maximum allowable cost sharing of 25/33 percent is 
discriminatory.
    Comment: Some commenters preferred CMS's option to permit Part D 
sponsors to exempt both specialty tiers from tiering exceptions, even 
between the two tiers.
    Response: As discussed in section IV.E. of this final rule, 
although we believe reasonable arguments can be made with regard to our 
statutory authority relative to both our proposal and the alternative, 
we are concerned that the alternative could make the preferred 
specialty tier vulnerable to tiering exceptions to the non-specialty 
tiers, which could impede the ability of Part D sponsors to offer 
actuarially equivalent benefit designs.
    Although implementation will be delayed until coverage year 2022, 
we are finalizing as proposed our proposals to permit a second 
specialty tier, except we are not finalizing our proposal to specify a 
specialty tier threshold of $780. Additionally, in response to 
comments, we are finalizing new paragraph Sec.  423.104(d)(2)(iv)(A)(6) 
which describes the eligibility for placement on the specialty tier of 
newly-FDA-approved Part D drugs.
    To retain the policies in effect before coverage year 2022, we are 
amending the definition of specialty tier at Sec.  423.560 by adding 
paragraph (i) to clarify that the existing definition will apply before 
coverage year 2022, and paragraph (ii) to cross reference the 
definition which appears in Sec.  423.104(d)(2)(iv), which will apply 
beginning coverage year 2022. Additionally, as discussed in section 
IV.E.2. of this final rule, we are amending Sec.  423.578(a)(6)(iii) by 
adding paragraph (A) to cross reference the definition of specialty 
tier which will apply before coverage year 2022, and paragraph (B) to 
cross reference placement of the definition of specialty tier at Sec.  
423.104(d)(2)(iv) which will apply beginning coverage year 2022. 
Additionally, paragraph (A) will remove the phrase ``and biological 
products,'' and paragraph (B) will (1) reflect the possibility of a 
second specialty tier, and (2) clarify that Part D sponsors may design 
their exception processes so that Part D drugs on the specialty tier(s) 
are not eligible for a tiering exception to non-specialty tiers.
5. Beneficiary Real Time Benefit Tool (RTBT) (Sec.  423.128)
    We are requiring that each Part D plan adopt a beneficiary RTBT by 
January 1, 2023. We had considered requiring that this regulatory 
action occur by January 1, 2021 to coincide with the requirement of a 
prescriber RTBT and the other regulatory actions in this rule. However, 
we wanted to ensure that plans had adequate time to focus on 
implementing the prescriber RTBT by the currently mandated January 1, 
2021 deadline.
    This option would probably not change the cost impact which, in 
section H8 of this final rule, was estimated as $4 million for 
implementation and $0.4 million for policy development and ongoing 
maintenance. The major driver of change in cost would be changes in

[[Page 6088]]

wages. We have already updated the 2018 wages in the NPRM to the 
current 2019 wages. The wages for general operations manager have 
decreased while the wages for compliance officer have increased. If we 
assume this continues for next year there would be no change in the 
$0.4 million estimate. Computer programmer wages are increased by about 
3 percent per year which would increase the $4 million implementation 
cost by about $0.1 million.
    We also considered requiring that plans display this information 
via a third party website or web application. However, since we 
discovered that plans already have patient portals that provide some of 
the mandated information, we believe it would be less confusing for 
beneficiaries to keep this information on the plan portal. In addition, 
it would be less of a burden on plans for them to put the information 
on the portals, rather than supply the information to a third party.
    Another variation that we considered was to require that Part D 
sponsors clarify to enrollees that medications listed in the 
beneficiary RTBT are based on the formulary and that options may exist 
outside of the formulary. However, we ultimately decided that this 
requirement was not necessary, since Part D formularies already provide 
a robust array of options for Part D enrollees and we believe that Part 
D sponsors are in the best positon to judge whether such a statement is 
necessary. As a result, we declined to adopt this requirement.
    We received no comments on our estimated impacts and are therefore 
finalizing it as proposed.
6. Service Determination Request Processes Under PACE (Sec.  460.121)
    As we drafted this provision we considered several alternatives.
    Alternative 1: First, we considered requiring that requests that 
can be immediately approved by a member of the IDT would still require 
a reassessment. We rejected this approach because the IDT member, based 
on their knowledge of the participant, would know quickly that the 
services were appropriate and would therefore not need to conduct a 
reassessment to make that determination.
    Alternative 2: Second, we considered continuing to require that all 
requests that go to the full IDT would require a reassessment even if 
the service can be approved. We also rejected this approach because we 
do not believe it would be necessary to require a reassessment if the 
IDT can approve a service based on their knowledge of the participant.
    The alternatives, the finalized approach, as well as the current 
approach are listed in Table I12 with total 10-year impact over 10 
years.
[GRAPHIC] [TIFF OMITTED] TR19JA21.053


[[Page 6089]]



F. Accounting Statement and Table

    The following table summarizes savings, costs, and transfers by 
provision. As required by OMB Circular A-4 (available at https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/), in Table I13, we 
have prepared an accounting statement showing the savings and costs 
associated with the provisions of this final rule for calendar years 
2022 through 2031. Table I13 is based on Tables I14A, I14B, and I14C 
which lists savings and costs by provision. Table I13 is expressed in 
millions of dollars with both costs and savings listed as positive 
numbers; aggregate impact is expressed as a positive number since the 
aggregate impact is savings. As can be seen, the net annualized savings 
of this rule is about $2.9 to $3.4 million per year. The net raw 
savings over 10 years is $36.9 million. Minor seeming discrepancies in 
totals in Tables I14A, I14B, and I14C reflects use of underlying 
spreadsheets, rather than intermediate rounded amounts. A breakdown of 
these savings from various perspectives may be found in Table I14.
[GRAPHIC] [TIFF OMITTED] TR19JA21.054

    The following Table I14 summarizes savings, costs, and transfers by 
provision and forms a basis for the accounting table. For reasons of 
space, Table I14 is broken into Table I14A (2022 through 2025), Table 
I14B (2026 through 2029), and Table I14C (2030 through 2031, as well as 
raw totals). In these tables, all numbers are positive; positive 
numbers in the savings columns indicate actual dollars saved while 
positive numbers in the costs columns indicate actual dollars spent; 
the aggregate row indicates savings less costs. All numbers are in 
millions. Tables I14A, I14B, and I14C form the basis for Table I13. The 
savings in these tables are true savings reflecting reduced consumption 
of services and goods.

[[Page 6090]]

[GRAPHIC] [TIFF OMITTED] TR19JA21.055


[[Page 6091]]


[GRAPHIC] [TIFF OMITTED] TR19JA21.056


[[Page 6092]]


[GRAPHIC] [TIFF OMITTED] TR19JA21.057

    The following information supplements Table I14 and also identifies 
how impacts calculated in section VIII of this final rule affect the 
calculations of this section and the tables.
     For two provisions, DMP and PACE, this Regulatory Impact 
Analysis provides tables summarizing a variety of impacts with line 
items for the paperwork burdens of section VIII of this final rule. 
Thus the section VIII impacts are reflected both in Table I14 (summary 
table) and Table I13 (monetized table) as well as in special tables in 
this section.
     For six provisions (MTMP, RTBT, SNP MOCs, pharmacy 
performance measures, educating at risk enrollees, and Fraud and 
Abuse), the only impacts are calculated in section VIII of this final 
rule. These six provisions have those section VIII impacts listed in 
Table I14.
    We received comments on impacts in certain individual provisions. 
These comments as well as our responses, including changes to impacts, 
have been addressed in the appropriate provision sections, with many of 
these discussions presented in section VIII.D. of this final rule. 
Additionally, we did not receive any comments on the summary or 
monetized table per se and are therefore finalizing these numbers as 
proposed with appropriate adjustments for provisions not included in 
this first final rule, the updated impacts, and updated wage estimates.

G. Conclusion

    As indicated in Table I13, we estimate that this final rule 
generates annualized cost savings of approximately $3 to $3.5 million 
(depending on the discount factor used) per year over 2022 through 
2031.
    As indicated in Table I14, the primary drivers of savings are (1) 
revisions to the PACE program resulting in greater efficiencies and (2) 
increased vigilance for at-risk beneficiaries with a consequent 
reduction in drug costs. These savings are offset by costs from fraud 
and abuse efforts and a variety of outreach efforts to at-risk 
beneficiaries.
    The net savings are true savings since they reflect reductions in 
consumption of goods and services. These savings by plans arising from 
reduction of services and consumptions of goods are ultimately passed 
back to the Medicare Trust Fund which reduce the dollar spending needed 
for plans.

[[Page 6093]]

    The savings for the federal government are $75.4 million over 10 
years, arising exclusively from DMP savings on reduced prescription 
drug spending. Administrative savings such as those from the PACE 
provisions may not accrue directly to the Medicare Trust Fund.

H. Reducing Regulation and Controlling Regulatory Costs

    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017, and requires that the 
costs associated with significant new regulations ``shall, to the 
extent permitted by law, be offset by the elimination of existing costs 
associated with at least two prior regulations.'' This final rule is a 
deregulatory action under Executive Order 13771. At a 7 percent rate, 
this rule is estimated to save $3.7 million a year in 2016 dollars over 
an infinite time horizon.

List of Subjects

42 CFR Part 405

    Administrative practice and procedure, Diseases, Health facilities, 
Health professions, Medical devices, Medicare, Reporting and 
recordkeeping requirements, Rural areas, and X-rays.

42 CFR Part 417

    Administrative practice and procedure, Grant programs--health, 
Health care, Health insurance, Health maintenance organizations (HMO), 
Loan programs--health, Medicare, and Reporting and recordkeeping 
requirements.

42 CFR Part 422

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

42 CFR Part 423

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

42 CFR Part 455

    Fraud, Grant programs--health, Health facilities, Health 
professions, Investigations, Medicaid, Reporting and recordkeeping 
requirements.

42 CFR Part 460

    Aged, Health care, Health records, Medicaid, Medicare, Reporting 
and recordkeeping requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services amends 42 CFR chapter IV as set forth below:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

0
1. The authority citation for part 405 continues to reads as follows:

    Authority: 42 U.S.C. 263a, 405(a), 1302, 1320b-12, 1395x, 
1395y(a), 1395ff, 1395hh, 1395kk, 1395rr, and 1395ww(k).


0
2. Section 405.370(a) is amended by--
0
a. Revising paragraph (1) of the definition of ``Credible allegation of 
fraud''; and
0
b. Adding the definition for ``Fraud hotline tip'' in alphabetical 
order.
    The revision and addition read as follows:


Sec.  405.370  Definitions.

    (a) * * *
    Credible allegation of fraud. * * *
    (1) Fraud hotline tips verified by further evidence.
* * * * *
    Fraud hotline tip. A complaint or other communications that are 
submitted through a fraud reporting phone number or a website intended 
for the same purpose, such as the Federal Government's HHS OIG Hotline 
or a health plan's fraud hotline.
* * * * *

PART 417--HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL 
PLANS, AND HEALTH CARE PREPAYMENT PLANS

0
3. The authority citation for part 417 continues to read as follows:

    Authority: 42 U.S.C. 1302 and 1395hh, 42 U.S.C. 300e, 300e-5, 
and 300e-9, and 31 U.S.C. 9701.


0
4. Section 417.496 is added to read as follows:


Sec.  417.496  Cost plan crosswalk.

    (a) General rules--(1) Definition. Crosswalk means the movement of 
enrollees from one plan (or plan benefit package (PBP)) to another plan 
(or PBP) under a cost plan contract between the CMP or HMO and CMS. To 
crosswalk enrollees from one PBP to another is to change the enrollment 
from the first PBP to the second.
    (2) Prohibition. (i) Crosswalks are prohibited between different 
contracts.
    (ii) Crosswalks are prohibited between different plan IDs unless 
the crosswalk to a different plan ID meets the requirements in 
paragraph (c)(1)(i) of this section.
    (3) Compliance with renewal/nonrenewal rules. The cost plan must 
comply with renewal and nonrenewal rules in Sec. Sec.  417.490 and 
417.492 in order to complete plan crosswalks.
    (b) Allowable crosswalk types. All cost plans may perform a 
crosswalk in the following circumstances:
    (1) Renewal. A plan in the following contract year that links to a 
current contract year plan and retains the entire service area from the 
current contract year. The following contract year plan must retain the 
same plan ID as the current contract year plan.
    (2) Consolidated renewal. A plan in the following contract year 
that combines 2 or more PBPs. The plan ID for the following contract 
year must retain one of the current contract year plan IDs.
    (3) Renewal with a service area expansion (SAE). A plan in the 
following contract year plan that links to a current contract year plan 
and retains all of its plan service area from the current contract 
year, but also adds one or more new counties. The following year 
contract plan must retain the same plan ID as the current contract year 
plan.
    (4) Renewal with a service area reduction (SAR). A plan in the 
following contract year that links to a current contract year plan and 
only retains a portion of its plan service area. The following contract 
year plan must retain the same plan ID as the current contract year 
plan. The crosswalk is limited to the enrollees in the remaining 
service area.
    (c) Exception. (1) In order to perform a crosswalk that is not 
specified in paragraph (b) of this section, a cost organization must 
request an exception. CMS reviews requests and may permit a crosswalk 
exception in the following circumstance:
    (i) Except as specified in paragraph (c)(1)(ii) of this section, 
terminating cost plans offering optional benefits may transfer 
enrollees from one of the PBPs under its contract to another PBP under 
its contract, including new PBPs that have no optional benefits or 
optional benefits different than those in the terminating PBP.
    (ii) A terminating cost plan cannot move an enrollee from a PBP 
that does not include Part D to a PBP that does include Part D.
    (iii) If the terminated supplemental benefit includes Part D and 
the new PBP does not, enrollees must receive written notification about 
the following:
    (A) That they are losing Part D coverage;
    (B) The options for obtaining Part D; and

[[Page 6094]]

    (C) The implications of not getting Part D through some other 
means.
    (2) [Reserved]

PART 422--MEDICARE ADVANTAGE PROGRAM

0
5. The authority citation for part 422 continues to read as follows:

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

    Section 422.2 is amended by--
0
a. Revising the definition of ``Institutionalized'';
0
b. Adding the definition of ``Parent organization'' in alphabetical 
order to read; and
0
c. Revising the definition of ``Special needs individual''.
    The revisions and addition read as follows:


Sec.  422.2  Definitions.

* * * * *
    Institutionalized means, for the purposes of defining a special 
needs individual and for the open enrollment period for 
institutionalized individuals at Sec.  422.62(a)(4), an MA eligible 
individual who continuously resides or is expected to continuously 
reside for 90 days or longer in one of the following long-term care 
facility settings:
    (1) Skilled nursing facility (SNF) as defined in section 1819 of 
the Act (Medicare).
    (2) Nursing facility (NF) as defined in section 1919 of the Act 
(Medicaid).
    (3) Intermediate care facility for individuals with intellectual 
and developmental disabilities as defined in section 1905(d) of the 
Act.
    (4) Psychiatric hospital or unit as defined in section 1861(f) of 
the Act.
    (5) Rehabilitation hospital or unit as defined in section 
1886(d)(1)(B) of the Act.
    (6) Long-term care hospital as defined in section 1886(d)(1)(B) of 
the Act.
    (7) Hospital which has an agreement under section 1883 of the Act 
(a swing-bed hospital).
    (8) Subject to CMS approval, a facility that is not listed in 
paragraphs (1) through (7) of this definition but meets both of the 
following:
    (i) Furnishes similar long-term, healthcare services that are 
covered under Medicare Part A, Medicare Part B, or Medicaid; and
    (ii) Whose residents have similar needs and healthcare status as 
residents of one or more facilities listed in paragraphs (1) through 
(7) of this definition.
* * * * *
    Parent organization means the legal entity that exercises a 
controlling interest, through the ownership of shares, the power to 
appoint voting board members, or other means, in a Part D sponsor or MA 
organization, directly or through a subsidiary or subsidiaries, and 
which is not itself a subsidiary of any other legal entity.
* * * * *
    Special needs individual means an MA eligible individual who is 
institutionalized or institutionalized-equivalent, as those terms are 
defined in this section, is entitled to medical assistance under a 
State plan under title XIX, or has a severe or disabling chronic 
condition(s) and would benefit from enrollment in a specialized MA 
plan.
* * * * *

0
6. Section 422.100 is amended by--
0
a. Revising paragraphs (c)(1) and (2);
0
b. Redesignating paragraph (d)(2) as paragraph (d)(2)(i);
0
c. Adding paragraph (d)(2)(ii);
0
d. Revising paragraph (m)(5)(iii).
    The revisions and additions read as follows:


Sec.  422.100  General requirements.

* * * * *
    (c) * * *
    (1) Basic benefits are all items and services (other than hospice 
care or, beginning in 2021, 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.
    (2) Supplemental benefits are benefits offered under Sec.  422.102.
    (i) Supplemental benefits consist of--
    (A) Mandatory supplemental benefits are services not covered by 
Medicare that an MA enrollee must purchase as part of an MA plan that 
are paid for in full, directly by (or on behalf of) Medicare enrollees, 
in the form of premiums or cost sharing.
    (B) Optional supplemental benefits are health services not covered 
by Medicare that are purchased at the option of the MA enrollee and 
paid for in full, directly by (or on behalf of) the Medicare enrollee, 
in the form of premiums or cost sharing. These services may be grouped 
or offered individually.
    (ii) Supplemental benefits must meet the following requirements:
    (A) Except in the case of special supplemental benefit for the 
chronically ill (SSBCI) offered in accordance with Sec.  422.102(f) 
that are not primarily health related, the benefits diagnose, prevent, 
or treat an illness or injury; compensate for physical impairments; act 
to ameliorate the functional/psychological impact of injuries or health 
conditions; or reduce avoidable emergency and health care utilization;
    (B) The MA organization incurs a non-zero direct medical cost, 
except that in the case of a SSBCI that is not primarily health related 
that is offered in accordance with Sec.  422.102, the MA organization 
may instead incur a non-zero direct non-administrative cost; and
    (C) The benefits are not covered by Medicare (This specifically 
includes Medicare Parts A, B, and D).
    (d) * * *
    (2) * * *
    (ii) MA plans may provide supplemental benefits (such as specific 
reductions in cost sharing or additional services or items) that are 
tied to disease state or health status in a manner that ensures that 
similarly situated individuals are treated uniformly; there must be 
some nexus between the health status or disease state and the specific 
benefit package designed for enrollees meeting that health status or 
disease state.
* * * * *
    (m) * * *
    (5) * * *
    (iii) Provide the information described in paragraphs (m)(1), (2), 
and (3) and (m)(5)(i) of this section on its website.

0
7. Section 422.101 by--
0
a. Revising paragraphs (f)(1) introductory text and (f)(1)(i) and 
(iii); and
0
b. Adding paragraph (f)(1)(iv);
0
c. Revising paragraph (f)(2) introductory text; and
0
d. Adding paragraph (f)(3).
    The revisions and additions read as follows:


Sec.  422.101  Requirements relating to basic benefits.

* * * * *
    (f) * * *
    (1) MA organizations offering special needs plans (SNP) must 
implement an evidence-based model of care with appropriate networks of 
providers and specialists designed to meet the specialized needs of the 
plan's targeted enrollees. The MA organization must, with respect to 
each individual enrolled, do all of the following:
    (i) Conduct a comprehensive initial health risk assessment of the 
individual's physical, psychosocial, and functional needs as well as 
annual health risk reassessment, using a comprehensive risk assessment 
tool that CMS may review during oversight activities, and ensure that 
results from the initial assessment and annual reassessment conducted 
for each individual enrolled in the plan are addressed in the 
individual's

[[Page 6095]]

individualized care plan as required under paragraph (f)(1)(ii) of this 
section.
* * * * *
    (iii) In the management of care, use an interdisciplinary team that 
includes a team of providers with demonstrated expertise and training, 
and, as applicable, training in a defined role appropriate to their 
licensure in treating individuals similar to the targeted population of 
the plan.
    (iv) Provide, on at least an annual basis, beginning within the 
first 12 months of enrollment, as feasible and with the individual's 
consent, for face-to-face encounters for the delivery of health care or 
care management or care coordination services and be between each 
enrollee and a member of the enrollee's interdisciplinary team or the 
plan's case management and coordination staff, or contracted plan 
healthcare providers. A face-for-face encounter must be either in 
person or through a visual, real-time, interactive telehealth 
encounter.
    (2) MA organizations offering SNPs must also develop and implement 
the following model of care components to assure an effective care 
management structure:
* * * * *
    (3)(i) All MA organizations wishing to offer or continue to offer a 
SNP will be required to be approved by the National Committee for 
Quality Assurance (NCQA) effective January 1, 2012 and subsequent 
years. All SNPs must submit their model of care (MOC) to CMS for NCQA 
evaluation and approval in accordance with CMS guidance.
    (ii) As part of the evaluation and approval of the SNP model of 
care, NCQA must evaluate whether goals were fulfilled from the previous 
model of care.
    (A) Plans must provide relevant information pertaining to the MOC's 
goals as well as appropriate data pertaining to the fulfillment the 
previous MOC's goals.
    (B) Plans submitting an initial model of care must provide relevant 
information pertaining to the MOC's goals for review and approval.
    (C) If the SNP model of care did not fulfill the previous MOC's 
goals, the plan must indicate in the MOC submission how it will achieve 
or revise the goals for the plan's next MOC.
    (iii) Each element of the model of care of a plan must meet a 
minimum benchmark score of 50 percent, and a plan's model of care will 
only be approved if each element of the model of care meets the minimum 
benchmark.

0
8. Section 422.102 is amended--
0
a. In paragraph (a)(4) by removing the phrase ``only as a mandatory'' 
and adding in its place the phrase ``for Part A and B benefits only as 
a mandatory''; and
0
b. Adding paragraphs (a)(5) and (6).
    The revisions and additions read as follows:


Sec.  422.102  Supplemental benefits.

    (a) * * *
    (5) An MA plan may reduce the cost sharing for items and services 
that are not basic benefits only as a mandatory supplemental benefit 
(reductions or payment of cost sharing for Part D drugs is not 
permissible as a Part C supplemental benefit).
    (6) An MA plan may offer mandatory supplemental benefits in the 
following forms:
    (i) Reductions in cost sharing through the use of reimbursement, 
through a debit card or other means, for cost sharing paid for covered 
benefits. Reimbursements must be limited to the specific plan year.
    (ii) Use of a uniform dollar amount as a maximum plan allowance for 
a package of supplemental benefits, including reductions in cost 
sharing or coverage of specific items and services, available to 
enrollees on a uniform basis for enrollee use for any supplemental 
benefit in the package. Allowance must be limited to the specific plan 
year.
* * * * *

0
9. Section 422.111 is amended by--
0
a. Removing paragraph (b)(12);
0
b. Redesignating paragraph (h)(1)(i) as paragraph (h)(1)(i)(A);
0
c. Adding paragraph (h)(1)(i)(B);
0
d. Adding paragraphs (h)(1)(ii)(A) through (C);
0
e. Redesignating paragraph (h)(1)(iii) as (h)(1)(iii)(A);
0
f. Adding paragraph (h)(1)(iii)(B);
0
g. Adding paragraphs (h)(1)(iv), (j), and (k).
    The revisions and additions read as follows:


Sec.  422.111  Disclosure requirements.

* * * * *
    (h) * * *
    (1) * * *
    (i)(A) * * *
    (B) For coverage beginning on and after January 1, 2022, is open at 
least from 8:00 a.m. to 8:00 p.m. in all service areas served by the 
Part C plan, with the following exceptions:
    (1) From October 1 through March 31 of the following year, a 
customer call center may be closed on Thanksgiving Day and Christmas 
Day so long as the interactive voice response (IVR) system or similar 
technology records messages from incoming callers and such messages are 
returned within one (1) business day.
    (2) From April 1 through September 30, a customer call center may 
be closed any Federal holiday, Saturday, or Sunday, so long as the 
interactive voice response (IVR) system or similar technology records 
messages from incoming callers and such messages are returned within 
one (1) business day.
    (ii) * * *
    (A) For coverage beginning on and after January 1, 2022, limits 
average hold time to no longer than 2 minutes. The hold time is defined 
as the time spent on hold by callers following the interactive voice 
response (IVR) system, touch-tone response system, or recorded 
greeting, before reaching a live person.
    (B) For coverage beginning on and after January 1, 2022, answers 80 
percent of incoming calls within 30 seconds after the interactive voice 
response (IVR), touch-tone response system, or recorded greeting 
interaction.
    (C) For coverage beginning on and after January 1, 2022, limits the 
disconnect rate of all incoming calls to no higher than 5 percent. The 
disconnect rate is defined as the number of calls unexpectedly dropped 
divided by the total number of calls made to the customer call center.
    (iii) (A) * * *
    (B) For coverage beginning on and after January 1, 2022, 
interpreters must be available for 80 percent of incoming calls 
requiring an interpreter within 8 minutes of reaching the customer 
service representative and be made available at no cost to the caller.
    (iv) At a minimum, for coverage beginning on and after January 1, 
2022:
    (A) Provides effective real-time communication with individuals 
using auxiliary aids and services, including TTYs and all forms of 
Federal Communication Commission-approved telecommunications relay 
systems, when using automated-attendant systems. See 28 CFR 35.161 and 
36.303(d).
    (B) Connects 80 percent of incoming calls requiring TTY services to 
a TTY operator within 7 minutes.
* * * * *
    (j) Safe disposal of certain prescription drugs. Information 
regarding the safe disposal of prescription drugs that are controlled 
substances and drug takeback programs must be provided in the case of 
an individual enrolled under an MA plan who is furnished an in-home 
health risk assessment on or after January 1, 2022. For purposes of 
this paragraph (j), a health risk assessment furnished to an individual 
who is residing in an institutional setting, such as a nursing 
facility, that has the primary

[[Page 6096]]

responsibility for the disposal of unused medications, is not 
considered an in-home health risk assessment. As part of the in-home 
health risk assessment, the enrollee must be furnished written 
supporting materials describing how to safely dispose of medications 
that are controlled substances as well as a verbal summary of the 
written information as described at paragraphs (j)(1) through (6) of 
this section when possible. The written information furnished to 
enrollees about the safe disposal of medications and takeback programs 
must include the following information for enrollees:
    (1) Unused medications should be disposed of as soon as possible.
    (2) The U.S. Drug Enforcement Administration (DEA) allows unused 
prescription medications to be mailed back to pharmacies and other 
authorized sites using packages made available at such pharmacies or 
other authorized sites. Include a web link to the information available 
on the DEA website at www.deatakeback.com and the web link to the DEA 
search engine which enables beneficiaries to identify drug take back 
sites in their community at the following web address: https://
apps2.deadiversion.usdoj.gov/pubdispsearch/spring/main?execution=e2s1.
    (3) Community take back sites are the preferred method of disposing 
of unused controlled substances.
    (4) The location of two or more drug take back sites that are 
available in the community where the enrollee resides.
    (5) Instructions on how to safely dispose of medications in 
household trash or of cases when a medication can be safely flushed. 
Include instructions on removing personal identification information 
when disposing of prescription containers. If applicable, the 
instructions may also include information on the availability of in-
home drug deactivation kits in the enrollee's community.
    (6) Include a web link to the information available on the United 
States Department of Health and Human Services website identifying 
methods for the safe disposal of drugs available at the following web 
address: www.hhs.gov/opioids/prevention/safely-dispose-drugs/index.html
    (k) Claims information. MA organizations must furnish directly to 
enrollees, in the manner specified by CMS and in a form easily 
understandable to such enrollees, a written explanation of benefits, 
when benefits are provided under this part.
    (1) Information requirements for the reporting period. Claims data 
elements presented on the explanation of benefits must include all of 
the following for the reporting period:
    (i) The descriptor and billing code for the item or service billed 
by the provider, and the corresponding amount billed.
    (ii) The total cost approved by the plan for reimbursement.
    (iii) The share of total cost paid for by the plan.
    (iv) The share of total cost for which the enrollee is liable.
    (2) Information requirements for year-to-date totals. Claims data 
elements presented on the explanation of benefits must include specific 
year-to-date totals as follows:
    (i) The cumulative amount billed by all providers.
    (ii) The cumulative total costs approved by the plan.
    (iii) The cumulative share of total cost paid for by the plan.
    (iv) The cumulative share of total cost for which the enrollee is 
liable.
    (v) The amount an enrollee has incurred toward the MOOP limit, as 
applicable.
    (vi) The amount an enrollee has incurred toward the deductible, as 
applicable.
    (3) Additional information requirements. (i) Each explanation of 
benefits must include clear contact information for enrollee customer 
service.
    (ii) Each explanation of benefits must include instructions on how 
to report fraud.
    (iii) Each EOB that includes a denied claim must clearly identify 
the denied claim and provide information about enrollee appeal rights, 
but the EOB does not replace the notice required by Sec. Sec.  422.568 
and 422.570.
    (4) Reporting cycles for explanation of benefits. MA organizations 
must send an explanation of benefits on either a monthly cycle or a 
quarterly cycle with per-claim notifications.
    (i) A monthly explanation of benefits must include all claims 
processed in the prior month and, for each claim, the information in 
paragraphs (k)(1) and (2) of this section as of the last day of the 
prior month.
    (A) The monthly explanation of benefits must be sent before the end 
of each month that follows the month a claim was filed.
    (B) [Reserved]
    (ii) A quarterly explanation of benefits must include all claims 
processed in the quarter and, for each claim, the information in 
paragraphs (k)(1) and (2) of this section as of the last day of the 
quarter; a per-claim notification must include all claims processed in 
the prior month and, for each claim, the information specified in 
paragraph (k)(1) of this section as of the last day of the prior month.
    (A) MA organizations that send the explanation of benefits on a 
quarterly cycle with per-claim notifications must send the quarterly 
explanation of benefits before the end of each month that follows the 
quarter in which a claim was filed.
    (B) MA organizations that send the explanation of benefits on a 
quarterly cycle with per-claim notifications must send the per-claim 
notification before the end of each month that follows the month in 
which a claim was filed.
    (5) Exceptions. MA organizations are not required to send the 
explanation of benefits to dual-eligible enrollees.

0
10. Section 422.134 is revised to read as follows:


Sec.  422.134  Reward and incentive programs.

    (a) Definitions. As used in this section, the following definitions 
are applicable:
    Incentive item means the same things as reward item.
    Incentive(s) program, reward(s) program, and R&I program mean the 
same thing as rewards and incentives program.
    Incentive(s), R&I, and rewards and incentives mean the same things 
as reward(s).
    Qualifying individual in the context of a plan-covered health 
benefit means any plan enrollee who would qualify for coverage of the 
benefit. In the context of a non-plan-covered health benefit, 
qualifying individual means any plan enrollee.
    Reward and incentive program is a program offered by an MA plan to 
qualifying individuals to voluntarily perform specified target 
activities in exchange for reward items.
    Reward item (or incentive item) means the item furnished to a 
qualifying individual who performs a target activity as specified by 
the plan in the reward program.
    Target activity means the activity for which the reward is provided 
to the qualifying individual by the MA plan.
    (b) Offering an R&I program. An MA plan may offer R&I program(s) 
consistent with the requirements of this section.
    (c) Target activities. (1) A target activity in an R&I program must 
meet all of the following:
    (i) Directly involve the qualifying individual and performance by 
the qualifying individual.
    (ii) Be specified, in detail, as to the level of completion needed 
in order to qualify for the reward item.
    (iii) Be health-related by doing at least one of the following:

[[Page 6097]]

    (A) Promoting improved health.
    (B) Preventing injuries and illness,
    (C) Promoting the efficient use of health care resources.
    (iv) Uniformly offer any qualifying individual the opportunity to 
participate in the target activity.
    (v) Be provided with accommodations consistent with the goal of the 
target activity to otherwise qualifying individuals who are unable to 
perform the target activity in a manner that satisfies the intended 
goal of the target activity.
    (2) The target activity in an R&I program must not do any of the 
following:
    (i) Be related to Part D benefits.
    (ii) Discriminate against enrollees. To ensure that anti-
discrimination requirements are met, an MA organization, in providing a 
rewards and incentives program, must comply with paragraph (g)(1) of 
this section and must not design a program based on the achievement of 
a health status measurement.
    (d) Reward items. (1) The reward item for a target activity must 
meet all of the following:
    (i) Be offered identically to any qualifying individual who 
performs the target activity.
    (ii) Be a direct tangible benefit to the qualifying individual who 
performs the target activity.
    (iii) Be provided, to the enrollee, such as through transfer of 
ownership or delivery, for a target activity completed in the contract 
year during which this R&I program was offered, regardless if the 
enrollee is likely to use the reward item after the contract year.
    (2) The reward item for a target activity must not:
    (i) Be offered in the form of cash, cash equivalents, or other 
monetary rebates (including reduced cost sharing or premiums). An item 
is classified as a cash equivalent if it either:
    (A) Is convertible to cash (such as a check); or
    (B) Can be used like cash (such as a general purpose debit card).
    (ii) Have a value that exceeds the value of the target activity 
itself.
    (iii) Involve elements of chance.
    (3) Permissible reward items for a target activity may be reward 
items that:
    (i) Consist of ``points'' or ``tokens'' that can be used to acquire 
tangible items.
    (ii) Are offered in the form of a gift card that can be redeemed 
only at specific retailers or retail chains or for a specific category 
of items or services.
    (e) Marketing and communication requirements. An MA organization 
that offers an R&I program must comply with all marketing and 
communications requirements in subpart V of this part.
    (f) R&I disclosure. MA organization must make information available 
to CMS upon request about the form and manner of any rewards and 
incentives programs it offers and any evaluations of the effectiveness 
of such programs.
    (g) Miscellaneous. (1) The MA organization's reward and incentive 
program must comply with all relevant fraud and abuse laws, including, 
when applicable, the anti-kickback statute and civil monetary penalty 
prohibiting inducements to beneficiaries. Additionally, all MA program 
anti-discrimination prohibitions continue to apply. The R&I program may 
not discriminate against enrollees based on race, color, national 
origin, including limited English proficiency, sex, age, disability, 
chronic disease, whether a person resides or receives services in an 
institutional setting, frailty, health status, or other prohibited 
basis.
    (2) Failure to comply with R&I program requirements may result in a 
violation of one or more of the basis for sanction at Sec.  422.752(a).
    (3) The reward and incentive program is classified as a non-benefit 
expense in the plan bid.
    (i) If offering a reward and incentive program, the MA organization 
must include all costs associated with the reward and incentive program 
as an administrative cost and non-benefit expense in the bid for the 
year in which the reward and incentive program operates.
    (ii) Disputes on rewards and incentives must be treated as a 
grievance under Sec.  422.564.

0
11. Section 422.162 is amended--
0
a. By revising paragraphs (b)(3)(iv)(A) and (B); and
0
b. By adding paragraph (b)(4).
    The additions and revisions read as follows:


Sec.  422.162  Medicare Advantage Quality Rating System.

* * * * *
    (b) * * *
    (3) * * *
    (iv) * * *
    (A)(1) For the first year after consolidation, CMS uses enrollment-
weighted measure scores using the July enrollment of the measurement 
period of the consumed and surviving contracts for all measures, except 
survey-based measures and call center measures. The survey-based 
measures would use enrollment of the surviving and consumed contracts 
at the time the sample is pulled for the rating year. The call center 
measures would use average enrollment during the study period.
    (2) For contract consolidations approved on or after January 1, 
2022, if a measure score for a consumed or surviving contract is 
missing due to a data integrity issue as described in Sec.  
422.164(g)(1)(i) and (ii), CMS assigns a score of zero for the missing 
measure score in the calculation of the enrollment-weighted measure 
score.
    (B)(1) For the second year after consolidation, CMS uses the 
enrollment-weighted measure scores using the July enrollment of the 
measurement year of the consumed and surviving contracts for all 
measures except for HEDIS, CAHPS, and HOS. HEDIS and HOS measure data 
are scored as reported. CMS ensures that the CAHPS survey sample 
includes enrollees in the sample frame from both the surviving and 
consumed contracts.
    (2) For contract consolidations approved on or after January 1, 
2022, for all measures except HEDIS, CAHPS, and HOS if a measure score 
for a consumed or surviving contract is missing due to a data integrity 
issue as described in Sec.  422.164(g)(1)(i) and (ii), CMS assigns a 
score of zero for the missing measure score in the calculation of the 
enrollment-weighted measure score.
* * * * *
    (4) Quality bonus payment ratings. (i) For contracts that receive a 
numeric Star Rating, the final quality bonus payment (QBP) rating for 
the contract is released in April of each year for the following 
contract year. The QBP rating is the contract's highest rating from the 
Star Ratings published by CMS in October of the calendar year that is 2 
years before the contract year to which the QBP rating applies.
    (ii) The contract QBP rating is applied to each plan benefit 
package offered under the contract.
* * * * *

0
12. Section 422.164 is amended by revising paragraph (g)(1)(iii)(A) to 
read as follows:


Sec.  422.164  Adding, updating, and removing measures.

* * * * *
    (g) * * *
    (1) * * *
    (iii) * * *
    (A)(1) The data submitted for the Timeliness Monitoring Project 
(TMP) or audit that aligns with the Star Ratings year measurement 
period is used to determine the scaled reduction.
    (2) For contract consolidations approved on or after January 1, 
2022, if there is a contract consolidation as described at Sec.  
422.162(b)(3), the TMP or audit data are combined for the consumed and 
surviving contracts

[[Page 6098]]

before the methodology provided in paragraphs (g)(1)(iii)(B) through 
(O) of this section is applied.
* * * * *

0
13. Section 422.166 is amended--
0
a. By adding paragraph (d)(2)(vi); and
0
b. By adding a sentence to the end of paragraph (i)(8).
    The additions read as follows:


Sec.  422.166  Calculation of Star Ratings.

* * * * *
    (d) * * *
    (2) * * *
    (vi) The QBP ratings for contracts that do not have sufficient data 
to calculate and assign ratings and do not meet the definition of low 
enrollment or new MA plans at Sec.  422.252 are assigned as follows:
    (A) For a new contract under an existing parent organization that 
has other MA contract(s) with numeric Star Ratings in November when the 
preliminary QBP ratings are calculated for the contract year that 
begins 14 months later, the QBP rating assigned is the enrollment-
weighted average highest rating of the parent organization's other MA 
contract(s) that are active as of the April when the final QBP ratings 
are released under Sec.  422.162(b)(4). The Star Ratings used in this 
calculation are the rounded stars (to the whole or half star) that are 
publicly displayed on www.medicare.gov. The enrollment figures used in 
the enrollment-weighted calculations are the November enrollment in the 
year the Star Ratings are released.
    (B) For a new contract under a parent organization that does not 
have other MA contract(s) with numeric Star Ratings in November when 
the preliminary QBP ratings are calculated for the contract year that 
begins 14 months later, the MA Star Ratings for the previous 3 years 
are used and the QBP rating is the enrollment-weighted average of the 
MA contract(s)'s highest ratings from the most recent year rated for 
that parent organization.
    (1) The Star Ratings had to be publicly reported on 
www.medicare.gov.
    (2) The Star Ratings used in this calculation are rounded to the 
whole or half star.
    (C) The enrollment figures used in the enrollment-weighted 
calculations are the November enrollment in the year the Star Ratings 
are released.
    (D) The QBP ratings are updated for any changes in a contract's 
parent organization that are reflected in CMS records prior to the 
release of the final QBP ratings in April of each year.
    (E) Once the QBP ratings are finalized in April of each year for 
the following contract year, no additional parent organization changes 
are used for purposes of assigning QBP ratings.
* * * * *
    (i) * * *
    (8) * * * Missing data includes data where there is a data 
integrity issue as defined at Sec.  422.164(g)(1).
* * * * *

0
14. Section 422.220 is revised to read as follows:


Sec.  422.220  Exclusion of payment for basic benefits furnished under 
a private contract.

    (a) Unless otherwise authorized in paragraph (b) or (c) of this 
section, an MA organization may not pay, directly or indirectly, on any 
basis, for basic benefits furnished to a Medicare enrollee by a 
physician (as defined in paragraphs (1), (2), (3), and (4) of section 
1861(r) of the Act) or other practitioner (as defined in section 
1842(b)(18)(C) of the Act) who has filed with the Medicare contractor 
an affidavit promising to furnish Medicare-covered services to Medicare 
beneficiaries only through private contracts under section 1802(b) of 
the Act with the beneficiaries.
    (b) An MA organization must pay for emergency or urgently needed 
services furnished by a physician or practitioner described in 
paragraph (a) of this section who has not signed a private contract 
with the beneficiary.
    (c) An MA organization may make payment to a physician or 
practitioner described in paragraph (a) of this section for services 
that are not basic benefits but are provided to a beneficiary as a 
supplemental benefit consistent with Sec.  422.102.

0
15. Section 422.252 is amended by revising the definition of ``New MA 
plan'' to read as follows:


Sec.  422.252  Terminology.

* * * * *
    New MA plan means a plan that meets the following:
    (1) Offered under a new MA contract.
    (2) Offered under an MA contract that is held by a parent 
organization defined at Sec.  422.2 that has not had an MA contract in 
the prior 3 years. For purposes of this definition, the parent 
organization is identified as of April of the calendar year before the 
payment year to which the final QBP rating applies, and contracts 
associated with that parent organization are also evaluated using 
contracts in existence as of April of the 3 calendar years before the 
payment year to which the final QBP rating applies. For purposes of 
2022 quality bonus payments based on 2021 Star Ratings only, new MA 
plan means an MA contract offered by a parent organization that has not 
had another MA contract in the previous 4 years.
* * * * *

0
16. Section 422.500 is amended in paragraph (b) by adding the 
definitions of ``Fraud hotline tip'', ``Inappropriate prescribing'', 
and ``Substantiated or suspicious activities of fraud, waste, or 
abuse'' in alphabetical order to read as follows:


Sec.  422.500  Scope and definitions.

* * * * *
    (b) * * *
    Fraud hotline tip is a complaint or other communications that are 
submitted through a fraud reporting phone number or a website intended 
for the same purpose, such as the Federal Government's HHS OIG Hotline 
or a health plan's fraud hotline.
* * * * *
    Inappropriate prescribing means that, after consideration of all 
the facts and circumstances of a particular situation identified 
through investigation or other information or actions taken by MA 
organizations and Part D plan sponsors, there is an established pattern 
of potential fraud, waste, and abuse related to prescribing of opioids, 
as reported by the plan sponsors. Beneficiaries with cancer and sickle-
cell disease, as well as those patients receiving hospice and long term 
care (LTC) services are excluded, when determining inappropriate 
prescribing. Plan sponsors may consider any number of factors 
including, but not limited to the following:
    (1) Documentation of a patient's medical condition.
    (2) Identified instances of patient harm or death.
    (3) Medical records, including claims (if available).
    (4) Concurrent prescribing of opioids with an opioid potentiator in 
a manner that increases risk of serious patient harm.
    (5) Levels of morphine milligram equivalent (MME) dosages 
prescribed.
    (6) Absent clinical indication or documentation in the care 
management plan or in a manner that may indicate diversion.
    (7) State-level prescription drug monitoring program (PDMP) data.
    (8) Geography, time, and distance between a prescriber and the 
patient.
    (9) Refill frequency and factors associated with increased risk of 
opioid overdose.
* * * * *
    Substantiated or suspicious activities of fraud, waste, or abuse 
means and

[[Page 6099]]

includes, but is not limited to, allegations that a provider of 
services (including a prescriber) or supplier--
    (1) Engaged in a pattern of improper billing;
    (2) Submitted improper claims with suspected knowledge of their 
falsity;
    (3) Submitted improper claims with reckless disregard or deliberate 
ignorance of their truth or falsity; or
    (4) Is the subject of a fraud hotline tip verified by further 
evidence.

0
17. Section 422.502 is amended by adding paragraphs (b)(1)(i) and (ii) 
to read as follows:


Sec.  422.502  Evaluation and determination procedures.

* * * * *
    (b) * * *
    (1) * * *
    (i) An applicant may be considered to have failed to comply with a 
contract for purposes of an application denial under paragraph (b)(1) 
if during the applicable review period the applicant does any of the 
following:
    (A) Was subject to the imposition of an intermediate sanction under 
subpart O of this part, with the exception of a sanction imposed under 
Sec.  422.752(d) or a determination by CMS to prohibit the enrollment 
of new enrollees pursuant to Sec.  422.2410(c).
    (B) Failed to maintain a fiscally sound operation consistent with 
the requirements of Sec.  422.504(b)(14).
    (ii) CMS may deny an application submitted by an organization that 
does not hold a Part C contract at the time of the submission when the 
applicant's parent organization or another subsidiary of the parent 
organization meets the criteria for denial stated in paragraph 
(b)(1)(i) of this section. This paragraph does not apply when the 
parent organization completed the acquisition of the subsidiary that 
meets the criteria within the 24 months preceding the application 
submission deadline.
* * * * *

0
18. Section 422.503 is amended by adding paragraphs (b)(4)(vi)(G)(4) 
through (7) and (b)(5)(i) and (ii) to read as follows:


Sec.  422.503   General provisions.

* * * * *
    (b) * * *
    (4) * * *
    (vi) * * *
    (G) * * *
    (4) The MA organization must have procedures to identify, and must 
report to CMS or its designee either of the following, in the manner 
described in paragraphs (b)(4)(vi)(G)(4) through (6) of this section:
    (i) Any payment suspension implemented by a plan, pending 
investigation of credible allegations of fraud by a pharmacy, which 
must be implemented in the same manner as the Secretary does under 
section 1862(o)(1) of the Act.
    (ii) Any information concerning investigations, credible evidence 
of suspicious activities of a provider of services (including a 
prescriber) or supplier, and other actions taken by the plan related to 
the inappropriate prescribing of opioids.
    (5) The MA organization must submit data, as specified in this 
section, in the program integrity portal when reporting payment 
suspensions pending investigations of credible allegations of fraud by 
pharmacies; information related to the inappropriate prescribing of 
opioids and concerning investigations and credible evidence of 
suspicious activities of a provider of services (including a 
prescriber) or supplier, and other actions taken by the MA 
organization; or if the plan reports a referral, through the portal, of 
substantiated or suspicious activities of a provider of services 
(including a prescriber) or a supplier related to fraud, waste, or 
abuse to initiate or assist with investigations conducted by CMS, or 
its designee, a Medicare program integrity contractor, or law 
enforcement partners. The data categories, as applicable, include 
referral information and actions taken by the MA organization on the 
referral.
    (6)(i) The MA organization is required to notify the Secretary, or 
its designee, of a payment suspension described in paragraph 
(b)(4)(vi)(G)(4)(i) of this section 7 days prior to implementation of 
the payment suspension. The MA organization may request an exception to 
the 7-day prior notification to the Secretary, or its designee, if 
circumstances warrant a reduced reporting time frame, such as potential 
beneficiary harm.
    (ii) The MA organization is required to submit the information 
described in paragraph (b)(4)(vi)(G)(4)(ii) of this section no later 
than January 30, April 30, July 30, and October 30 of each year for the 
preceding periods, respectively, of October 1 through December 31, 
January 1 through March 31, April 1 through June 30, and July 1 through 
September 30. For the first reporting period (January 30, 2022), the 
reporting will reflect the data gathered and analyzed for the previous 
quarter in the calendar year (October 1-December 31).
    (7)(i) CMS will provide MA organizations with data report(s) or 
links to the information described in paragraphs (b)(4)(vi)(G)(4)(i) 
and (ii) of this section no later than April 15, July 15, October 15, 
and January 15 of each year based on the information in the portal, 
respectively, as of the preceding October 1 through December 31, 
January 1 through March 31, April 1 through June 30, and July 1 through 
September 30.
    (ii) Include administrative actions, pertinent information related 
to opioid overprescribing, and other data determined appropriate by the 
Secretary in consultation with stakeholders.
    (iii) Are anonymized information submitted by plans without 
identifying the source of such information.
    (iv) For the first quarterly report (April 15, 2022), that the 
report reflect the data gathered and analyzed for the previous quarter 
submitted by the plan sponsors on January 30, 2022.
    (5) * * *
    (i) Not accept, or share a corporate parent organization owning a 
controlling interest in an entity that accepts, new enrollees under a 
section 1876 reasonable cost contract in any area in which it seeks to 
offer an MA plan.
    (ii) Not accept, or be either the parent organization owning a 
controlling interest of or subsidiary of an entity that accepts, new 
enrollees under a section 1876 reasonable cost contract in any area in 
which it seeks to offer an MA plan.
* * * * *

0
19. Section 422.504 is amended by revising paragraph (a)(15) to read as 
follows:


Sec.  422.504  Contract provisions.

* * * * *
    (a) * * *
    (15) Through the CMS complaint tracking system, to address and 
resolve complaints received by CMS against the MA organization.
* * * * *

0
20. Section 422.530 is added to subpart K to read as follows:


Sec.  422.530  Plan crosswalks.

    (a) General rules--(1) Definition of crosswalk. A crosswalk is the 
movement of enrollees from one plan (or plan benefit package (PBP)) to 
another plan (or PBP) under a contract between the MA organization and 
CMS. To crosswalk enrollees from one PBP to another is to change the 
enrollment from the first PBP to the second.
    (2) Prohibitions. Except as described in paragraph (c) of this 
section, crosswalks are prohibited between different contracts or 
different plan types (for example, HMO to PPO).
    (3) Compliance with renewal/nonrenewal rules. The MA organization

[[Page 6100]]

must comply with renewal and nonrenewal rules in Sec. Sec.  422.505 and 
422.506 in order to complete plan crosswalks.
    (4) Eligibility. Enrollees must be eligible for enrollment under 
Sec. Sec.  422.50 through 422.54 in order to be moved from one PBP to 
another PBP.
    (5) Types of MA plans. For purposes of crosswalk policy in this 
section, CMS considers the following plans as different plan types:
    (i) Health maintenance organizations coordinated care plans.
    (ii) Provider-sponsored organizations coordinated care plans.
    (iii) Regional or local preferred provider organizations 
coordinated care plans.
    (iv) Special needs plans.
    (v) Private Fee-for-service plans.
    (vi) MSA plans.
    (b) Allowable crosswalk types--(1) All MA plans. An MA organization 
may perform a crosswalk in the following circumstances:
    (i) Renewal. A plan in the following contract year that links to a 
current contract year plan and retains the entire service area from the 
current contract year. The following contract year plan must retain the 
same plan ID as the current contract year plan.
    (ii) Consolidated renewal. A plan in the following contract year 
that combines 2 or more complete current contract year plans of the 
same plan type but not including when a current PBP is split among more 
than one PBP for the following contract year. The plan ID for the 
following contract year must be the same as one of the current contract 
year plan IDs.
    (iii) Renewal with a service area expansion (SAE). A plan in the 
following contract year that links to a current contract year plan and 
retains all of its plan service area from the current contract year, 
but also adds one or more new counties. The following year contract 
plan must retain the same plan ID as the current contract year plan.
    (iv) Renewal with a service area reduction (SAR). (A) A plan in the 
following contract year that links to a current contract year plan and 
only retains a portion of its plan service area. The following contract 
year plan must retain the same plan ID as the current contract year 
plan. The crosswalk is limited to the enrollees in the remaining 
service area.
    (B) While the MA organization may not affirmatively crosswalk 
enrollees in the locations that will no longer be part of the service 
area, the MA organization may offer those affected enrollees in the 
reduced portion of the service area a continuation in accordance with 
Sec.  422.74(b)(3)(ii), provided that there are no other MA plan 
options in the reduced service area.
    (C) If the MA organization offers another PBP in the locations that 
will no longer be part of the service area, current enrollees in the 
locations that will no longer be part of the service area must be 
disenrolled and the MA organization must send a non-renewal notice that 
includes notification of a special enrollment period under Sec.  422.62 
and, for applicable enrollees, Medigap guaranteed issue rights.
    (D) The MA organization may offer current enrollees in the 
locations that will no longer be part of the service area the option of 
enrolling in the other plan(s) the MA organization offers in the 
location that is no longer part of the service area, however, no 
specific plan information for the following contract year may be shared 
with any beneficiaries prior to the plan marketing period for the next 
contract year, consistent with 42 CFR 422.2263 and 423.2263.
    (2) Special needs plans (SNPs). In addition to those described in 
paragraph (b)(1) of this section, SNPs may also perform the following 
types of crosswalks:
    (i) Chronic SNPs (C-SNPs). (A) Renewing C-SNP with one chronic 
condition that transitions eligible enrollees into another C-SNP with a 
grouping that contains that same chronic condition.
    (B) Non-renewing C-SNP with one chronic condition that transitions 
eligible enrollees into another C-SNP with a grouping that contains 
that same chronic condition.
    (C) Non-renewing C-SNP with a grouping that is transitioning 
eligible enrollees into a different grouping C-SNP if the new grouping 
contains at least one condition that the prior C-SNP contained.
    (ii) Institutional SNP. (A) Renewing Institutional SNP that 
transitions enrollees to an Institutional/Institutional Equivalent SNP.
    (B) Renewing Institutional Equivalent SNP that transitions 
enrollees to an Institutional/Institutional Equivalent SNP.
    (C) Renewing Institutional/Institutional Equivalent SNP that 
transitions eligible enrollees to an Institutional SNP.
    (D) Renewing Institutional/Institutional Equivalent SNP that 
transitions eligible enrollees to an Institutional Equivalent SNP.
    (E) Non-renewing Institutional/Institutional Equivalent SNP that 
transitions eligible enrollees to another Institutional/Institutional 
Equivalent SNP.
    (c) Exceptions. In order to perform a crosswalk that is not 
specified in paragraph (b) of this section, an MA organization must 
request an exception. Crosswalk exceptions are prohibited between 
different plan types. CMS reviews exception requests and may permit a 
crosswalk exception in the following circumstances:
    (1) When a non-network or partial network Private Fee-For-Service 
(PFFS) plan changes to either a partial network or to a full network 
PFFS plan, enrollees may be moved to the new plan when CMS determines 
it is in the interest of beneficiaries, considering whether the risks 
to enrollees are such that they would be better served by remaining in 
the plan, whether there are other suitable managed care plans 
available, and whether the enrollees are particularly medically 
vulnerable, such as institutionalized enrollees. Crosswalks from a 
network based PFFS plan to a non-network or partial network PFFS plan 
will not be permitted.
    (2) When MA contracts offered by two different MA organizations 
that share the same parent organization are consolidated such that the 
separate contracts are consolidated under one surviving contract, the 
enrollees from the consolidating contracts may be crosswalked to an MA 
plan under the surviving contract.
    (3) When a renewing D-SNP with a multi-state service area reduces 
its service area or, in the case of a D-SNP in an MA regional plan 
contract, nonrenews and creates state-specific local preferred provider 
organization plans in its place to accommodate state contracting 
efforts in the service area, enrollees who are no longer in the service 
area may be moved into one or more new or renewing D-SNPs, offered 
under the same parent organization (even if the D-SNPs are offered by 
two different MA organizations), and for which the enrollees are 
eligible, as CMS determines is necessary to accommodate changes to the 
contracts between the state and D-SNP under Sec.  422.107. For this 
crosswalk exception, CMS will permit enrollees to be moved between 
different contracts.
    (4) When a renewing D-SNP has another new or renewing D-SNP, and 
the two D-SNPs are offered to different populations, enrollees who are 
no longer eligible for their current D-SNP may be moved into the other 
new or renewing D-SNP offered by the same MA organization if they meet 
the eligibility criteria for the new or renewing D-SNP and CMS 
determines it

[[Page 6101]]

is in the best interest of the enrollees to move to the new or renewing 
D-SNP in order to promote access to and continuity of care for 
enrollees relative to the absence of a crosswalk exception. For this 
crosswalk exception, CMS will not permit enrollees to be moved between 
different contracts.
    (5) Renewing C-SNP with a grouping of multiple conditions that is 
transitioning eligible enrollees into another C-SNP with one of the 
chronic conditions from that grouping.
    (d) Procedures. (1) An MA organization must submit all crosswalks 
in paragraph (b) of this section in writing through the bid submission 
process in HPMS by the bid submission deadline announced by CMS.
    (2) An MA organization must submit all crosswalk exception requests 
in paragraph (c)(1) of this section in writing through the crosswalk 
exceptions process in HPMS by the crosswalk exception request deadline 
announced by CMS annually. CMS verifies the requests and notifies 
requesting MA organizations of the approval or denial after the 
crosswalk exception request deadline.

0
21. Section 422.550 is amended by adding paragraph (f) to read as 
follows:


Sec.  422.550  General provisions.

* * * * *
    (f) Sale of beneficiaries not permitted. (1) CMS only recognizes 
the sale or transfer of an organization's entire MA line of business, 
consisting of all MA contracts held by the MA organization with the 
exception of the sale or transfer of a full contract between wholly 
owned subsidiaries of the same parent organization, which is permitted.
    (2) CMS does not recognize or allow a sale or transfer that 
consists solely of the sale or transfer of individual beneficiaries or 
groups of beneficiaries enrolled in a plan benefit package.

0
22. Section 422.562 is amended by adding paragraph (d)(3) to read as 
follows:


Sec.  422.562  General provisions.

* * * * *
    (d) * * *
    (3) For the sole purpose of applying the regulations at Sec.  
405.1038(c) of this chapter, an MA organization is included in the 
definition of ``contractors'' as it relates to stipulated decisions.

0
23. Section 422.568 is amended by adding paragraphs (g) through (k) to 
read as follows:


Sec.  422.568   Standard timeframes and notice requirements for 
organization determinations.

* * * * *
    (g) Dismissing a request. The MA organization dismisses an 
organization determination request, either entirely or as to any stated 
issue, under any of the following circumstances:
    (1) The individual or entity making the request is not permitted to 
request an organization determination under Sec.  422.566(c).
    (2) The MA organization determines the party failed to make out a 
valid request for an organization determination that substantially 
complies with paragraph (a) of this section.
    (3) An enrollee or the enrollee's representative files a request 
for an organization determination, but the enrollee dies while the 
request is pending, and both of the following apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) No other individual or entity with a financial interest in the 
case wishes to pursue the organization determination.
    (4) A party filing the organization determination request submits a 
timely request for withdrawal of their request for an organization 
determination with the MA organization.
    (h) Notice of dismissal. The MA organization must mail or otherwise 
transmit a written notice of the dismissal of the organization 
determination request to the parties. The notice must state all of the 
following:
    (1) The reason for the dismissal.
    (2) The right to request that the MA organization vacate the 
dismissal action.
    (3) The right to request reconsideration of the dismissal.
    (i) Vacating a dismissal. If good cause is established, the MA 
organization may vacate its dismissal of a request for an organization 
determination within 6 months from the date of the notice of dismissal.
    (j) Effect of dismissal. The dismissal of a request for an 
organization determination is binding unless it is modified or reversed 
by the MA organization upon reconsideration or vacated under paragraph 
(i) of this section.
    (k) Withdrawing a request. A party that requests an organization 
determination may withdraw its request at any time before the decision 
is issued by filing a request with the MA organization.

0
24. Section 422.570 is amended by adding paragraph (g) to read as 
follows:


Sec.  422.570  Expediting certain organization determinations.

* * * * *
    (g) Dismissing a request. The MA organization dismisses an 
expedited organization request in accordance with Sec.  422.568.

0
25. Section 422.582 is amended--
0
a. In paragraph (e) by removing the word ``written''; and
0
b. By adding paragraphs (f) through (i).
    The additions to read as follows:


Sec.  422.582  Request for a standard reconsideration.

* * * * *
    (f) Dismissing a request. The MA organization dismisses a 
reconsideration request, either entirely or as to any stated issue, 
under any of the following circumstances:
    (1) The person or entity requesting a reconsideration is not a 
proper party under Sec.  422.578.
    (2) The MA organization determines the party failed to make a valid 
request for a reconsideration that substantially complies with 
paragraph (a) of this section.
    (3) The party fails to file the reconsideration request within the 
proper filing time frame in accordance with paragraph (b) of this 
section.
    (4) The enrollee or the enrollee's representative files a request 
for a reconsideration, but the enrollee dies while the request is 
pending, and both of the following criteria apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) No other individual or entity with a financial interest in the 
case wishes to pursue the reconsideration.
    (5) A party filing the reconsideration request submits a timely 
request for withdrawal of the request for a reconsideration with the MA 
organization.
    (g) Notice of dismissal. The MA organization must mail or otherwise 
transmit a written notice of the dismissal of the reconsideration 
request to the parties. The notice must state all of the following:
    (1) The reason for the dismissal.
    (2) The right to request that the MA organization vacate the 
dismissal action.
    (3) The right to request review of the dismissal by the independent 
entity.
    (h) Vacating a dismissal. If good cause is established, the MA 
organization may vacate its dismissal of a request for reconsideration 
within 6 months from the date of the notice of dismissal.
    (i) Effect of dismissal. The MA organization's dismissal is binding 
unless the enrollee or other party requests review by the independent 
entity in accordance with Sec.  422.590(h) or the decision is vacated 
under paragraph (h) of this section.

[[Page 6102]]


0
26. Section 422.584 is amended by adding paragraph (g) to read as 
follows:


Sec.  422.584  Expediting certain reconsiderations.

* * * * *
    (g) Dismissing a request. The MA organization dismisses an 
expedited reconsideration request in accordance with Sec.  422.582(f) 
through (i).

0
27. Section 422.590 is amended by adding paragraph (i) to read as 
follows:


Sec.  422.590  Timeframes and responsibility for reconsiderations.

* * * * *
    (i) Requests for review of a dismissal by the independent entity. 
If the MA organization dismisses a request for a reconsideration in 
accordance with Sec. Sec.  422.582(f) and 422.584(g), the enrollee or 
other proper party under Sec.  422.578 has the right to request review 
of the dismissal by the independent entity. A request for review of a 
dismissal must be filed in writing with the independent entity within 
60 calendar days from the date of the MA organization's dismissal 
notice.

0
28. Section 422.592 is amended--
0
a. In paragraph (a) by adding a sentence at the end of the paragraph; 
and
0
b. By adding paragraphs (d) through (i).
    The additions to read as follows:


Sec.  422.592  Reconsideration by an independent entity.

    (a) * * * In accordance with Sec.  422.590(i), the independent 
entity is responsible for reviewing MA organization dismissals of 
reconsideration requests.
* * * * *
    (d) The independent entity dismisses a reconsideration request, 
either entirely or as to any stated issue, under any of the following 
circumstances:
    (1) The person or entity requesting a reconsideration is not a 
proper party under Sec.  422.578.
    (2) The independent entity determines the party failed to make out 
a valid request for a reconsideration that substantially complies with 
Sec.  422.582(a) or (b).
    (3) The enrollee or the enrollee's representative files a request 
for a reconsideration, but the enrollee dies while the request is 
pending, and both of the following criteria apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) No other individual or entity with a financial interest in the 
case wishes to pursue the reconsideration.
    (4) The party filing the reconsideration request submits with the 
independent review entity a timely request for withdrawal of the 
request for reconsideration.
    (e) The independent entity mails or otherwise transmits a written 
notice of the dismissal of the reconsideration request to the parties. 
The notice must state the following:
    (1) The reason for the dismissal.
    (2) That there is a right to request that the independent entity 
vacate the dismissal action.
    (3) The right to a review of the dismissal under Sec. Sec.  422.600 
and 422.602.
    (f) If good cause is established, the independent entity may vacate 
its dismissal of a request for reconsideration within 6 months from the 
date of the notice of dismissal.
    (g) The independent entity's dismissal is binding and not subject 
to further review unless a party meets the requirements in Sec.  
422.600 and files a proper and timely request under Sec.  422.602 or 
the dismissal is vacated under paragraph (f) of this section.
    (h) The party or physician acting on behalf of an enrollee who 
files a request for reconsideration may withdraw the request by filing 
a request for withdrawal with the independent entity.
    (i) If the independent entity determines that the MA organization's 
dismissal was in error, the independent entity vacates the dismissal 
and remands the case to the plan for reconsideration consistent with 
Sec.  422.590. The independent entity's decision regarding an MA 
organization's dismissal, including a decision to deny a request for 
review of a dismissal, is binding and not subject to further review.

0
29. Section 422.600 is amended in paragraph (b) by adding a new 
sentence at the end of the paragraph to read as follows:


Sec.  422.600  Right to a hearing.

* * * * *
    (b) * * * For purposes of calculating the amount remaining in 
controversy under this section, references to coinsurance in Sec.  
405.1006(d) of this chapter should be read to include coinsurance and 
copayment amounts.
* * * * *

0
30. Section 422.629 is amended by revising paragraph (k)(4)(ii) to read 
as follows:


Sec.  422.629   General requirements for applicable integrated plans.

* * * * *
    (k) * * *
    (4) * * *
    (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 and Medicaid coverage criteria, before the 
applicable integrated plan issues the integrated organization 
determination decision.
* * * * *

0
31. Section 422.631 is amended by adding paragraphs (e) through (i) to 
read as follows:


Sec.  422.631  Integrated organization determinations.

* * * * *
    (e) Dismissing a request. The applicable integrated plan dismisses 
a standard or expedited integrated organization determination request, 
either entirely or as to any stated issue, under any of the following 
circumstances:
    (1) The individual or entity making the request is not permitted to 
request an integrated organization determination under Sec.  
422.629(l).
    (2) The applicable integrated plan determines the party failed to 
make out a valid request for an integrated organization determination 
that substantially complies with paragraph (b) of this section.
    (3) An enrollee or the enrollee's representative files a request 
for an integrated organization determination, but the enrollee dies 
while the request is pending, and both of the following apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) No other individual or entity with a financial interest in the 
case wishes to pursue the integrated organization determination.
    (4) A party filing the integrated organization determination 
request submits a timely request for withdrawal of their request for an 
integrated organization determination with the applicable integrated 
plan.
    (f) Notice of dismissal. The applicable integrated plan must mail 
or otherwise transmit a written notice of the dismissal of the 
integrated organization determination request to the parties. The 
notice must state all of the following:
    (1) The reason for the dismissal.
    (2) The right to request that the applicable integrated plan vacate 
the dismissal action.
    (3) The right to request reconsideration of the dismissal.

[[Page 6103]]

    (g) Vacating a dismissal. If good cause is established, the 
applicable integrated plan may vacate its dismissal of a request for an 
integrated organization determination within 6 months from the date of 
the notice of dismissal.
    (h) Effect of dismissal. The dismissal of a request for an 
integrated organization determination is binding unless it is modified 
or reversed by the applicable integrated plan or vacated under 
paragraph (g) of this section.
    (i) Withdrawing a request. A party that requests an integrated 
organization determination may withdraw its request at any time before 
the decision is issued by filing a request with the applicable 
integrated plan.

0
32. Section 422.632 is amended in paragraph (b)(1) by removing the 
reference ``Sec.  422.633(e)'' and adding in its place the reference 
``Sec.  422.633(d)''.


Sec.  422.632  [Amended]

0
33. Section 422.633 is amended by adding paragraphs (g) through (k) to 
read as follows:


Sec.  422.633  Integrated reconsideration.

* * * * *
    (g) Withdrawing a request. The party or physician acting on behalf 
of an enrollee who files a request for integrated reconsideration may 
withdraw it by filing a request for withdrawal with the applicable 
integrated plan.
    (h) Dismissing a request. The applicable integrated plan dismisses 
an expedited or standard integrated reconsideration request, either 
entirely or as to any stated issue, under any of the following 
circumstances:
    (1) The person or entity requesting an integrated reconsideration 
is not a proper party to request an integrated reconsideration under 
Sec.  422.629(l).
    (2) The applicable integrated plan determines the party failed to 
make a valid request for an integrated reconsideration that 
substantially complies with Sec.  422.629(l) of this section.
    (3) The party fails to file the integrated reconsideration request 
within the proper filing timeframe in accordance with paragraph (d) of 
this section.
    (4) The enrollee or the enrollee's representative files a request 
for an integrated reconsideration, but the enrollee dies while the 
request is pending, and both of the following criteria apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) No other individual or entity with a financial interest in the 
case wishes to pursue the integrated reconsideration.
    (5) A party filing the reconsideration request submits a timely 
request for withdrawal of their request for an integrated 
reconsideration with the applicable integrated plan.
    (i) Notice of dismissal. The applicable integrated plan must mail 
or otherwise transmit a written notice of the dismissal of the 
integrated reconsideration request to the parties. The notice must 
state all of the following:
    (1) The reason for the dismissal.
    (2) The right to request that the applicable integrated plan vacate 
the dismissal action.
    (3) The right to request review of the dismissal by the independent 
entity.
    (j) Vacating a dismissal. If good cause is established, the 
applicable integrated plan may vacate its dismissal of a request for 
integrated reconsideration within 6 months from the date of the notice 
of dismissal.
    (k) Effect of dismissal. The applicable integrated plan's dismissal 
is binding unless the enrollee or other party requests review by the 
independent entity in accordance with Sec.  422.590(h) or the dismissal 
is vacated under paragraph (j) of this section.

0
34. Section 422.760 is amended by redesignating paragraphs (b)(3) and 
(4) as paragraphs (b)(4) and (5), respectively, and adding a new 
paragraph (b)(3) to read as follows:


Sec.  422.760  Determinations regarding the amount of civil money 
penalties and assessment imposed by CMS.

* * * * *
    (b) * * *
    (3) CMS calculates the minimum penalty amounts under paragraphs 
(b)(1) and (2) of this section using the following criteria:
    (i) Definitions for calculating penalty amounts--(A) Per 
determination. The penalty amounts calculated under paragraph (b)(1) of 
this section.
    (B) Per enrollee. The penalty amounts calculated under paragraph 
(b)(2) of this section.
    (C) Standard minimum penalty. The per enrollee or per determination 
penalty amount that is dependent on the type of adverse impact that 
occurred.
    (D) Aggravating factor(s). Specific penalty amounts that may 
increase the per enrollee or per determination standard minimum penalty 
and are determined based on criteria under paragraph (a) of this 
section.
    (E) Cost-of-living multiplier. The percent change between each 
year's published October consumer price index for all urban consumers 
(United States city average), which is released by The Office of 
Management and Budget (OMB) annually.
    (ii) Calculation of minimum penalty amounts. (A) Per determination 
and per enrollee minimum penalty amounts increases by multiplying the 
current standard minimum penalty and aggravating factor amounts by the 
cost-of-living multiplier.
    (B) The minimum penalty and aggravating factor amounts is updated 
no more often than every 3 years.
    (C) CMS does the following:
    (1) Tracks the calculation and accrual of the standard minimum 
penalty and aggravating factor amounts.
    (2) Announces the penalties and amounts described in paragraph (b) 
of this section on an annual basis.
* * * * *

0
35. Section 422.2260 is revised to read as follows:


Sec.  422.2260  Definitions.

    The definitions in this section apply for this subpart unless the 
context indicates otherwise.
    Advertisement (Ad) means a read, written, visual, oral, watched, or 
heard bid for, or call to attention. Advertisements can be considered 
communications or marketing based on the intent and content of the 
message.
    Alternate format means a format used to convey information to 
individuals with visual, speech, physical, hearing, and intellectual 
disabilities (for example, braille, large print, audio).
    Banner means a type of advertisement feature typically used in 
television ads that is intended to be brief, and flashes limited 
information across a screen for the sole purpose of enticing a 
prospective enrollee to contact the MA plan (for example, obtain more 
information) or to alert the viewer that information is forthcoming.
    Banner-like advertisement is an advertisement that uses a banner-
like feature, that is typically found in some media other than 
television (for example, outdoors and on the internet).
    Communications means activities and use of materials created or 
administered by the MA organization or any downstream entity to provide 
information to current and prospective enrollees. Marketing is a subset 
of communications.
    Marketing means communications materials and activities that meet 
both the following standards for intent and content:
    (1) Intended, as determined under paragraph (1)(ii) of this 
definition, to do any of the following:

[[Page 6104]]

    (i)(A) Draw a beneficiary's attention to a MA plan or plans.
    (B) Influence a beneficiary's decision-making process when making a 
MA plan selection.
    (C) Influence a beneficiary's decision to stay enrolled in a plan 
(that is, retention-based marketing).
    (ii) In evaluating the intent of an activity or material, CMS will 
consider objective information including, but not limited to, the 
audience of the activity or material, other information communicated by 
the activity or material, timing, and other context of the activity or 
material and is not limited to the MA organization's stated intent.
    (2) Include or address content regarding any of the following:
    (i) The plan's benefits, benefits structure, premiums, or cost 
sharing.
    (ii) Measuring or ranking standards (for example, Star Ratings or 
plan comparisons).
    (iii) Rewards and incentives as defined under Sec.  422.134(a).
    Outdoor advertising (ODA) means outdoor material intended to 
capture the attention of a passing audience (for example, billboards, 
signs attached to transportation vehicles). ODA may be communications 
or marketing material.

0
36. Section 422.2261 is added to read as follows:


Sec.  422.2261  Submission, review, and distribution of materials.

    (a) General requirements. MA organizations must submit all 
marketing materials, all election forms, and certain designated 
communications materials for CMS review.
    (1) The Health Plan Management System (HPMS) Marketing Module is 
the primary system of record for the collection, review, and storage of 
materials that must be submitted for review.
    (2) Materials must be submitted to the HPMS Marketing Module by the 
MA organization.
    (3) Unless specified by CMS, third party and downstream entities 
are not permitted to submit materials directly to CMS.
    (b) CMS review of marketing materials and election forms. MA 
organizations may not distribute or otherwise make available any 
marketing materials or election forms unless one of the following 
occurs:
    (1) CMS has reviewed and approved the material.
    (2) The material has been deemed approved; that is, CMS has not 
rendered a disposition for the material within 45 days (or 10 days if 
using CMS model or standardized marketing materials as outlined in 
Sec.  422.2267(e) of this chapter) of submission to CMS; or
    (3) The material has been accepted under File and Use, as follows:
    (i) The MA organization may distribute certain types of marketing 
materials, designated by CMS based on the material's content, audience, 
and intended use, as they apply to potential risk to the beneficiary, 5 
days following the submission.
    (ii) The MA organization must certify that the material meets all 
applicable CMS communications and marketing requirements in Sec. Sec.  
422.2260 through 422.2267.
    (c) CMS review of non-marketing communications materials. CMS does 
not require submission, or submission and approval, of communications 
materials prior to use, other than the following exceptions.
    (1) Certain designated communications materials that are critical 
to beneficiaries understanding or accessing their benefits (for 
example, the Evidence of Coverage (EOC).
    (2) Communications materials that, based on feedback such as 
complaints or data gathered through reviews, warrant additional 
oversight as determined by CMS, to ensure the information being 
received by beneficiaries is accurate.
    (d) Standards for CMS review. CMS reviews materials to ensure the 
following:
    (1) Compliance with all applicable requirements under Sec. Sec.  
422.2260 through 422.2267.
    (2) Benefit and cost information is an accurate reflection of what 
is contained in the MA organization's bid.
    (3) CMS may determine, upon review of such materials, that the 
materials must be modified, or may no longer be used.

0
37. Section 422.2262 is revised to read as follows:


Sec.  422.2262  General communications materials and activities 
requirements.

    MA organizations may not mislead, confuse, or provide materially 
inaccurate information to current or potential enrollees.
    (a) General rules. MA organizations must ensure their statements 
and the terminology used in communications activities and materials 
adhere to the following requirements:
    (1) MA organizations may not do any of the following:
    (i) Provide information that is inaccurate or misleading.
    (ii) Make unsubstantiated statements, except when used in logos or 
taglines.
    (iii) Engage in activities that could mislead or confuse Medicare 
beneficiaries, or misrepresent the MA organization.
    (iv) Engage in any discriminatory activity such as attempting to 
recruit Medicare beneficiaries from higher income areas without making 
comparable efforts to enroll Medicare beneficiaries from lower income 
areas, or vice versa.
    (v) Target potential enrollees based on income levels, unless it is 
a dual eligible special needs plan or comparable plan as determined by 
the Secretary.
    (vi) Target potential enrollees based on health status, unless it 
is a special needs plan or comparable plan as determined by the 
Secretary.
    (vii) State or imply plans are only available to seniors rather 
than to all Medicare beneficiaries.
    (viii) Employ MA plan names that suggest that a plan is not 
available to all Medicare beneficiaries, unless it is a special needs 
plan or comparable plan as determined by the Secretary. This 
prohibition does not apply to MA plan names in effect prior to July 31, 
2000.
    (ix) Display the names or logos or both of co-branded network 
providers on the organization's member identification card, unless the 
provider names or logos or both are related to the member selection of 
specific provider organizations (for example, physicians or hospitals).
    (x) Use a plan name that does not include the plan type. The plan 
type should be included at the end of the plan name, for example, 
``Super Medicare Advantage (HMO).'' MA organizations are not required 
to repeat the plan type when the plan name is used multiple times in 
the same material.
    (xi) Claim they are recommended or endorsed by CMS, Medicare, the 
Secretary, or HHS.
    (xii) Convey that a failure to pay premium will not result in 
disenrollment, except for factually accurate descriptions of the MA 
organization's policies adopted in accordance with Sec.  422.74(b)(1) 
and (d)(1) of this chapter.
    (xiii) Use the term ``free'' to describe a $0 premium, any type of 
reduction in premium, reduction in deductibles or cost sharing, low-
income subsidy, or cost sharing pertaining to dual eligible 
individuals.
    (xiv) Imply that the plan operates as a supplement to Medicare.
    (xv) State or imply a plan is available only to or is designed for 
beneficiaries who are dually eligible for Medicare and Medicaid, unless 
it is a dual-eligible special needs plan or comparable plan as 
determined by the Secretary.
    (xvi) Market a non-dual eligible special needs plan as if it were a 
dual-eligible special needs plan.

[[Page 6105]]

    (xvii) Target marketing efforts primarily to dual eligible 
individuals, unless the plan is a dual eligible special needs plan or 
comparable plan as determined by the Secretary.
    (xviii) Claim a relationship with the state Medicaid agency, unless 
a contract to coordinate Medicaid services for enrollees in that plan 
is in place.
    (2) MA organizations may do the following:
    (i) State that the MA organization is approved to participate in 
Medicare programs or is contracted to administer Medicare benefits or 
both.
    (ii) Use the term ``Medicare-approved'' to describe benefits or 
services in materials or both.
    (iii) Use the term ``free'' in conjunction with mandatory, 
supplemental, and preventative benefits provided at a zero cost share 
for all enrollees.
    (b) Product endorsements and testimonials. (1) Product endorsements 
and testimonials may take any of the following forms:
    (i) Television or video ads.
    (ii) Radio ads.
    (iii) Print ads.
    (iv) Social media ads. In cases of social media, the use of a 
previous post, whether or not associated with or originated by the MA 
organization, is considered a product endorsement or testimonial.
    (v) Other types of ads.
    (2) MA organizations may use individuals to endorse the MA 
organization's product provided the endorsement or testimonial adheres 
to the following requirements:
    (i) The speaker must identify the MA organization's product or 
company by name.
    (ii) Medicare beneficiaries endorsing or promoting the MA 
organization must have been an enrollee at the time the endorsement or 
testimonial was created.
    (iii) The endorsement or testimonial must clearly state that the 
individual was paid for the endorsement or testimonial, if applicable.
    (iv) If an individual is used (for example, an actor) to portray a 
real or fictitious situation, the endorsement or testimonial must state 
that it is an actor portrayal.
    (c) Requirements when including certain telephone numbers in 
materials. (1) MA organizations must adhere to the following 
requirements for including certain telephone numbers in materials:
    (i) When a MA organization includes its customer service number, 
the hours of operation must be prominently included at least once.
    (ii) When a MA organization includes its customer service number, 
it must provide a toll-free TTY number in conjunction with the customer 
service number in the same font size.
    (iii) On every material where 1-800-MEDICARE or Medicare TTY 
appears, the MA organization must prominently include, at least once, 
the hours and days of operation for 1-800-MEDICARE (that is, 24 hours a 
day/7 days a week).
    (2) The following advertisement types are exempt from these 
requirements:
    (i) Outdoor advertising.
    (ii) Banners or banner-like ads.
    (iii) Radio advertisements and sponsorships.
    (d) Standardized material identification (SMID). (1) MA 
organizations must use a standardized method of identification for 
oversight and tracking of materials received by beneficiaries.
    (2) The SMID consists of the following three parts:
    (i) The MA organization contract or Multi-Contract Entity (MCE) 
number (that is, ``H'' for MA or Section 1876 Cost Plans, ``R'' for 
Regional PPO plans (RPPOs), or ``Y'' for MCE, a means of identification 
available for Plans/Part D sponsors that have multiple MA contracts) 
followed by an underscore, except that the SMID for multi-plan 
marketing materials must begin with the word ``MULTI-PLAN'' instead of 
the MA organization's contract number (for example, H1234_abc123_C or 
MULTI-PLAN_efg456_M).
    (ii) A series of alpha numeric characters (chosen at the MA 
organization's discretion) unique to the material followed by an 
underscore.
    (iii) An uppercase ``C'' for communications materials or an 
uppercase ``M'' for marketing materials (for example, H1234_abc123_C or 
H5678_efg456_M).
    (3) The SMID is required on all materials except the following:
    (i) Membership ID card.
    (ii) Envelopes, radio ads, outdoor advertisements, banners, banner-
like ads, and social media comments and posts.
    (iii) OMB-approved forms/documents, except those materials 
specified in Sec.  422.2267.
    (iv) Corporate notices or forms (that is, not MA/Part D specific) 
meeting the definition of communications (see Sec.  422.2260) such as 
privacy notices and authorization to disclose protected health 
information (PHI).
    (v) Agent-developed communications materials that are not 
marketing.
    (4) Non-English and alternate format materials, based on previously 
created materials, may have the same SMID as the material on which they 
are based.

0
38. Section 422.2263 is added to read as follows:


Sec.  422.2263  General marketing requirements.

    Marketing is a subset of communications and therefore must follow 
the requirements outlined in Sec.  422.2262 as well as this section. 
Marketing (as defined in Sec.  422.2260) must additionally meet the 
following requirements:
    (a) MA organizations may begin marketing prospective plan year 
offerings on October 1 of each year for the following contract year. MA 
organizations may market the current and prospective year 
simultaneously provided materials clearly indicate what year is being 
discussed.
    (b) In marketing, MA organizations may not do any of the following:
    (1) Provide cash or other monetary rebates as an inducement for 
enrollment or otherwise.
    (2) Offer gifts to beneficiaries, unless the gifts are of nominal 
value (as governed by guidance published by the HHS OIG), are offered 
to similarly situated beneficiaries without regard to whether or not 
the beneficiary enrolls, and are not in the form of cash or other 
monetary rebates.
    (3) Provide meals to potential enrollees regardless of value.
    (4) Market non-health care related products to prospective 
enrollees during any MA sales activity or presentation. This is 
considered cross-selling and is prohibited.
    (5) Compare their plan to other plans, unless the information is 
accurate, not misleading, and can be supported by the MA organization 
making the comparison.
    (6) Display the names or logos or both of provider co-branding 
partners on marketing materials, unless the materials clearly indicate 
via a disclaimer or in the body that ``Other providers are available in 
the network.''
    (7) Knowingly target or send unsolicited marketing materials to any 
MA enrollee during the Open Enrollment Period (OEP).
    (i) During the OEP, an MA organization may do any of the following:
    (A) Conduct marketing activities that focus on other enrollment 
opportunities, including but not limited to marketing to age-ins (who 
have not yet made an enrollment decision), marketing by 5-star plans 
regarding their continuous enrollment special election period (SEP), 
and marketing to dual-eligible and LIS beneficiaries who, in general, 
may make changes once per calendar quarter during the first 9 months of 
the year;

[[Page 6106]]

    (B) Send marketing materials when a beneficiary makes a proactive 
request;
    (C) At the beneficiary's request, have one-on-one meetings with a 
sales agent;
    (D) At the beneficiary's request, provide information on the OEP 
through the call center; and
    (E) Include educational information, excluding marketing, on the MA 
organization's website about the existence of OEP.
    (ii) During the OEP, an MA organization may not:
    (A) Send unsolicited materials advertising the ability or 
opportunity to make an additional enrollment change or referencing the 
OEP;
    (B) Specifically target beneficiaries who are in the OEP because 
they made a choice during Annual Enrollment Period (AEP) by purchase of 
mailing lists or other means of identification;
    (C) Engage in or promote agent or broker activities that intend to 
target the OEP as an opportunity to make further sales; or
    (D) Call or otherwise contact former enrollees who have selected a 
new plan during the AEP.
    (c) The following requirements apply to how MA organizations must 
display CMS-issued Star Ratings:
    (1) References to individual Star Rating measure(s) must also 
include references to the overall Star Rating for MA-PDs and the 
summary rating for MA-only plans.
    (2) May not use an individual underlying category, domain, or 
measure rating to imply overall higher Star Ratings.
    (3) Must be clear that the rating is out of 5 stars.
    (4) Must clearly identify the Star Ratings contract year.
    (5) May only market the Star Ratings in the service area(s) for 
which the Star Rating is applicable, unless using Star Ratings to 
convey overall MA organization performance (for example, ``Plan X has 
achieved 4.5 stars in Montgomery, Chester, and Delaware Counties), in 
which case the MA organization must do so in a way that is not 
confusing or misleading.
    (6) The following requirements apply to all 5 Star MA contracts:
    (i) May not market the 5-star special enrollment period, as defined 
in Sec.  422.62(b)(15), after November 30 of each year if the contract 
has not received an overall 5 star for the next contract year.
    (ii) May use CMS' 5-star icon or may create their own icon.
    (7) The following requirements apply to all Low Performing MA 
contracts:
    (i) The Low Performing Icon must be included on all materials about 
or referencing the specific contract's Star Ratings.
    (ii) Must state the Low Performing Icon means that the MA 
organization's contract received a summary rating of 2.5 stars or below 
in Part C or Part D or both for the last 3 years.
    (iii) May not attempt to refute or minimize Low Performing Status.

0
39. Section 422.2264 is revised to read as follows:


Sec.  422.2264  Beneficiary contact.

    For the purpose of this section, beneficiary contact means any 
outreach activities to a beneficiary or a beneficiary's caregivers by 
the MA organization or its agents and brokers.
    (a) Unsolicited contact. Subject to the rules for contact for plan 
business in paragraph (b) of this section, the following rules apply 
when materials or activities are given or supplied to a beneficiary or 
their caregiver without prior request:
    (1) MA organizations may make unsolicited direct contact by 
conventional mail and other print media (for example, advertisements 
and direct mail) or email (provided every email contains an opt-out 
option).
    (2) MA organizations may not do any of the following if 
unsolicited:
    (i) Use door to door solicitation, including leaving information of 
any kind, except that information may be left when an appointment is 
pre-scheduled but the beneficiary is not home.
    (ii) Approach enrollees in common areas such as parking lots, 
hallways, and lobbies.
    (iii) Send direct messages from social media platforms.
    (iv) Use telephone solicitation (that is, cold calling), robocalls, 
text messages, or voicemail messages, including, but not limited to, 
the following:
    (A) Calls based on referrals.
    (B) Calls to former enrollees who have disenrolled or those in the 
process of disenrolling, except to conduct disenrollment surveys for 
quality improvement purposes.
    (C) Calls to beneficiaries who attended a sales event, unless the 
beneficiary gave express permission to be contacted.
    (D) Calls to prospective enrollees to confirm receipt of mailed 
information.
    (3) Calls are not considered unsolicited if the beneficiary 
provides consent or initiates contact with the plan. For example, 
returning phone calls or calling an individual who has completed a 
business reply card requesting contact is not considered unsolicited.
    (b) Contact for plan business. MA organizations may contact 
current, and to a more limited extent, former members, including those 
enrolled in other products offered by the parent organization, to 
discuss plan business, in accordance with the following requirements:
    (1) An MA organization may conduct the following activities as plan 
business:
    (i) Call current enrollees, including those in non-Medicare 
products, to discuss Medicare products. Examples of such calls include, 
but are not limited to the following:
    (A) Enrollees aging into Medicare from commercial products.
    (B) Existing enrollees, including Medicaid enrollees, to discuss 
other Medicare products or plan benefits.
    (C) Members in a Part D plan to discuss other Medicare products.
    (ii) Call beneficiaries who submit enrollment applications to 
conduct business related to enrollment.
    (iii) With prior CMS approval, call LIS enrollees that a plan is 
prospectively losing due to reassignment. CMS decisions to approve 
calls are for limited circumstances based on the following:
    (A) The proximity of cost of the losing plan as compared to the 
national benchmark; and
    (B) The selection of plans in the service area that are below the 
benchmark.
    (iv) Agents/brokers calling clients who are enrolled in other 
products they may sell, such as automotive or home insurance.
    (v) MA organizations may not make unsolicited calls about other 
lines of business as a means of generating leads for Medicare plans.
    (2) When reaching out to a beneficiary regarding plan business, as 
outlined in this section, MA organizations must offer the beneficiary 
the ability to opt out of future calls regarding plan business.
    (c) Events with beneficiaries. MA organizations and their agents or 
brokers may hold educational events, marketing or sales events, and 
personal marketing appointments to meet with Medicare beneficiaries, 
either face-to-face or virtually. The requirements for each type of 
event are as follows:
    (1) Educational events must be advertised as such and be designed 
to generally inform beneficiaries about Medicare, including Medicare 
Advantage, Prescription Drug programs, or any other Medicare program.
    (i) At educational events, MA organizations and agents/brokers may 
not market specific MA plans or benefits.
    (ii) MA organizations holding or participating in educational 
events may do any of the following:

[[Page 6107]]

    (A) Distribute communications materials.
    (B) Answer beneficiary-initiated questions pertaining to MA plans.
    (C) Set up future personal marketing appointments.
    (D) Distribute business cards.
    (E) Obtain beneficiary contact information, including Scope of 
Appointment forms.
    (iii) MA organizations holding or participating in educational 
events may not conduct sales or marketing presentations or distribute 
or accept plan applications.
    (iv) MA organizations may schedule appointments with residents of 
long-term care facilities (for example, nursing homes, assisted living 
facilities, board and care homes) upon a resident's request. If a 
resident did not request an appointment, any visit by an agent or 
broker is prohibited as unsolicited door-to-door marketing.
    (2) Marketing or sales events are group events that fall within the 
definition of marketing at Sec.  422.2260.
    (i) If a marketing event directly follows an educational event, the 
beneficiary must be made aware of the change and given the opportunity 
to leave prior to the marketing event beginning.
    (ii) MA organizations holding or participating in marketing events 
may do any of the following:
    (A) Provide marketing materials.
    (B) Distribute and accept plan applications.
    (C) Collect Scope of Appointment forms for future personal 
marketing appointments.
    (D) Conduct marketing presentations.
    (iii) MA organizations holding or participating in marketing events 
may not do any of the following:
    (A) Require sign-in sheets or require attendees to provide contact 
information as a prerequisite for attending an event.
    (B) Conduct activities, including health screenings, health 
surveys, or other activities that are used for or could be viewed as 
being used to target a subset of members (that is, ``cherry-picking'').
    (C) Use information collected for raffles or drawings for any 
purpose other than raffles or drawings.
    (3) Personal marketing appointments are those appointments that are 
tailored to an individual or small group (for example, a married 
couple). Personal marketing appointments are not defined by the 
location.
    (i) Prior to the personal marketing appointment beginning, the MA 
plan (or agent or broker, as applicable) must agree upon and record the 
Scope of Appointment with the beneficiary(ies).
    (ii) MA organizations holding a personal marketing appointment may 
do any of the following:
    (A) Provide marketing materials.
    (B) Distribute and accept plan applications.
    (C) Conduct marketing presentations.
    (D) Review the individual needs of the beneficiary including, but 
not limited to, health care needs and history, commonly used 
medications, and financial concerns.
    (iii) MA organizations holding a personal marketing appointment may 
not do any of the following:
    (A) Market any health care related product during a marketing 
appointment beyond the scope agreed upon by the beneficiary, and 
documented by the plan, prior to the appointment.
    (B) Market additional health related lines of plan business not 
identified prior to an individual appointment without a separate Scope 
of Appointment identifying the additional lines of business to be 
discussed.
    (C) Market non-health related products, such as annuities.

0
40. Section 422.2265 is added to read as follows:


Sec.  422.2265  Websites.

    As required under Sec.  422.111(h)(2), MA organizations must have a 
website.
    (a) General website requirements. (1) MA organization websites must 
meet all of the following requirements:
    (i) Maintain current year contract content through December 31 of 
each year.
    (ii) Notify users when they will leave the MA organization's 
Medicare site.
    (iii) Include or provide access to (for example, through a 
hyperlink) applicable notices, statements, disclosures, or disclaimers 
with corresponding content. Overarching disclaimers, such as the 
Federal Contracting Statement, are not required on every page.
    (iv) Reflect the most current information within 30 days of any 
material change.
    (v) Keep MA content separate and distinct from other lines of 
business, including Medicare Supplemental Plans.
    (2) MA organization websites may not do any of the following:
    (i) Require beneficiaries to enter any information other than zip 
code, county, or state for access to non-beneficiary-specific website 
content.
    (ii) Provide links to foreign drug sales, including advertising 
links.
    (iii) State that the MA organization is not responsible for the 
content of their social media pages or the website of any first tier, 
downstream, or related entity that provides information on behalf of 
the MA organization.
    (b) Required content. MA organization's websites must include the 
following content:
    (1) A toll-free customer service number, TTY number, and days and 
hours of operation.
    (2) A physical or Post Office Box address.
    (3) A PDF or copy of a printable provider directory.
    (4) A searchable provider directory.
    (5) When applicable, a searchable pharmacy directory combined with 
a provider directory.
    (6) Information on enrollees' and MA organizations' rights and 
responsibilities upon disenrollment. MA organizations may either post 
this information or provide specific information on where it is located 
in the Evidence of Coverage together with a link to that document.
    (7) A description of and information on how to file a grievance, 
request an organization determination, and an appeal.
    (8) Prominently displayed link to the Medicare.gov electronic 
complaint form.
    (9) Disaster and emergency policy consistent with Sec.  
422.100(m)(5)(iii).
    (10) A Notice of Privacy Practices as required under the HIPAA 
Privacy Rule (45 CFR 164.520).
    (11) For PFFS plans, a link to the PFFS Terms and Conditions of 
Payment.
    (12) For MSA plans, the following statements:
    (i) ``You must file Form 1040, `US Individual Income Tax Return,' 
along with Form 8853, `Archer MSA and Long-Term Care Insurance 
Contracts' with the Internal Revenue Service (IRS) for any 
distributions made from your Medicare MSA account to ensure you aren't 
taxed on your MSA account withdrawals. You must file these tax forms 
for any year in which an MSA account withdrawal is made, even if you 
have no taxable income or other reason for filing a Form 1040. MSA 
account withdrawals for qualified medical expenses are tax free, while 
account withdrawals for non-medical expenses are subject to both income 
tax and a fifty (50) percent tax penalty.''
    (ii) ``Tax publications are available on the IRS website at http://www.irs.gov or from 1-800-TAX-FORM (1-800-829-3676).''
    (c) Required posted materials. MA organization's website must 
provide access to the following materials, in a printable format, 
within the timeframes specified in paragraphs (c)(1) and (2) of this 
section.
    (1) The following materials for each plan year must be posted on 
the website

[[Page 6108]]

by October 15 prior to the beginning of the plan year:
    (i) Evidence of Coverage.
    (ii) Annual Notice of Change (for renewing plans).
    (iii) Summary of Benefits.
    (iv) Provider Directory.
    (v) Provider/Pharmacy Directory.
    (2) The following materials must be posted on the website 
throughout the year and be updated as required:
    (i) Prior Authorization Forms for physicians and enrollees.
    (ii) When applicable, Part D Model Coverage Determination and 
Redetermination Request Forms.
    (iii) Exception request forms for physicians (which must be posted 
by January 1 for new plans).
    (iv) CMS Star Ratings document, which must be posted within 21 days 
after its release on the Medicare Plan Finder.

0
41. Section 422.2266 is added to read as follows:


Sec.  422.2266  Activities with healthcare providers or in the 
healthcare setting.

    (a) Where marketing is prohibited. The requirements in paragraphs 
(c) through (e) of this section apply to activities in the health care 
setting. Marketing activities and materials are not permitted in areas 
where care is being administered, including but not limited to the 
following:
    (1) Exam rooms.
    (2) Hospital patient rooms.
    (3) Treatment areas where patients interact with a provider and 
clinical team (including such areas in dialysis treatment facilities).
    (4) Pharmacy counter areas.
    (b) Where marketing is permitted. Marketing activities and 
materials are permitted in common areas within the health care setting, 
including the following:
    (1) Common entryways.
    (2) Vestibules.
    (3) Waiting rooms.
    (4) Hospital or nursing home cafeterias.
    (5) Community, recreational, or conference rooms.
    (c) Provider-initiated activities. Provider-initiated activities 
are activities conducted by a provider at the request of the patient, 
or as a matter of a course of treatment, and occur when meeting with 
the patient as part of the professional relationship between the 
provider and patient. Provider-initiated activities do not include 
activities conducted at the request of the MA organization or pursuant 
to the network participation agreement between the MA organization and 
the provider. Provider-initiated activities that meet the definition in 
this paragraph (c) fall outside of the definition of marketing in Sec.  
422.2260. Permissible provider-initiated activities include:
    (1) Distributing unaltered, printed materials created by CMS, such 
as reports from Medicare Plan Finder, the ``Medicare & You'' handbook, 
or ``Medicare Options Compare'' (from https://www.medicare.gov), 
including in areas where care is delivered.
    (2) Providing the names of MA organizations with which they 
contract or participate or both.
    (3) Answering questions or discussing the merits of a MA plan or 
plans, including cost sharing and benefit information, including in 
areas where care is delivered.
    (4) Referring patients to other sources of information, such as 
State Health Insurance Assistance Program (SHIP) representatives, plan 
marketing representatives, State Medicaid Office, local Social Security 
Offices, CMS' website at https://www.medicare.gov, or 1-800-MEDICARE.
    (5) Referring patients to MA plan marketing materials available in 
common areas;
    (6) Providing information and assistance in applying for the LIS.
    (7) Announcing new or continuing affiliations with MA 
organizations, once a contractual agreement is signed. Announcements 
may be made through any means of distribution.
    (d) Plan-initiated provider activities. Plan-initiated provider 
activities are those activities conducted by a provider at the request 
of an MA organization. During a plan-initiated provider activity, the 
provider is acting on behalf of the MA organization. For the purpose of 
plan-initiated activities, the MA organization is responsible for 
compliance with all applicable regulatory requirements.
    (1) During plan-initiated provider activities, MA organizations 
must ensure that the provider does not:
    (i) Accept or collect Scope of Appointment forms.
    (ii) Accept Medicare enrollment applications.
    (iii) Make phone calls or direct, urge, or attempt to persuade 
their patients to enroll in a specific plan based on financial or any 
other interests of the provider.
    (iv) Mail marketing materials on behalf of the MA organization.
    (v) Offer inducements to persuade patients to enroll in a 
particular MA plan or organization.
    (vi) Conduct health screenings as a marketing activity.
    (vii) Distribute marketing materials or enrollment forms in areas 
where care is being delivered.
    (viii) Offer anything of value to induce enrollees to select the 
provider.
    (ix) Accept compensation from the MA organization for any marketing 
or enrollment activities performed on behalf of the MA organization.
    (2) During plan-initiated provider activities, the provider may do 
any of the following:
    (i) Make available, distribute, and display communications 
materials, including in areas where care is being delivered.
    (ii) Provide or make available marketing materials and enrollment 
forms in common areas.
    (e) MA organization activities in the health care setting. MA 
organization activities in the health care setting are those 
activities, including marketing activities that are conducted by MA 
organization staff or on behalf of the MA organization, or by any 
downstream entity, but not by a provider. All marketing must comply 
with the requirements in paragraphs (a) and (b) of this section. 
However, during MA organization activities, the following is permitted:
    (1) Accepting and collect Scope of Appointment forms.
    (2) Accepting enrollment forms.
    (3) Making available, distributing, and displaying communications 
materials, including in areas where care is being delivered.
    (f) Activities of Institutional Special Needs Plans (I-SNPs) 
Serving Long-Term Care Facility Residents (1) Depending on the context 
of a given situation, I-SNP contracted with a long-term care facility 
can be viewed as both a provider and a plan.
    (2) I-SNPs may use staff operating in a social worker capacity to 
provide information, including marketing materials (excluding 
enrollment forms), to residents of a long term care facility.
    (3) Social workers of the I-SNP (whether employees, agents, or 
contracted providers) may not accept or collect a scope of appointment 
or enrollment form on behalf of the I-SNP.
    (4) Unless the beneficiary or the beneficiary's authorized 
representative initiates additional contact with or by the plan, all 
other marketing and outreach activities in the beneficiary's room must 
follow the requirements for beneficiary contact under Sec.  422.2264
    (5) All other activities with healthcare providers or in the 
healthcare setting must comply with Sec. Sec.  422.2266(a), (b), (c), 
(d), and (e).

0
42. Section 422.2267 is added to read as follows:

[[Page 6109]]

Sec.  422.2267   Required materials and content.

    For information CMS deems to be vital to the beneficiary, including 
information related to enrollment, benefits, health, and rights, the 
agency may develop materials or content that are either standardized or 
provided in a model form. Such materials and content are collectively 
referred to as required.
    (a) Standards for required materials and content. All required 
materials and content, regardless of categorization as standardized in 
paragraph (b) of this section or model in paragraph (c) of this 
section, must meet the following:
    (1) Be in a 12pt font, Times New Roman or equivalent.
    (2) For markets with a significant non-English speaking population, 
be in the language of these individuals. Specifically, MA organizations 
must translate required materials into any non-English language that is 
the primary language of at least 5 percent of the individuals in a plan 
benefit package (PBP) service area.
    (3) Be provided to the beneficiary within CMS's specified 
timeframes.
    (b) Standardized materials. Standardized materials and content are 
required materials and content that must be used in the form and manner 
provided by CMS.
    (1) When CMS issues standardized material or content, an MA 
organization must use the document without alteration except for the 
following:
    (i) Populating variable fields.
    (ii) Correcting grammatical errors.
    (iii) Adding customer service phone numbers.
    (iv) Adding plan name, logo, or both.
    (v) Deleting content that does not pertain to the plan type (for 
example, removing Part D language for a MA-only plan).
    (vi) Adding the SMID.
    (vii) A Notice of Privacy Practices as required under the HIPAA 
Privacy Rule (45 CFR 164.520).
    (2) The MA organization may develop accompanying language for 
standardized material or content, provided that language does not 
conflict with the standardized material or content. For example, CMS 
may issue standardized content associated with an appeal notification 
and MA organizations may draft a letter that includes the standardized 
content in the body of the letter; the remaining language in the letter 
is at the plan's discretion, provided it does not conflict with the 
standardized content or other regulatory standards.
    (c) Model materials. Model materials and content are those required 
materials and content created by CMS as an example of how to convey 
beneficiary information. When drafting required materials or content 
based on CMS models, MA organizations:
    (1) Must accurately convey the vital information in the required 
material or content to the beneficiary, although the MA organization is 
not required to use CMS model materials or content verbatim; and
    (2) Must follow CMS's specified order of content, when specified.
    (d) Delivery of required materials. MA organizations must mail 
required materials in hard copy or provide them electronically, 
following the requirements in paragraphs (d)(1) and (2) of this 
section.
    (1) For hard copy mailed materials, each enrollee must receive his 
or her own copy, except in cases of non-beneficiary-specific 
material(s) where the MA organization has determined multiple enrollees 
are living in the same household and it has reason to believe the 
enrollees are related. In that case, the MA organization may mail one 
copy to the household. The MA organization must provide all enrollees 
an opt-out process so the enrollees can each receive his or her own 
copy, instead of a copy to the household. Materials specific to an 
individual beneficiary must always be mailed to that individual.
    (2) Materials may be delivered electronically following the 
requirements in paragraphs (d)(2)(i) and (ii) of this section.
    (i) Without prior authorization from the enrollee, MA organizations 
may mail new and current enrollees a notice informing enrollees how to 
electronically access the following required materials: the Evidence of 
Coverage, Provider and Pharmacy Directories, and Formulary. The 
following requirements apply:
    (A) The MA organization may mail one notice for all materials or 
multiple notices.
    (B) Notices for prospective year materials may not be mailed prior 
to September 1 of each year, but must be sent in time for an enrollee 
to access the specified materials by October 15 of each year.
    (C) The MA organization may send the notice throughout the year to 
new enrollees.
    (D) The notice must include the website address to access the 
materials, the date the materials will be available if not currently 
available, and a phone number to request that hard-copy materials be 
mailed.
    (E) The notice must provide the enrollee with the option to request 
hardcopy materials. Requests may be material specific, and must have 
the option of a one-time request or a permanent request that must stay 
in place until the enrollee chooses to receive electronic materials 
again.
    (F) Hard copies of requested materials must be sent within three 
business days of the request.
    (ii) With prior authorization from the enrollee, MA organizations 
may provide any required material or content electronically. To do so, 
MA organizations must:
    (A) Obtain prior consent from the enrollee. The consent must 
specify both the media type and the specific materials being provided 
in that media type.
    (B) Provide instructions on how and when enrollees can access the 
materials.
    (C) Have a process through which an enrollee can request hard 
copies be mailed, providing the beneficiary with the option of a one-
time request or a permanent request (which must stay in place until the 
enrollee chooses to receive electronic materials again), and with the 
option of requesting hard copies for all or a subset of materials. Hard 
copies must be mailed within three business days of the request.
    (D) Have a process for automatic mailing of hard copies when 
electronic versions or the chosen media type is undeliverable.
    (e) CMS required materials and content. The following are required 
materials that must be provided to current and prospective enrollees, 
as applicable, in the form and manner outlined in this section. Unless 
otherwise noted or instructed by CMS and subject to Sec.  422.2263(a) 
of this chapter, required materials may be sent once a fully executed 
contract is in place, but no later than the due dates listed for each 
material in this section.
    (1) Evidence of Coverage (EOC). The EOC is a standardized 
communications material through which certain required information 
(under Sec.  422.111(b)) must be provided annually and must be 
provided:
    (i) To current enrollees of the plan by October 15, prior to the 
year to which the EOC applies.
    (ii) To new enrollees within 10 calendars days from receipt of CMS 
confirmation of enrollment or by last day of month prior to effective 
date, whichever is later.
    (2) Part C explanation of benefits (EOB). The EOB is a model 
communications material through which plans must provide the 
information required under Sec.  422.111(k). MA organizations may send 
this monthly or per claim with a quarterly summary.

[[Page 6110]]

    (3) Annual notice of change (ANOC). The ANOC is a standardized 
marketing material through which plans must provide the information 
required under Sec.  422.111(d)(2) annually.
    (i) Must send for enrollee receipt no later than September 30 of 
each year.
    (ii) Enrollees with an October 1, November 1, or December 1 
effective date must receive within 10 calendar days from receipt of CMS 
confirmation of enrollment or by last day of month prior to effective 
date, whichever is later.
    (4) Pre-Enrollment checklist (PECL). The PECL is a standardized 
communications material that plans must provide to prospective 
enrollees with the enrollment form, so that the enrollees understand 
important plan benefits and rules. It references information on the 
following:
    (i) The EOC.
    (ii) Provider directory.
    (iii) Pharmacy directory.
    (iv) Formulary.
    (v) Premiums/copayments/coinsurance.
    (vi) Emergency/urgent coverage.
    (vii) Plan-type rules.
    (5) Summary of Benefits (SB). MA organizations must disseminate a 
summary of highly utilized coverage that include benefits and cost 
sharing to prospective enrollees, known as the SB. The SB is a model 
marketing material. It must be in a clear and accurate form.
    (i) The SB must be provided with an enrollment form as follows:
    (A) In hard copy with a paper enrollment form.
    (B) For online enrollment, the SB must be made available 
electronically (for example, via a link) prior to the completion and 
submission of enrollment request.
    (C) For telephonic enrollment, the beneficiary must be verbally 
told where the SB can be accessed.
    (ii) The SB must include the following information:
    (A) Information on medical benefits, including:
    (1) Monthly Plan Premium.
    (2) Deductible/Out-of-pocket limits.
    (3) Inpatient/Outpatient Hospital coverage.
    (4) Ambulatory Surgical Center (ASC).
    (5) Doctor Visits (Primary Care Providers and Specialists).
    (6) Preventive Care.
    (7) Emergency Care/Urgently Needed Services.
    (8) Diagnostic Services/Labs/Imaging.
    (9) Hearing Services/Dental Services/Vision Services.
    (10) Mental Health Services.
    (B) Information on prescription drug expenses, including:
    (1) Deductible, the initial coverage phase, coverage gap, and 
catastrophic coverage.
    (2) A statement that costs may differ based on pharmacy type or 
status (for example, preferred/non-preferred, mail order, long-term 
care (LTC) or home infusion, and 30-or 90-day supply), when applicable.
    (C) For Medicare Medical Savings Account Plans (MSAs), the SB must 
include the following:
    (1) The amount Medicare deposits into the beneficiaries MSA 
account.
    (2) A statement that the beneficiary pays nothing once the 
deductible is met.
    (D) For dual eligible special needs plan (D-SNP)s, the SB must 
identify or describe the Medicaid benefits to prospective enrollees. 
This may be done by either of the following:
    (1) Including the Medicaid benefits in the SB.
    (2) Providing a separate document identifying the Medicaid benefits 
that accompanies the SB.
    (E) For D-SNPs open to dually eligible enrollees with differing 
levels of cost, the SB must:
    (1) State how cost sharing and benefits differ depending on the 
level of Medicaid eligibility.
    (2) Describe the Medicaid benefits, if any, provided by the plan.
    (F) Fully integrated dual eligible SNPs (FIDE SNPs) and highly 
integrated D-SNPs, as defined in Sec.  422.2, that provide Medicaid 
benefits have the option to display integrated Medicare and Medicaid 
benefits in the SB.
    (G) MA organizations may describe or identify other health related 
benefits in the SB.
    (6) Enrollment/Election form. This is a model communications 
material through which plans must provide the information required 
under Sec.  422.60(c).
    (7) Enrollment Notice. This is a model communications material 
through which plans must provide the information required under Sec.  
422.60(e)(3).
    (8) Disenrollment Notice. This is a model communications material 
through which plans must provide the information required under Sec.  
422.74(b).
    (9) Mid-Year Change Notification. This is a model communications 
material through which plans must provide a notice to enrollees when 
there is a mid-year change in benefits or plan rules, under the 
following timelines:
    (i) Notices of changes in plan rules, unless otherwise addressed 
elsewhere in this part, must be provided 30 days in advance.
    (ii) For National Coverage Determination (NCD) changes announced or 
finalized less than 30 days before their effective date, a notification 
is required as soon as possible.
    (iii) Mid-year NCD or legislative changes must be provided no later 
than 30 days after the NCD is announced or the legislative change is 
effective.
    (A) Plans may include the change in next plan mass mailing (for 
example, newsletter), provided it is within 30 days.
    (B) The notice must also appear on the MA organization's website.
    (10) Non-renewal Notice. This is a model communications material 
through which plans must provide the information required under Sec.  
422.506.
    (i) The Non-renewal Notice must be provided at least 90 calendar 
days before the date on which the nonrenewal is effective. For 
contracts ending on December 31, the notice must be dated October 2 to 
ensure national consistency in the application of Medigap Guaranteed 
Issue (GI) rights to all enrollees, except for those enrollees in 
special needs plans (SNPs). Information about non-renewals or service 
area reductions may not be released to the public, including the Non-
renewal Notice, until CMS provides notification to the plan.
    (ii) The Non-renewal Notice must do all of the following:
    (A) Inform the enrollee that the plan will no longer be offered and 
the date the plan will end.
    (B) Provide information about any applicable open enrollment 
periods or special election periods or both (for example, Medicare open 
enrollment, non-renewal special election period), including the last 
day the enrollee has to make a Medicare health plan selection.
    (C) Explain what the enrollee must do to continue receiving 
Medicare coverage and what will happen if the enrollee chooses to do 
nothing.
    (D) As required under Sec.  422.506(a)(2)(ii)(A), provide a CMS-
approved written description of alternative MA plan, MA-PD plan, and 
PDP options available for obtaining qualified Medicare services within 
the beneficiary's' region in the enrollee's notice.
    (E) Specify when coverage will start after a new Medicare plan is 
chosen.
    (F) List 1-800-MEDICARE contact information together with other 
organizations that may be able to assist with comparing plans (for 
example, SHIPs).
    (G) Explain Medigap to applicable enrollees and the special right 
to buy a Medigap policy, and include a Medigap fact sheet with the non-
renewal notice that explains Medigap coverage, policy,

[[Page 6111]]

options to compare Medigap policies, and options to buy a Medigap 
policy.
    (H) Include the MA organization's call center telephone number, TTY 
number, and hours and days of operation.
    (11) Provider Directory. This is a model communications material 
through which plans must provide the information under Sec.  
422.111(b)(3). The Provider Directory must:
    (i) Be provided to current enrollees of the plan by October 15 of 
the year prior to the applicable year.
    (ii) Be provided to new enrollees within 10 calendar days from 
receipt of CMS confirmation of enrollment or by last day of month prior 
to effective date, whichever is later.
    (iii) Be provided to current enrollees upon request, within three 
business days of the request.
    (iv) Be updated any time the MA organization becomes aware of 
changes.
    (A) Updates to the online provider directories must be completed 
within 30 days of receiving information requiring update.
    (B)(1) Updates to hardcopy provider directories must be completed 
within 30 days.
    (2) Hard copy directories that include separate updates via addenda 
are considered up-to-date.
    (12) Provider Termination Notice. This is a model communications 
material through which plans must provide the information required 
under Sec.  422.111(e). The provider termination notice must be both of 
the following:
    (i) Provided in hard copy.
    (ii) Sent via U.S. mail (first class postage is recommended, but 
not required).
    (13) Star Ratings Document. This is a standardized marketing 
material through which Star Ratings information is conveyed to 
prospective enrollees.
    (i) The Star Ratings Document is generated through HPMS.
    (ii) The Star Ratings Document must be provided with an enrollment 
form, as follows:
    (A) In hard copy with a paper enrollment form.
    (B) For online enrollment, made available electronically (for 
example, via a link) prior to the completion and submission of 
enrollment request.
    (C) For telephonic enrollment, the beneficiary must be verbally 
told where they can access the Star Ratings Document.
    (iii) New MA organizations that have no Star Ratings are not 
required to provide the Star Ratings Document until the following 
contract year.
    (iv) Updated Star Ratings must be used within 21 calendar days of 
release of updated information on Medicare Plan Finder.
    (v) Updated Star Ratings must not be used until CMS releases Star 
Ratings on Medicare Plan Finder.
    (14) Organization Determination Notice. This is a model 
communications material through which plans must provide the 
information under Sec.  422.568.
    (15) Excluded Provider Notice. This is a model communications 
material through which plans must notify enrollees when a provider they 
visit or consult has been excluded from participating in the Medicare 
program based on an OIG exclusion or the CMS preclusion list.
    (16) Notice of Denial of Medical Coverage or Payment (NDMCP) (also 
known as the Integrated Denial Notice (IDN)). This is a standardized 
communications material used to convey beneficiary appeal rights when a 
plan has denied a service as non-covered or excluded from benefits.
    (17) Notice of Medicare Non-Coverage (NOMNC). This is a 
standardized communications material used to convey beneficiary appeal 
rights when a plan is terminating previously-approved coverage in a 
Skilled Nursing Facility (SNF), Comprehensive Outpatient Rehabilitation 
Facility (CORF), or Home Health setting (HHA).
    (18) Detailed Explanation of Non-Coverage (DENC). This is a 
standardized communications material used to convey to a beneficiary 
why their current Medicare covered SNF, CORF or HHA services should 
end.
    (19) Appointment of Representative (AOR). This is a standardized 
communications material used to authorize or appoint an individual to 
act on behalf of a beneficiary for the purpose of a specific appeal, 
grievance, or organization determination.
    (20) An Important Message From Medicare About Your Rights (IM). 
This is a standardized communications material used to convey a 
beneficiary's rights as a hospital inpatient and appeal rights when 
their covered inpatient hospital stay is ending.
    (21) Detailed Notice of Discharge Form (DND). This is a 
standardized communications material, as required under Sec.  
422.622(e), used to convey to a beneficiary why their current Medicare 
covered inpatient hospital stay should end.
    (22) Medicare Outpatient Observation Notice (MOON). This is a 
standardized communications material used to inform a beneficiary that 
he or she is an outpatient receiving observation services.
    (23) Appeal and Grievance Data Form. This is a standardized 
communications material used to convey organization-specific grievance 
and appeals data.
    (24) Request for Administrative Law Judge (ALJ) Hearing. This is a 
standardized communications material used to formally request a 
reconsideration of the independent review entity's determination.
    (25) Attorney Adjudicator Review in Lieu of ALJ Hearing. This is a 
standardized communications material used to request that an attorney 
adjudicator review a previously determined decision rather than having 
an ALJ do so.
    (26) Notice of Right to an Expedited Grievance. This is a model 
communications material used to convey a Medicare enrollee's rights to 
request that a decision be made on a grievance or appeal within a 
shorter timeframe.
    (27) Waiver of Liability Statement. This is a model communications 
material used by non-contracted providers to waive beneficiary 
liability for payment for denied services while utilizing the enrollee 
appeals process under subpart M of part 422.
    (28) Notice of Appeal Status. This is a model communications 
material used to inform a beneficiary of the denial of an appeal and 
additional appeal rights.
    (29) Notice of Dismissal of Appeal. This is a model communications 
material used to convey the rationale by an MA organization to dismiss 
beneficiary's appeal.
    (30) Federal Contracting Statement. This is model content through 
which plans must convey that they have a contract with Medicare and 
that enrollment in the plan depends on contract renewal.
    (i) The Federal Contracting Statement must include all of the 
following:
    (A) Legal or marketing name of the organization.
    (B) Type of plan (for example, HMO, HMO SNP, PPO, PFFS, PDP).
    (C) A statement that the organization has a contract with Medicare 
(when applicable, MA organizations may incorporate a statement that the 
organization has a contract with the state/Medicaid program).
    (D) A statement that enrollment depends on contract renewal.
    (ii) MA organizations must include the Federal Contracting 
Statement on all marketing materials with the exception of the 
following:
    (A) Banners and banner-like advertisements.
    (B) Outdoor advertisements.
    (C) Text messages.
    (D) Social media.
    (E) Envelopes

[[Page 6112]]

    (31) Star Ratings Disclaimer. This is model content through which 
plans must:
    (i) Convey that MA organizations are evaluated yearly by Medicare.
    (ii) Convey that the ratings are based on a 5-star rating system.
    (iii) Include the model content in disclaimer form or within the 
material whenever Star Ratings are mentioned in marketing materials, 
with the exception of when Star Ratings are published on small objects 
(that is, a give-away items such as a pens or rulers).
    (32) SSBCI Disclaimer. This is model content through which MA 
organizations must:
    (i) Convey the benefits mentioned are a part of special 
supplemental benefits.
    (ii) Convey that not all members will qualify.
    (iii) Include the model content in the material copy which mentions 
SSBCI benefits.
    (33) Accommodations Disclaimer. This is model content through which 
MA organizations must:
    (i) Convey that accommodations for persons with special needs are 
available.
    (ii) Provide a telephone number and TTY number.
    (iii) Include the model content in disclaimer form or within the 
body of the material on any advertisement of invitation to all events 
described under Sec.  422.2264(c).
    (34) Mailing Statements. This is standardized content. It consists 
of statements on envelopes that MA organizations must include when 
mailing information to current members, as follows:
    (i) MA organizations must include the following statement when 
mailing information about the enrollee's current plan: ``Important 
[Insert Plan Name] information.''
    (ii) MA organizations must include the following statement when 
mailing health and wellness information: ``Health and wellness or 
prevention information.''
    (iii) The MA organization must include the plan name; however, if 
the plan name is elsewhere on the envelope, the plan name does not need 
to be repeated in the disclaimer.
    (iv) Delegated or sub-contracted entities and downstream entities 
that conduct mailings on behalf of a multiple MA organizations must 
also comply with this requirement; however, they do not have to include 
a plan name.
    (35) Promotional Give-Away Disclaimer. This is model content. The 
disclaimer consists of a statement that must make clear that there is 
no obligation to enroll in a plan, and must be included when offering a 
promotional give-away such as a drawing, prizes, or a free gift.
    (36) Provider Co-branded Material Disclaimer. This is model content 
through which MA organizations must:
    (i) Convey, as applicable, that other pharmacies, physicians or 
providers are available in the plan's network.
    (ii) Include the model content in disclaimer form or within the 
material whenever co-branding relationships with network provider are 
mentioned, unless the co-branding is with a provider network or health 
system that represents 90 percent or more of the network as a whole.
    (37) Out of Network Non-Contracted Provider Disclaimer. This is 
standardized content. The disclaimer consists of the statement: ``Out-
of-network/non-contracted providers are under no obligation to treat 
Plan members, except in emergency situations. Please call our customer 
service number or see your Evidence of Coverage for more information, 
including the cost-sharing that applies to out-of-network services,'' 
and must be included whenever materials reference out-of-network/non-
contracted providers.
    (38) NCQA SNP Approval Statement. This is model content and must be 
used by SNPs who have received NCQA approval. MA organizations must:
    (i) Convey that MA organization has been approved by the National 
Committee for Quality Assurance (NCQA) to operate as a Special Needs 
Plan (SNP).
    (ii) Include the last contract year of NCQA approval.
    (iii) Convey that the approval is based on a review of [insert Plan 
Name's] Model of Care.
    (iv) Not include numeric SNP approval scores.


Sec.  422.2268  [Removed]

0
43. Section 422.2268 is removed.

0
44. Section 422.2274 is revised to read as follows:


Sec.  422.2274  Agent, broker, and other third party requirements.

    If an MA organization uses agents and brokers to sell its Medicare 
plans, the requirements in paragraphs (a) through (e) of this section 
are applicable. If an MA organization makes payments to third parties, 
the requirements in paragraph (f) of this section are applicable.
    (a) Definitions. For purposes of this section, the following 
definitions are applicable:
    Compensation. (i) Includes monetary or non-monetary remuneration of 
any kind relating to the sale or renewal of a plan or product offered 
by an MA organization including, but not limited to the following:
    (A) Commissions.
    (B) Bonuses.
    (C) Gifts.
    (D) Prizes or Awards.
    (ii) Does not include any of the following:
    (A) Payment of fees to comply with State appointment laws, 
training, certification, and testing costs.
    (B) Reimbursement for mileage to, and from, appointments with 
beneficiaries.
    (C) Reimbursement for actual costs associated with beneficiary 
sales appointments such as venue rent, snacks, and materials.
    Fair market value (FMV) means, for purposes of evaluating agent or 
broker compensation under the requirements of this section only, the 
amount that CMS determines could reasonably be expected to be paid for 
an enrollment or continued enrollment into an MA plan. Beginning 
January 1, 2021, the national FMV is $539, the FMV for Connecticut, 
Pennsylvania, and the District of Columbia is $607, the FMV for 
California and New Jersey is $672, and the FMV for Puerto Rico and the 
U.S. Virgin Islands is $370. For subsequent years, FMV is calculated by 
adding the current year FMV and the product of the current year FMV and 
MA Growth Percentage for aged and disabled beneficiaries, which is 
published for each year in the rate announcement issued pursuant to 
Sec.  422.312.
    Initial enrollment year means the first year that a beneficiary is 
enrolled in a plan versus subsequent years (c.f., renewal year) that a 
beneficiary remains enrolled in a plan.
    Like plan type means one of the following:
    (i) PDP replaced with another PDP.
    (ii) MA or MA-PD replaced with another MA or MA-PD.
    (iii) Cost plan replaced with another cost plan.
    Plan year and enrollment year mean the year beginning January 1 and 
ending December 31.
    Renewal year means all years following the initial enrollment year 
in the same plan or in different plan that is a like plan type.
    Unlike plan type means one of the following:
    (i) An MA or, MA-PD plan to a PDP or Section 1876 Cost Plan.
    (ii) A PDP to a Section 1876 Cost Plan or an MA or MA-PD plan.
    (iii) A Section 1876 Cost Plan to an MA or MA-PD plan or PDP.
    (b) Agent/broker requirements. Agents and brokers who represent MA

[[Page 6113]]

organizations must follow the requirements in paragraphs (b)(1) through 
(3) of this section. Representation includes selling products 
(including Medicare Advantage plans, Medicare Advantage-Prescription 
Drug plans, Medicare Prescription Drug plans, and section 1876 Cost 
plans) as well as outreach to existing or potential beneficiaries and 
answering or potentially answering questions from existing or potential 
beneficiaries.
    (1) Be licensed and appointed under State law (if required under 
applicable State law).
    (2) Be trained and tested annually as required under paragraph 
(c)(4) of this section, and achieve an 85 percent or higher on all 
forms of testing.
    (3) Secure and document a Scope of Appointment prior to meeting 
with potential enrollees.
    (c) MA organization oversight. MA organizations must oversee first 
tier, downstream, and related entities that represent the MA 
organization to ensure agents and brokers abide by all applicable State 
and Federal laws, regulations, and requirements. MA organizations must 
do all of the following:
    (1) As required under applicable State law, employ as marketing 
representatives only individuals who are licensed by the State to 
conduct marketing (as defined in this subpart) of health insurance in 
that State, and whom the MA organization has informed that State it has 
appointed, consistent with the appointment process for agents and 
brokers provided for under State law.
    (2) As required under applicable State law, report the termination 
of an agent or broker to the State and the reason for termination.
    (3) Report to CMS all enrollments made by unlicensed agents or 
brokers and for-cause terminations of agents or brokers.
    (4) On an annual basis, provide training and testing to agents and 
brokers on Medicare rules and regulations, the plan products that 
agents and brokers will sell, including any details specific to each 
plan product, and relevant State and Federal requirements.
    (5) On an annual basis by the last Friday in July, report to CMS 
whether the MA organization intends to use employed, captive, or 
independent agents or brokers in the upcoming plan year and the 
specific rates or range of rates the plan will pay independent agents 
and brokers. Following the reporting deadline, MA organizations may not 
change their decisions related to agent or broker type, or their 
compensation rates and ranges, until the next plan year.
    (6) On an annual basis by October 1, have in place full 
compensation structures for the following plan year. The structure must 
include details on compensation dissemination, including specifying 
payment amounts for initial enrollment year and renewal year 
compensation.
    (7) Submit agent or broker marketing materials to CMS through HPMS 
prior to use, following the requirements for marketing materials in 
this subpart.
    (8) Ensure beneficiaries are not charged marketing consulting fees 
when considering enrollment in MA plans.
    (9) Establish and maintain a system for confirming that:
    (i) Beneficiaries enrolled by agents or brokers understand the 
product, including the rules applicable under the plan.
    (ii) Agents and brokers appropriately complete Scope of Appointment 
records for all marketing appointments (including telephonic and walk-
in).
    (10) Demonstrate that marketing resources are allocated to 
marketing to the disabled Medicare population as well as to Medicare 
beneficiaries age 65 and over.
    (11) Must comply with State requests for information about the 
performance of a licensed agent or broker as part of a state 
investigation into the individual's conduct. CMS will establish and 
maintain a memorandum of understanding (MOU) to share compliance and 
oversight information with States that agree to the MOU.
    (d) Compensation requirements. MA organizations must ensure they 
meet the requirements in paragraphs (d)(1) through (5) of this section 
in order to pay compensation. These compensation requirements only 
apply to independent agents and brokers.
    (1) General rules. (i) MA organizations may only pay agents or 
brokers who meet the requirements in paragraph (b) of this section.
    (ii) MA organizations may determine, through their contracts, the 
amount of compensation to be paid, provided it does not exceed 
limitations outlined in this section.
    (iii) MA organizations may determine their payment schedule (for 
example, monthly or quarterly). Payments (including payments for AEP 
enrollments) must be made during the year of the beneficiary's 
enrollment.
    (iv) MA organizations may only pay compensation for the number of 
months a member is enrolled.
    (2) Initial enrollment year compensation. For each enrollment in an 
initial enrollment year, MA organizations may pay compensation at or 
below FMV.
    (i) MA organizations may pay either a full or pro-rated initial 
enrollment year compensation for:
    (A) A beneficiary's first year of enrollment in any plan; or
    (B) A beneficiary's move from an employer group plan to a non-
employer group plan (either within the same parent organization or 
between parent organizations).
    (ii) MA organizations must pay pro-rated initial enrollment year 
compensation for:
    (A) A beneficiary's plan change(s) during their initial enrollment 
year.
    (B) A beneficiary's selection of an ``unlike plan type'' change. In 
that case, the new plan would only pay the months that the beneficiary 
is enrolled, and the previous plan would recoup the months that the 
beneficiary was not in the plan.
    (3) Renewal compensation. For each enrollment in a renewal year, MA 
plans may pay compensation at an amount up to 50 percent of FMV.
    (i) MA plans may pay compensation for a renewal year:
    (A) In any year following the initial enrollment year the 
beneficiary remains in the same plan; or
    (B) When a beneficiary enrolls in a new ``like plan type''.
    (ii) [Reserved]
    (4) Other compensation scenarios. (i) When a beneficiary enrolls in 
an MA-PD, MA organizations may pay only the MA compensation (and not 
compensation for Part D enrollment under Sec.  423.2274 of this 
chapter).
    (ii) When a beneficiary enrolls in both a section 1876 Cost Plan 
and a stand-alone PDP, the 1876 Cost Plan sponsor may pay compensation 
for the cost plan enrollment and the Part D sponsor must pay 
compensation for the Part D enrollment.
    (iii) When a beneficiary enrolls in a MA-only plan and a PDP plan, 
the MA plan sponsor may pay for the MA plan enrollment and the Part D 
plan may pay for the PDP plan enrollment.
    (iv) When a beneficiary changes from two plans (for example, a MA 
plan and a stand-alone PDP) (dual enrollments) to one plan (MA-PD), the 
MA organization may only pay compensation at the renewal rate for the 
MA-PD product.
    (5) Additional compensation, payment, and compensation recovery 
requirements (Charge-backs). (i) MA organizations must retroactively 
pay or recoup funds for retroactive beneficiary changes for the current 
and previous calendar years. MA organizations may choose to recoup or 
pay compensation

[[Page 6114]]

for years prior to the previous calendar year, but they must do both 
(recoup amounts owed and pay amounts due) during the same year.
    (ii) Compensation recovery is required when:
    (A) A beneficiary makes any plan change (regardless of the parent 
organization) within the first three months of enrollment (known as 
rapid disenrollment), except as provided in paragraph (d)(5)(iii) of 
this section.
    (B) Any other time period a beneficiary is not enrolled in a plan, 
but the plan paid compensation based on that time period.
    (iii) Rapid disenrollment compensation recovery does not apply 
when:
    (A) A beneficiary enrolls effective October 1, November 1, or 
December 1 and subsequently uses the Annual Election Period to change 
plans for an effective date of January 1.
    (B) A beneficiary's enrollment change is not in the best interests 
of the Medicare program, including for the following reasons:
    (1) Other creditable coverage (for example, an employer plan).
    (2) Moving into or out of an institution.
    (3) Gain or loss of employer/union sponsored coverage.
    (4) Plan termination, non-renewal, or CMS imposed sanction.
    (5) To coordinate with Part D enrollment periods or the State 
Pharmaceutical Assistance Program.
    (6) Becoming LIS or dually eligible for Medicare and Medicaid.
    (7) Qualifying for another plan based on special needs.
    (8) Due to an auto, facilitated, or passive enrollment.
    (9) Death.
    (10) Moving out of the service area.
    (11) Non-payment of premium.
    (12) Loss of entitlement or retroactive notice of entitlement.
    (13) Moving into a 5-star plan.
    (14) Moving from an LPI plan into a plan with three or more stars.
    (iv)(A) When rapid disenrollment compensation recovery applies, the 
entire compensation must be recovered.
    (B) For other compensation recovery, plans must recover a pro-rated 
amount of compensation (whether paid for an initial enrollment year or 
renewal year) from an agent or broker equal to the number of months not 
enrolled.
    (1) If a plan has paid full initial compensation, and the enrollee 
disenrolls prior to the end of the enrollment year, the total number of 
months not enrolled (including months prior to the effective date of 
enrollment) must be recovered from the agent or broker.
    (2) Example: A beneficiary enrolls upon turning 65 effective April 
1 and disenrolls September 30 of the same year. The plan paid full 
initial enrollment year compensation. Recovery is equal to 6/12ths of 
the initial enrollment year compensation (for January through March and 
October through December).
    (e) Payments other than compensation (administrative payments). (1) 
Payments made for services other than enrollment of beneficiaries (for 
example, training, customer service, agent recruitment, operational 
overhead, or assistance with completion of health risk assessments) 
must not exceed the value of those services in the marketplace.
    (2) Administrative payments can be based on enrollment provided 
payments are at or below the value of those services in the 
marketplace.
    (f) Payments for referrals. Payments may be made to individuals for 
the referral (including a recommendation, provision, or other means of 
referring beneficiaries) to an agent, broker or other entity for 
potential enrollment into a plan. The payment may not exceed $100 for a 
referral into an MA or MA-PD plan and $25 for a referral into a PDP 
plan.

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

0
45. The authority citation for part 423 continues to read as follows:

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


0
46. Section 423.4 is amended by adding definitions for ``Credible 
allegation of fraud'', ``Fraud hotline tip'', ``Inappropriate 
prescribing'', ``Parent organization'', and ``Substantiated or 
suspicious activities of fraud, waste, or abuse'' in alphabetical order 
to read as follows:


Sec.  423.4  Definitions.

* * * * *
    Credible allegation of fraud means an allegation from any source, 
including but not limited to the following:
    (1) Fraud hotline tips verified by further evidence.
    (2) Claims data mining.
    (3) Patterns identified through provider audits, civil false claims 
cases, and law enforcement investigations. Allegations are considered 
to be credible when they have indicia of reliability.
* * * * *
    Fraud hotline tip is a complaint or other communications that are 
submitted through a fraud reporting phone number or a website intended 
for the same purpose, such as the Federal Government's HHS OIG Hotline 
or a health plan's fraud hotline.
* * * * *
    Inappropriate prescribing means that, after consideration of all 
the facts and circumstances of a particular situation identified 
through investigation or other information or actions taken by Medicare 
Advantage (MA) organizations and Part D plan sponsors, there is an 
established pattern of potential fraud, waste, and abuse related to 
prescribing of opioids, as reported by the plan sponsors. Beneficiaries 
with cancer and sickle-cell disease, as well as those patients 
receiving hospice and long term care (LTC) services are excluded, when 
determining inappropriate prescribing. Plan sponsors may consider any 
number of factors including, but not limited, to the following:
    (1) Documentation of a patient's medical condition.
    (2) Identified instances of patient harm or death.
    (3) Medical records, including claims (if available).
    (4) Concurrent prescribing of opioids with an opioid potentiator in 
a manner that increases risk of serious patient harm.
    (5) Levels of morphine milligram equivalent (MME) dosages 
prescribed.
    (6) Absent clinical indication or documentation in the care 
management plan or in a manner that may indicate diversion.
    (7) State-level prescription drug monitoring program (PDMP) data.
    (8) Geography, time, and distance between a prescriber and the 
patient.
    (9) Refill frequency and factors associated with increased risk of 
opioid overdose.
* * * * *
    Parent organization means the legal entity that exercises a 
controlling interest, through the ownership of shares, the power to 
appoint voting board members, or other means, in a Part D sponsor or MA 
organization, directly or through a subsidiary or subsidiaries, and 
which is not itself a subsidiary of any other legal entity.
* * * * *
    Substantiated or suspicious activities of fraud, waste, or abuse 
means and includes, but is not limited to, allegations that a provider 
of services (including a prescriber) or supplier;
    (1) Engaged in a pattern of improper billing;
    (2) Submitted improper claims with suspected knowledge of their 
falsity;
    (3) Submitted improper claims with reckless disregard or deliberate 
ignorance of their truth or falsity; or

[[Page 6115]]

    (4) Is the subject of a fraud hotline tip verified by further 
evidence.
* * * * *

0
47. Section 423.100 is amended--
0
a. In the definition of ``Applicable drug'' by revising paragraph 
(1)(ii);
0
b. In the definition of ``Exempted beneficiary'' by:
0
i. Removing the word ``or'' at the end of paragraph (2);
0
ii. Removing the period at the end of paragraph (3) and adding ``; or'' 
in its place; and
0
iii. Adding paragraph (4); and
0
c. By revising the introductory text in the definition of ``Potential 
at-risk beneficiary''.
    The revisions and addition read as follows:


Sec.  423.100  Definitions.

* * * * *
    Applicable drug * * *
    (1) * * *
    (ii) In the case of a biological product, licensed under section 
351 of the Public Health Service Act (other than, with respect to a 
plan year before 2019, a product licensed under subsection (k) of such 
section 351); and
* * * * *
    Exempted beneficiary * * *
    (4) Has sickle cell disease.
* * * * *
    Potential at-risk beneficiary means a Part D eligible individual 
who is not an exempted beneficiary (as defined in this section) and--
* * * * *

0
48. Section 423.104 is amended by adding paragraph (d)(2)(iv) to read 
as follows:


Sec.  423.104   Requirements related to qualified prescription drug 
coverage.

* * * * *
    (d) * * *
    (2) * * *
    (iv) Specialty tier means a formulary cost sharing tier dedicated 
to high-cost Part D drugs with ingredient costs for a 30-day equivalent 
supply (as described in paragraph (d)(2)(iv)(A)(2) of this section) 
that are greater than the specialty tier cost threshold specified in 
paragraph (d)(2)(iv)(A) of this section.
    (A) Specialty-tier cost threshold. CMS sets the specialty-tier cost 
threshold for a plan year in accordance with this paragraph 
(d)(2)(iv)(A), using the following steps:
    (1) 30-day equivalent ingredient cost. Using the PDE data as 
specified in paragraph (d)(2)(iv)(C) of this section, CMS uses the 
ingredient cost reflected on the prescription drug event (PDE) to 
determine the ingredient cost in dollars for a 30-day equivalent supply 
of the Part D drug.
    (2) 30-day equivalent supply. CMS determines the 30-day equivalent 
supply as follows: If the days' supply reported on a PDE is less than 
or equal to 34, the number of 30-day equivalent supplies equals one. If 
the days' supply reported on a PDE is greater than 34, the number of 
30-day equivalent supplies is equal to the number of days' supply 
reported on each PDE divided by 30.
    (3) Top 1 percent. CMS determines the amount that equals the lowest 
30-day equivalent ingredient cost that is within the top 1 percent of 
all 30-day equivalent ingredient costs reflected in the PDE data.
    (4) Determination. Except as provided in paragraph (d)(2)(iv)(B) of 
this section, the amount determined in paragraph (d)(2)(iii) of this 
section is the specialty-tier cost threshold for the plan year.
    (5) Claims history. Except for newly FDA-approved Part D drugs only 
recently available on the market for which Part D sponsors would have 
little or no claims data, CMS approves placement of a Part D drug on a 
specialty tier when that Part D sponsor's claims data from the time 
period specified in paragraph (d)(2)(iv)(C) of this section 
demonstrates that greater than 50 percent of the Part D sponsor's PDEs 
for a given Part D drug, when adjusted for 30-day equivalent supplies, 
have ingredient costs for 30-day equivalent supplies, as described in 
paragraph (d)(2)(iv)(A)(2) of this section, that exceed the specialty-
tier cost threshold.
    (6) No claims history. For newly FDA-approved Part D drugs only 
recently available on the market for which Part D sponsors would have 
little or no claims data, CMS approves placement of a Part D drug on a 
specialty tier when that Part D sponsor estimates that ingredient cost 
portion of their negotiated prices for a 30-day equivalent supply, as 
defined in subparagraph (d)(2)(iv)(A)(2), is anticipated to exceed the 
specialty-tier cost threshold more than 50 percent of the time, subject 
to the requirements at Sec.  423.120(b).
    (B) Limit on specialty-tier cost threshold adjustment. (1) CMS 
increases the specialty-tier cost threshold for a plan year only if the 
amount determined in paragraph (d)(2)(iv)(A)(3) of this section for a 
plan year is at least 10 percent above the specialty tier cost 
threshold for the prior plan year.
    (2) If an increase is made in accordance with this paragraph 
(d)(2)(iv)(B), CMS rounds the amount determined in paragraph 
(d)(2)(iv)(A)(3) of this section to the nearest $10, and the resulting 
dollar amount is the specialty-tier cost threshold for the plan year.
    (C) Data used to determine the specialty-tier cost threshold. CMS 
uses PDEs from the plan year that ended 12 months prior to the 
applicable plan year.
    (D) Maximum number of specialty tiers and maximum allowable cost 
sharing. A Part D plan may maintain up to two specialty tiers. CMS sets 
the maximum allowable cost sharing for a single specialty tier, or, in 
the case of a plan with two specialty tiers, the higher cost sharing 
specialty tier as follows:
    (1) For Part D plans with the full deductible provided under the 
Defined Standard benefit, as specified in paragraph (d)(1) of this 
section, 25 percent coinsurance.
    (2) For Part D plans with no deductible, 33 percent coinsurance.
    (3) For Part D plans with a deductible that is greater than $0 and 
less than the deductible provided under the Defined Standard benefit, a 
coinsurance percentage that is determined by subtracting the plan's 
deductible from 33 percent of the initial coverage limit (ICL) under 
section 1860D-2(b)(3) of the Act, dividing this difference by the 
difference between the ICL and the plan's deductible, and rounding to 
the nearest 1 percent.
* * * * *

0
49. Section 423.128 is amended by--
0
a. Revising paragraph (a)(1);
0
b. Adding paragraph (b)(11);
0
c. Adding paragraphs (d)(1)(i)(A) and (B), and (ii)(A) through (C);
0
d. Redesignating paragraph (d)(1)(iii) as (d)(1)(iii)(A);
0
e. Adding paragraph (d)(1)(iii)(B); and
0
f. Adding paragraphs (d)(1)(v) and (vi) and (d)(4) and (5).
    The revisions and additions read as follows:


Sec.  423.128  Dissemination of Part D plan information.

    (a) * * *
    (1) To each enrollee of a Part D plan offered by the Part D sponsor 
under this part, except as provided in paragraph (b)(11)(ii) of this 
section;
* * * * *
    (b) * * *
    (11) Opioid information. (i) Beginning January 1, 2022, and subject 
to paragraph (b)(11)(ii) of this section, a Part D sponsor must 
disclose to each enrollee at least once per year the following:
    (A) The risks associated with prolonged opioid use.
    (B) Coverage of non-pharmacological therapies, devices, and non-
opioid medications--
    (1) In the case of an MA-PD, under such plan; and

[[Page 6116]]

    (2) In the case of a PDP, under such plan and Medicare Parts A and 
B.
    (ii) The Part D sponsor may elect to, in lieu of disclosing the 
information described in paragraph (b)(11)(i) of this section to each 
enrollee under each plan offered by the Part D sponsor under this part, 
disclose such information to a subset of enrollees, such as enrollees 
who have been prescribed an opioid in the previous 2-year period.
* * * * *
    (d) * * *
    (1) * * *
    (i) * * *
    (A) For coverage beginning on and after January 1, 2022, is open at 
least from 8:00 a.m. to 8:00 p.m. in all regions served by the Part D 
plan, with the following exceptions:
    (1) From October 1 through March 31 of the following year, a 
customer call center may be closed on Thanksgiving Day and Christmas 
Day so long as the interactive voice response (IVR) system or similar 
technology records messages from incoming callers and such messages are 
returned within one (1) business day.
    (2) From April 1 through September 30, a customer call center may 
be closed any Federal holiday, Saturday, or Sunday, so long as the 
interactive voice response (IVR) system or similar technology records 
messages from incoming callers and such messages are returned within 
one (1) business day.
    (B) For coverage beginning on and after January 1, 2022, any call 
center serving pharmacists or pharmacies must be open so long as any 
network pharmacy in that region is open.
    (ii) * * *
    (A) For coverage beginning on and after January 1, 2022, limits 
average hold time to 2 minutes. The hold time is defined as the time 
spent on hold by callers following the interactive voice response (IVR) 
system, touch-tone response system, or recorded greeting, before 
reaching a live person.
    (B) For coverage beginning on and after January 1, 2022, answers 80 
percent of incoming calls within 30 seconds after the interactive voice 
response (IVR), touch-tone response system, or recorded greeting 
interaction.
    (C) For coverage beginning on and after January 1, 2022, limits the 
disconnect rate of all incoming calls to 5 percent. The disconnect rate 
is defined as the number of calls unexpectedly dropped divided by the 
total number of calls made to the customer call center.
    (iii)(A) * * *.
    (B) For coverage beginning on and after January 1, 2022, 
interpreters must be available for 80 percent of incoming calls 
requiring an interpreter within 8 minutes of reaching the customer 
service representative and be made available at no cost to the caller.
* * * * *
    (v) At a minimum, for coverage beginning on and after January 1, 
2022:
    (A) Provides effective real-time communication with individuals 
using auxiliary aids and services, including TTYs and all forms of 
Federal Communication Commission-approved telecommunications relay 
systems, when using automated-attendant systems. See 28 CFR 35.161 and 
36.303(d).
    (B) Connects 80 percent of incoming calls requiring TTY services to 
a TTY operator within 7 minutes.
    (vi) For coverage beginning on and after January 1, 2022, provides 
the information described in paragraph (d)(4) of this section to 
enrollees who call the customer service call center.
* * * * *
    (4) Beginning on January 1, 2023, a Part D sponsor must implement, 
and make available directly to enrollees, in an easy to understand 
manner, the following complete, accurate, timely, clinically 
appropriate, patient-specific formulary and benefit real-time 
information in their beneficiary-specific portal or computer 
application:
    (i) Enrollee cost sharing amounts.
    (ii) Formulary medication alternatives for a given condition.
    (iii) Formulary status, including utilization management 
requirements applicable to each alternative medication, as appropriate 
for each enrollee and medication presented.
    (5) The Part D sponsor may provide rewards and incentives to 
enrollees who use the beneficiary real time benefit tool (RTBT) 
described in paragraph (d)(4) of this section, provided the rewards and 
incentives comply with the requirements in paragraphs (d)(5)(i) through 
(vi) of this section, and the rewards and incentives information is 
made available to CMS upon request. Use is defined as logging into the 
RTBT, via portal or computer application, or calling the customer 
service call center to obtain the information described in paragraph 
(d)(4) of this section. The rewards and incentives must meet the 
following:
    (i) Be of reasonable value, both individually and in the aggregate.
    (ii) Be designed so that all enrollees are eligible to earn rewards 
and incentives, and that there is no discrimination based on race, 
color, national origin, including limited English proficiency, sex, 
age, disability, chronic disease, health status, or other prohibited 
basis.
    (iii) Not be offered in the form of cash or other cash equivalents.
    (iv) Not be used to target potential enrollees.
    (v) Be earned solely for logging onto the beneficiary RTBT and not 
for any other purpose.
    (vi) Otherwise comply with all relevant fraud and abuse laws, 
including, when applicable, the anti-kickback statute and civil money 
penalty prohibiting inducements to beneficiaries.
* * * * *

0
50. Section 423.153 is amended by--
0
a. Revising the section heading;
0
b. Revising paragraph (a);
0
c. By adding paragraphs (d)(1)(vii)(E) and (F);
0
d. By revising paragraph (d)(2);
0
e. By revising paragraph (f)(1) introductory text;
0
f. In paragraph (f)(3)(ii) introductory text by removing the phrase 
``paragraphs (f)(10) and (11) of this section'' and adding its place 
the phrase ``paragraphs (f)(9) through (13) of this section'';
0
g. In paragraph (f)(4)(ii)(A) by removing the phrase ``paragraph 
(f)(2)(ii)(B) of this section'' and adding its place the phrase 
``paragraph (f)(3)(ii)(A) of this section'';
0
h. In paragraph (f)(4)(ii)(A) by removing the phrase ``paragraph 
(f)(4)(i)(B) of this section'' and adding in its place the phrase 
``paragraph (f)(2)(i)(B) of this section'';
0
i. Revising paragraphs (f)(5)(ii)(C)(3), (f)(6)(ii)(C)(4), and 
(f)(8)(i);
0
j. In paragraph (f)(15)(ii)(C) by removing the phrase ``any potential 
at-risk beneficiary'' and adding in its place the phrase ``any 
potential at-risk beneficiary or at-risk beneficiary'' and changing 
``definition'' to ``definitions'';
0
k. In paragraph (f)(15)(ii)(D) by changing ``no later than 7 days of 
the date'' to ``no later than 7 days from the date'';
0
l. By revising paragraph (f)(16); and
0
m. By revising the heading of paragraph (g).
    The revisions and additions read as follows:


Sec.  423.153  Drug utilization management, quality assurance, 
medication therapy management programs (MTMPs), drug management 
programs, and access to Medicare Parts A and B claims data extracts.

    (a) General rule. Each Part D sponsor must have established, for 
covered Part D drugs furnished through a Part D plan, a drug 
utilization management program, quality assurance measures and systems, 
and an MTMP as described in

[[Page 6117]]

paragraphs (b), (c), and (d) of this section. No later than January 1, 
2022, a Part D plan sponsor must have established a drug management 
program for at-risk beneficiaries enrolled in their prescription drug 
benefit plans to address overutilization of frequently abused drugs, as 
described in paragraph (f) of this section.
* * * * *
    (d) * * *
    (1) * * *
    (vii) * * *
    (E) Beginning January 1, 2022, for enrollees targeted in paragraph 
(d)(2) of this section, provide at least annually as part of the 
comprehensive medication review, a targeted medication review, or other 
MTM correspondence or service, information about safe disposal of 
prescription drugs that are controlled substances, drug take back 
programs, in-home disposal and cost-effective means to safely dispose 
of such drugs.
    (F) The information to be provided under paragraph (d)(1)(vii)(E) 
of this section must comply with all requirements of Sec.  422.111(j) 
of this chapter.
    (2) Targeted beneficiaries. Targeted beneficiaries for the MTMP 
described in paragraph (d)(1) of this section are enrollees in the 
sponsor's Part D plan who meet the characteristics of at least one of 
the following two groups:
    (i)(A) Have multiple chronic diseases, with three chronic diseases 
being the maximum number a Part D plan sponsor may require for targeted 
enrollment;
    (B) Are taking multiple Part D drugs, with eight Part D drugs being 
the maximum number of drugs a Part D plan sponsor may require for 
targeted enrollment; and
    (C) Are likely to incur the following annual Part D drug costs:
    (1) For 2011, costs for covered Part D drugs greater than or equal 
to $3,000.
    (2) For 2012 and subsequent years, costs for covered Part D drugs 
in an amount greater than or equal to $3,000 increased by the annual 
percentage specified in Sec.  423.104(d)(5)(iv); or
    (ii) Beginning January 1, 2022, are at-risk beneficiaries as 
defined in Sec.  423.100.
* * * * *
    (f) * * *
    (1) Written policies and procedures. A sponsor must document its 
drug management program in written policies and procedures that are 
approved by the applicable P&T committee and reviewed and updated as 
appropriate. In the case of a Part D sponsor, including a PACE 
organization, without its own or a contracted P&T committee because it 
does not use a formulary, the written policies and procedures described 
in this section must be approved by the Part D sponsor's medical 
director as described at Sec.  423.562(a)(5) (or, for a PACE 
organization, at Sec.  460.60(b)) and applicable clinical and other 
staff or contractors as determined appropriate by the medical director. 
These policies and procedures must address all aspects of the sponsor's 
drug management program, including but not limited to the following:
* * * * *
    (3) * * *
    (ii) In accordance with paragraphs (f)(9) through (13) of this 
section, limit an at-risk beneficiary's access to coverage for 
frequently abused drugs to those that are--
* * * * *
    (4) * * *
    (A) Except as provided in paragraph (f)(3)(ii)(A) of this section 
regarding a prescriber limitation, if the sponsor has complied with the 
requirement of paragraph (f)(2)(i)(C) of this section about attempts to 
reach prescribers, and the prescribers were not responsive after 3 
attempts by the sponsor to contact them within 10 business days, then 
the sponsor has met the requirement of paragraph (f)(2)(i)(B) of this 
section for eliciting information from the prescribers.
    (5) * * *
    (ii) * * *
    (C) * * *
    (3) An explanation of the beneficiary's right to a redetermination 
if the sponsor issues a determination that the beneficiary is an at-
risk beneficiary and the standard and expedited redetermination 
processes described at Sec. Sec.  423.582 and 423.584, including notice 
that if on redetermination the plan sponsor affirms its denial, in 
whole or in part, the case must be automatically forwarded to the 
independent review entity contracted with CMS for review and 
resolution.
* * * * *
    (6) * * *
    (ii) * * *
    (C) * * *
    (4) An explanation of the beneficiary's right to a redetermination 
under Sec.  423.580, including all of the following:
    (i) A description of both the standard and expedited 
redetermination processes.
    (ii) The beneficiary's right to, and conditions for, obtaining an 
expedited redetermination.
    (iii) Notice that if on redetermination the plan sponsor affirms 
its denial, in whole or in part, the case must be automatically 
forwarded to the independent review entity contracted with CMS for 
review and resolution.
* * * * *
    (8) * * *
    (i) Subject to paragraph (f)(8)(ii) of this section, a Part D 
sponsor must provide the second notice described in paragraph (f)(6) of 
this section or the alternate second notice described in paragraph 
(f)(7) of this section, as applicable, on a date that is not less than 
30 days after the date of the initial notice described in paragraph 
(f)(5) of this section and not more than the earlier of the following 
two dates:
    (A) The date the sponsor makes the relevant determination.
    (B) Sixty days after the date of the initial notice described in 
paragraph (f)(5) of this section.
* * * * *
    (15) * * *
    (ii) * * *
    (C) Provide information to CMS about any potential at-risk 
beneficiary or at-risk beneficiary that meets paragraph (2) of the 
definitions in Sec.  423.100 that a sponsor identifies within 30 days 
from the date of the most recent CMS report identifying potential at-
risk beneficiaries.
    (D) Provide information to CMS as soon as possible but no later 
than 7 days from the date of the initial notice or second notice that 
the sponsor provided to a beneficiary, or as soon as possible but no 
later than 7 days from a termination date, as applicable, about a 
beneficiary-specific opioid claim edit or a limitation on access to 
coverage for frequently abused drugs.
* * * * *
    (16) Clinical guidelines. Potential at-risk beneficiaries and at-
risk beneficiaries are identified by CMS or a Part D sponsor using 
clinical guidelines that--
    (i) Are developed with stakeholder consultation;
    (ii) Are based on:
    (1) The acquisition of frequently abused drugs from multiple 
prescribers, multiple pharmacies, the level of frequently abused drugs 
used, or any combination of these factors; or
    (2) Beginning January 1, 2022, a history of opioid-related overdose 
as determined by at least one recent claim that contains a principal 
diagnosis indicating opioid overdose, and at least one recent claim for 
an opioid medication other than an opioid used for medication assisted 
therapy (MAT).
    (iii) Are derived from expert opinion and an analysis of Medicare 
data; and
    (iv) Include a program size estimate.

[[Page 6118]]

    (g) Prescription drug plan sponsors' access to Medicare Parts A and 
B claims data extracts-- * * *
* * * * *

0
51. Section 423.182 is amended by revising paragraphs (b)(3)(ii)(A) and 
(B) to read as follows:


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

* * * * *
    (b) * * *
    (3) * * *
    (ii) * * *
    (A)(1) For the first year after consolidation, CMS uses enrollment-
weighted measure scores using the July enrollment of the measurement 
period of the consumed and surviving contracts for all measures, except 
survey-based measures and call center measures. The survey-based 
measures would use enrollment of the surviving and consumed contracts 
at the time the sample is pulled for the rating year. The call center 
measures would use average enrollment during the study period.
    (2) For contract consolidations approved on or after January 1, 
2022, if a measure score for a consumed or surviving contract is 
missing due to a data integrity issue as described in Sec.  
423.184(g)(1)(i) and (ii), CMS assigns a score of zero for the missing 
measure score in the calculation of the enrollment-weighted measure 
score.
    (B)(1) For the second year after consolidation, CMS uses the 
enrollment-weighted measure scores using the July enrollment of the 
measurement year of the consumed and surviving contracts for all 
measures except for CAHPS. CMS ensures that the CAHPS survey sample 
includes enrollees in the sample frame from both the surviving and 
consumed contracts.
    (2) For contract consolidations approved on or after January 1, 
2022, for all measures except CAHPS if a measure score for a consumed 
or surviving contract is missing due to a data integrity issue as 
described in Sec.  423.184(g)(1)(i) and (ii), CMS assigns a score of 
zero for the missing measure score in the calculation of the 
enrollment-weighted measure score.
* * * * *

0
52. Section 423.184 is amended by revising paragraph (g)(1)(ii)(A) to 
read as follows:


Sec.  423.184  Adding, updating, and removing measures.

* * * * *
    (g) * * *
    (1) * * *
    (ii) * * *
    (A)(1) The data submitted for the Timeliness Monitoring Project 
(TMP) or audit that aligns with the Star Ratings year measurement 
period is used to determine the scaled reduction.
    (2) For contract consolidations approved on or after January 1, 
2022, if there is a contract consolidation as described at Sec.  
423.182(b)(3), the TMP or audit data are combined for the consumed and 
surviving contracts before the methodology provided in paragraphs 
(g)(1)(ii)(B) through (M) of this section is applied.
* * * * *

0
53. Section 423.186 is amended by adding a sentence to the end of 
paragraph (i)(6) to read as follows:


Sec.  423.186  Calculation of Star Ratings.

* * * * *
    (i) * * *
    (6) * * * Missing data includes data where there is a data 
integrity issue as defined at Sec.  423.184(g)(1).
* * * * *

0
54. Section 423.265 is amended by revising paragraph (b)(2) to read as 
follows:


Sec.  423.265  Submission of bids and related information.

* * * * *
    (b) * * *
    (2) Limit on number of plan offerings. Potential Part D sponsors' 
bid submissions may include no more than three stand-alone prescription 
drug plan offerings in a service area and must include only one basic 
prescription drug plan offering.
* * * * *

0
55. Section 423.286 is amended by revising paragraph (d)(4)(ii) to read 
as follows:


Sec.  423.286  Rules regarding premiums.

* * * * *
    (d) * * *
    (4) * * *
    (ii) Calculating the income-related monthly adjustment amount. The 
income-related monthly adjustment is equal to the product of the 
standard base beneficiary premium, as determined under paragraph (c) of 
this section, and the ratio of the applicable premium percentage 
specified in 20 CFR 418.2120, reduced by 25.5 percent; divided by 25.5 
percent (that is, premium percentage-25.5 percent)/25.5 percent).
* * * * *

0
56. Section 423.503 is amended by adding paragraphs (b)(1)(i) and (ii) 
to read as follows:


Sec.  423.503  Evaluation and determination procedures for applications 
to be determined qualified to act as a sponsor.

* * * * *
    (b) * * *
    (1) * * *
    (i) An applicant may be considered to have failed to comply with a 
contract for purposes of an application denial under paragraph (b)(1) 
of this section if during the applicable review period the applicant 
does any of the following:
    (A) Was subject to the imposition of an intermediate sanction under 
to subpart O of this part or a determination by CMS to prohibit the 
enrollment of new enrollees pursuant to Sec.  423.2410(c).
    (B) Failed to maintain a fiscally sound operation consistent with 
the requirements of Sec.  423.505(b)(23).
    (ii) CMS may deny an application submitted by an organization that 
does not hold a Part D contract at the time of the submission when the 
applicant's parent organization or another subsidiary of the parent 
organization meets the criteria for denial stated in paragraph 
(b)(1)(i) of this section. This paragraph does not apply when the 
parent completed the acquisition of the subsidiary that meets the 
criteria within the 24 months preceding the application submission 
deadline.
* * * * *

0
57. Section 423.503 is amended by revising paragraph (a)(3) to read as 
follows:


Sec.  423.503  Evaluation and determination procedures for applications 
to be determined qualified to act as a sponsor.

    (a) * * *
    (3) CMS does not approve an application when it would result in the 
applicant's parent organization, directly or through its subsidiaries, 
holding more than one PDP sponsor contract in the PDP Region for which 
the applicant is seeking qualification as a PDP sponsor.
* * * * *

0
58. Section 423.504 is amended by adding paragraphs (b)(4)(vi)(G)(4) 
through (7) to read as follows:


Sec.  423.504  General provisions.

* * * * *
    (b) * * *
    (4) * * *
    (vi) * * *
    (G) * * *
    (4) The Part D plan sponsor must have procedures to identify, and 
must report to CMS or its designee either of the following, in the 
manner described in paragraphs (b)(4)(vi)(G)(4) through (6) of this 
section:
    (i) Any payment suspension implemented by a plan, pending 
investigation of credible allegations of fraud by a pharmacy, which 
must be implemented in the same manner as the

[[Page 6119]]

Secretary does under section 1862(o)(1) of the Act.
    (ii) Any information concerning investigations, credible evidence 
of suspicious activities of a provider of services (including a 
prescriber) or supplier, and other actions taken by the plan related to 
the inappropriate prescribing of opioids.
    (5) The Part D plan sponsor must submit data, as specified in this 
section, in the program integrity portal when reporting payment 
suspensions pending investigations of credible allegations of fraud by 
pharmacies; information related to the inappropriate prescribing of 
opioids and concerning investigations and credible evidence of 
suspicious activities of a provider of services (including a 
prescriber) or supplier, and other actions taken by the plan sponsor; 
or if the plan reports a referral, through the portal, of substantiated 
or suspicious activities of a provider of services (including a 
prescriber) or a supplier related to fraud, waste or abuse to initiate 
or assist with investigations conducted by CMS, or its designee, a 
Medicare program integrity contractor, or law enforcement partners. The 
data categories, as applicable, include referral information and 
actions taken by the Part D plan sponsor on the referral. (6)(i) The 
plan sponsor is required to notify the Secretary, or its designee, of a 
payment suspension described in paragraph (b)(4)(vi)(G)(4) of this 
section 7 days prior to implementation of the payment suspension. The 
MA organization may request an exception to the 7day prior notification 
to the Secretary, or its designee, if circumstances warrant a reduced 
reporting time frame, such as potential beneficiary harm.
    (ii) The plan sponsor is required to submit the information 
described in paragraph (b)(4)(vi)(G)(4)(ii) of this section no later 
than January 30, April 30, July 30, and October 30 of each year for the 
preceding periods, respectively, of October 1 through December 31, 
January 1 through March 31, April 1 through June 30, and July 1 through 
September 30. For the first reporting period (January 30, 2022), the 
reporting will reflect the data gathered and analyzed for the previous 
quarter in the calendar year (October 1-December 31).
    (7)(i) CMS provides plan sponsors with data report(s) or links to 
the information described in paragraphs (b)(4)(vi)(G)(4)(i) and (ii) of 
this section no later than April 15, July 15, October 15, and January 
15 of each year based on the information in the portal, respectively, 
as of the preceding October 1 through December 31, January 1 through 
March 31, April 1 through June 30, and July 1 through September 30.
    (ii) Include administrative actions, pertinent information related 
to opioid overprescribing, and other data determined appropriate by the 
Secretary in consultation with stakeholders.
    (iii) Are anonymized information submitted by plans without 
identifying the source of such information.
    (iv) For the first quarterly report (April 15, 2022), that the 
report reflect the data gathered and analyzed for the previous quarter 
submitted by the plan sponsors on January 30, 2022.
* * * * *

0
59. Section 423.505 is amended by revising paragraph (b)(22) to read as 
follows:


Sec.  423.505  Contract provisions.

* * * * *
    (b) * * *
    (22) Through the CMS complaint tracking system, address and resolve 
complaints received by CMS against the MA organization.
* * * * *

0
60. Section 423.514 is amended by redesignating paragraph (a)(5) as 
paragraph (a)(6) and adding a new paragraph (a)(5) to read as follows:


Sec.  423.514  Validation of Part D reporting requirements.

    (a) * * *
    (5) Pharmacy performance measures.
* * * * *

0
61. Section 423.551 is amended by revising paragraph (g)(2) to read as 
follows:


Sec.  423.551  General provisions.

* * * * *
    (g) * * *
    (2) CMS does not recognize or allow a sale or transfer that 
consists solely of the sale or transfer of individual beneficiaries or 
groups of beneficiaries enrolled in a plan benefit package.
* * * * *

0
62. Section 423.560 is amended by--
0
a. Removing the definition of ``Appointed representative'';
0
b. Adding the definition of ``Representative'' in alphabetical order; 
and
0
c. Revising the definition of ``Specialty tier''.
    The addition and revision read as follows:


Sec.  423.560  Definitions.

* * * * *
    Representative means an individual either appointed by an enrollee 
or authorized under State or other applicable law to act on behalf of 
the enrollee in filing a grievance, obtaining a coverage determination, 
or in dealing with any of the levels of the appeals process. Unless 
otherwise stated in this subpart, the representative has all of the 
rights and responsibilities of an enrollee in filing a grievance, 
obtaining a coverage determination, or in dealing with any of the 
levels of the appeals process, subject to the rules described in part 
422, subpart M, of this chapter.
    Specialty tier: (1) Before January 1, 2022, means a formulary cost-
sharing tier dedicated to very high cost Part D drugs that exceed a 
cost threshold established by the Secretary; and
    (2) Beginning January 1, 2022, has the meaning given the term in 
Sec.  423.104.

0
63. Section 423.566 is amended by revising paragraph (c)(2) to read as 
follows:


Sec.  423.566  Coverage determinations.

* * * * *
    (c) * * *
    (2) The enrollee's representative, on behalf of the enrollee; or
* * * * *

0
64. Section 423.568 is amended by adding paragraphs (i) through (m) to 
read as follows:


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

* * * * *
    (i) Dismissing a request. The Part D plan sponsor dismisses a 
coverage determination request, either entirely or as to any stated 
issue, under any of the following circumstances:
    (1) When the individual making the request is not permitted to 
request a coverage determination under Sec.  423.566(c).
    (2) When the Part D plan sponsor determines the party failed to 
make out a valid request for a coverage determination that 
substantially complies with paragraph (a) of this section.
    (3) When an enrollee or the enrollee's representative files a 
request for a coverage determination, but the enrollee dies while the 
request is pending, and both of the following criteria apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) The enrollee's representative, if any, does not wish to pursue 
the request for coverage.
    (4) When a party filing the coverage determination request submits 
a timely request for withdrawal of the request for a coverage 
determination with the Part D plan sponsor.
    (j) Notice of dismissal. The Part D plan must mail or otherwise 
transmit a written notice of the dismissal of the

[[Page 6120]]

coverage determination request to the parties. The notice must state 
all of the following:
    (1) The reason for the dismissal.
    (2) The right to request that the MA organization vacate the 
dismissal action.
    (3) The right to request reconsideration of the dismissal.
    (k) Vacating a dismissal. If good cause is established, the Part D 
plan sponsor may vacate its dismissal of a request for redetermination 
within 6 months from the date of the notice of dismissal.
    (l) Effect of dismissal. The Part D plan sponsor's dismissal is 
binding unless it is modified or reversed by the Part D plan sponsor or 
vacated under paragraph (k) of this section.
    (m) Withdrawing a request. A party that requests a coverage 
determination may withdraw its request at any time before the decision 
is issued by filing a request with the Part D plan sponsor.

0
65. Section 423.570 is amended by adding paragraph (f) to read as 
follows:


Sec.  423.570  Expediting certain coverage determinations.

* * * * *
    (f) Dismissing a request. The Part D plan sponsor dismisses an 
expedited coverage determination in accordance with Sec.  423.568.

0
66. Section 423.578 is amended--
0
a. By revising paragraph (a)(6)(iii); and
0
b. In paragraph (b)(4) by removing the phrase ``the enrollee's 
appointed representative'' and adding in its place the phrase ``the 
enrollee's representative''.
    The revision reads as follows:


Sec.  423.578  Exceptions process.

    (a) * * *
    (6) * * *
    (iii)(A) Before January 1, 2022, if a Part D plan sponsor maintains 
a specialty tier, as defined in Sec.  423.560, the Part D sponsor may 
design its exception process so that Part D drugs on the specialty tier 
are not eligible for a tiering exception.
    (B) Beginning January 1, 2022, if a Part D sponsor maintains one or 
two specialty tiers, as defined in Sec.  423.104, the Part D sponsor 
may design its exception process so that Part D drugs on the specialty 
tier(s) are not eligible for tiering exception(s) to non-specialty 
tiers.
* * * * *

0
67. Section 423.582 is amended--
0
a. In paragraph (d) by removing the word ``written'' and
0
b. By adding paragraphs (e) through (h).
    The additions read as follows:


Sec.  423.582  Request for a standard redetermination.

* * * * *
    (e) Dismissing a request. A Part D plan sponsor dismisses a 
redetermination request, either entirely or as to any stated issue, 
under any of the following circumstances:
    (1) When the person or entity requesting a redetermination is not a 
proper party under Sec.  423.580.
    (2) When the Part D plan sponsor determines the party failed to 
make out a valid request for redetermination that substantially 
complies with paragraph (a) of this section.
    (3) When the party fails to file the redetermination request within 
the proper filing time frame in accordance with paragraph (b) of this 
section.
    (4) When the enrollee or the enrollee's representative files a 
request for redetermination, but the enrollee dies while the request is 
pending, and both of the following criteria apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) The enrollee's representative, if any, does not wish to pursue 
the request for coverage.
    (5) When a party filing the redetermination request submits a 
timely request for withdrawal of the request for a redetermination with 
the Part D plan sponsor.
    (f) Notice of dismissal. The Part D plan sponsor must mail or 
otherwise transmit a written notice of the dismissal of the 
redetermination request to the parties. The notice must state all of 
the following:
    (1) The reason for the dismissal.
    (2) The right to request that the Part D plan sponsor vacate the 
dismissal action.
    (3) The right to request review of the dismissal by the independent 
entity.
    (g) Vacating a dismissal. If good cause is established, a Part D 
sponsor may vacate its dismissal of a request for redetermination 
within 6 months from the date of the notice of dismissal.
    (h) Effect of dismissal. The dismissal of a request for 
redetermination is binding unless the enrollee or other party requests 
review by the IRE or the decision is vacated under paragraph (g) of 
this section.

0
68. Section 423.584 is amended by adding paragraph (f) to read as 
follows:


Sec.  423.584  Expediting certain redeterminations.

* * * * *
    (f) Dismissing a request. The Part D plan sponsor dismisses an 
expedited redetermination in accordance with Sec.  423.582.

0
69. Section 423.590 is amended by adding paragraphs (i) and (j) to read 
as follows:


Sec.  423.590  Timeframes and responsibility for making 
redeterminations.

* * * * *
    (i) Automatic forwarding of redeterminations made under a drug 
management program. If on redetermination the plan sponsor affirms, in 
whole or in part, its denial related to an at-risk determination under 
a drug management program in accordance with Sec.  423.153(f), the Part 
D plan sponsor must forward the case to the IRE contracted with CMS 
within 24 hours of the expiration of the applicable adjudication 
timeframe under paragraph (a)(2), (b)(2), or (d)(1) of this section.
    (j) Requests for review of a dismissal by the independent entity. 
If the Part D plan sponsor dismisses a request for a reconsideration in 
accordance with Sec.  423.582(e) or Sec.  423.584(f), the enrollee or 
other proper party has the right to request review of the dismissal by 
the independent entity. A request for review of a dismissal must be 
filed in writing with the independent entity within 60 calendar days 
from the date of the Part D plan sponsor's dismissal notice.

0
70. Section 423.600 is amended by--
0
a. Revising paragraph (b); and
0
b. Adding paragraphs (f) through (k).
    The revision and additions read as follows:


Sec.  423.600  Reconsideration by an independent review entity (IRE).

* * * * *
    (b) When an enrollee, or an enrollee's prescribing physician or 
other prescriber (acting on behalf of the enrollee), files an appeal or 
a determination is forwarded to the IRE by a Part D plan sponsor, the 
IRE is required to solicit the views of the prescribing physician or 
other prescriber.
    (1) The IRE may solicit the views of the prescribing physician or 
other prescriber orally or in writing.
    (2) A written account of the prescribing physician's or other 
prescriber's views (prepared by either the prescribing physician, other 
prescriber, or IRE, as appropriate) must be contained in the IRE 
record.
* * * * *
    (f) The party who files a request for reconsideration may withdraw 
it by filing a request with the IRE.
    (g) The independent entity dismisses a reconsideration request, 
either entirely or as to any stated issue, under any of the following 
circumstances:
    (1) When the person or entity requesting a reconsideration is not a

[[Page 6121]]

proper party under paragraph (a) of this section.
    (2) When the IRE determines the party failed to make out a valid 
request for reconsideration that substantially complies with paragraph 
(a) of this section.
    (3) When the party fails to file the reconsideration request within 
the proper filing time frame in accordance with paragraph (a) of this 
section.
    (4) When an enrollee or the enrollee's representative files a 
request for reconsideration, but the enrollee dies while the request is 
pending, and both of the following criteria apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) The enrollee's representative, if any, does not wish to 
continue the appeal.
    (5) When a party filing the reconsideration request submits a 
timely request for withdrawal of the request for a reconsideration with 
the IRE.
    (h) The IRE mails or otherwise transmits a written notice of the 
dismissal of the reconsideration request to the parties. The notice 
must state all of the following:
    (1) The reason for the dismissal.
    (2) That there is a right to request that the IRE vacate the 
dismissal action.
    (3) The right to a review of the dismissal in accordance with Sec.  
423.2004.
    (i) If good cause is established, the IRE may vacate its dismissal 
of a request for redetermination within 6 months from the date of the 
notice of dismissal.
    (j) An enrollee has a right to have an IRE's dismissal reconsidered 
in accordance with Sec.  423.2004.
    (k) If the IRE determines that the Part D plan sponsor's dismissal 
was in error, the IRE vacates the dismissal and remands the case to the 
Part D plan sponsor for reconsideration consistent with Sec.  423.590. 
The IRE's decision regarding an Part D plan sponsor's dismissal, 
including a decision to deny a request for review of a dismissal, is 
binding and not subject to further review.

0
71. Section 423.760 is amended by--
0
a. Redesignating paragraphs (b)(3) and (4) as paragraphs (b)(4) and 
(5); and
0
b. Adding a new paragraph (b)(3).
    The addition reads as follows:


Sec.  423.760   Determinations regarding the amount of civil money 
penalties and assessments imposed by CMS.

* * * * *
    (b) * * *
    (3) CMS calculates the minimum penalty amounts under paragraphs 
(b)(1) and (2) of this section using the following criteria:
    (i) Definitions for calculating penalty amounts--(A) Per 
determination. The penalty amounts calculated under paragraph (b)(1) of 
this section.
    (B) Per enrollee. The penalty amounts calculated under paragraph 
(b)(2) of this section.
    (C) Standard minimum penalty. The per enrollee or per determination 
amount that is dependent on the type of adverse impact that occurred.
    (D) Aggravating factor(s). Specific penalty amounts that may 
increase the per enrollee or per determination standard minimum penalty 
and are determined based on criteria under paragraph (a) of this 
section.
    (E) Cost-of-living multiplier. The percent change between each 
year's published October consumer price index for all urban consumers 
(United States city average), which is released by the Office of 
Management and Budget (OMB) annually.
    (ii) Calculation of penalty amounts. (A) Per determination and per 
enrollee penalty amounts are increased by multiplying the current 
standard minimum penalty and aggravating factor amounts by the cost-of-
living multiplier.
    (B) The minimum penalty and aggravating factor amounts will be 
updated no more often than every 3 years.
    (C) CMS tracks the calculation and accrual of the standard minimum 
penalty and aggravating factor amounts and announce them on an annual 
basis.
* * * * *

0
72. Section 423.2006 is amended by redesignating paragraphs (c)(1) and 
(2) as paragraphs (c)(2) and (3) and adding a new paragraph (c)(1) to 
read as follows:


Sec.  423.2006  Amount in controversy required for an ALJ hearing and 
judicial review.

* * * * *
    (c) * * *
    (1) The amount remaining in controversy is computed as the 
projected value described in paragraph (c)(2) or (3) of this section, 
reduced by any cost sharing amounts, including deductible, coinsurance, 
or copayment amounts that may be collected from the enrollee for the 
Part D drug(s).
* * * * *


Sec.  423.2014  [Amended]

0
73. Section 423.2014 is amended in paragraph (a)(1)(ii) by removing the 
phrase ``appointed representative'' and adding in its place the phrase 
``representative''.


Sec.  423.2036  [Amended]

0
74. Section 423.2036 is amended in paragraphs (c) and (d) by removing 
the phrase ``appointed representative'' and adding in its place the 
phrase ``representative'' each time it appears.

0
75. Section 423.2260 is revised to read as follows:


Sec.  423.2260  Definitions.

    The definitions in this section apply for this subpart unless the 
context indicates otherwise.
    Advertisement (Ad) means a read, written, visual, oral, watched, or 
heard bid for, or call to attention. Advertisements can be considered 
communication or marketing based on the intent and content of the 
message.
    Alternate format means used to convey information to individuals 
with visual, speech, physical, hearing, and intellectual disabilities 
(for example, braille, large print, audio).
    Banner means a type of advertisement feature typically used in 
television ads that is intended to be brief, and flashes limited 
information across a screen for the sole purpose of enticing a 
prospective enrollee to contact the Part D sponsor (for example, obtain 
more information) or to alert the viewer that information is 
forthcoming.
    Banner-like advertisement is an advertisement that uses a banner-
like feature, that is typically found in some media other than 
television (for example, outdoors and on the internet).
    Communications means activities and use of materials created or 
administered by the Part D sponsor or any downstream entity to provide 
information to current and prospective enrollees. Marketing is a subset 
of communications.
    Marketing means communications materials and activities that meet 
both the following standards for intent and content:
    (1) Intended, as determined under paragraph (1)(ii) of this 
definition, to do any of the following:
    (i)(A) Draw a beneficiary's attention to a Part D plan or plans.
    (B) Influence a beneficiary's decision making process when making a 
Part D plan selection.
    (C) Influence a beneficiary's decision to stay enrolled in a Part D 
plan (that is, retention-based marketing).
    (ii) In evaluating the intent of an activity or material, CMS will 
consider objective information including, but not limited to, the 
audience of the activity or material, other information communicated by 
the activity or material, timing, and other context of the activity or 
material and is not

[[Page 6122]]

limited to the Part D sponsor's stated intent.
    (2) Include or address content regarding any of the following:
    (i) The plan's benefits, benefits structure, premiums or cost 
sharing.
    (ii) Measuring or ranking standards (for example, Star Ratings or 
plan comparisons).
    Outdoor advertising (ODA) means outdoor material intended to 
capture the attention of a passing audience (for example, billboards, 
signs attached to transportation vehicles). ODA may be a communication 
or marketing material.

0
76. Section 423.2261 is added to read as follows:


Sec.  423.2261  Submission, review, and distribution of materials.

    (a) General requirements. Part D sponsors must submit all marketing 
materials, all election forms, and certain designated communications 
materials for CMS review.
    (1) The Health Plan Management System (HPMS) Marketing Module is 
the primary system of record for the collection, review, and storage of 
materials that must be submitted for review.
    (2) Materials must be submitted to the HPMS Marketing Module by the 
Part D sponsor.
    (3) Unless specified by CMS, third party and downstream entities 
are not permitted to submit materials directly to CMS.
    (b) CMS review of marketing materials and election forms. Part D 
sponsors may not distribute or otherwise make available any marketing 
materials or election forms unless one of the following occurs:
    (1) CMS has reviewed and approved the material.
    (2) The material has been deemed approved; that is, CMS has not 
rendered a disposition for the material within 45 days (or 10 days if 
using CMS model or standardized marketing materials as outlined in 
Sec.  422.2267(e) of this chapter) of submission to CMS.
    (3) The material has been accepted under File and Use, as follows:
    (i) The Part D sponsor may distribute certain types of marketing 
materials, designated by CMS based on the material's content, audience, 
and intended use, as they apply to potential risk to the beneficiary, 5 
days following the submission.
    (ii) The Part D sponsor must certify that the material meets all 
applicable CMS communications and marketing requirements in Sec. Sec.  
423.2260 through 423.2267.
    (c) CMS review of non-marketing communications materials. CMS does 
not require submission, or submission and approval, of communications 
materials prior to use, other than the following exceptions.
    (1) Certain designated communications materials that are critical 
to beneficiaries understanding or accessing their benefits (for 
example, the Evidence of Coverage (EOC).
    (2) Communications materials that, based on feedback such as 
complaints or data gathered through reviews, warrant additional 
oversight as determined by CMS, to ensure the information being 
received by beneficiaries is accurate.
    (d) Standards for CMS review. CMS reviews materials to ensure the 
following:
    (1) Compliance with all applicable requirements under Sec. Sec.  
423.2260 through 423.2267.
    (2) Benefit and cost information is an accurate reflection of what 
is contained in the Part D sponsor's bid.
    (3) CMS may determine, upon review of such materials, that the 
materials must be modified, or may no longer be used.

0
77. Section 423.2262 is revised to read as follows:


Sec.  423.2262  General communications materials and activity 
requirements.

    Part D sponsors may not mislead, confuse, or provide materially 
inaccurate information to current or potential enrollees.
    (a) General rules. Part D sponsors must ensure their statements and 
the terminology used in communications activities and materials adhere 
to the following requirements:
    (1) Part D sponsors may not do any of the following:
    (i) Provide information that is inaccurate or misleading.
    (ii) Make unsubstantiated statements except when used in logos or 
taglines.
    (iii) Engage in activities that could mislead or confuse Medicare 
beneficiaries, or misrepresent the Part D sponsor.
    (iv) Engage in any discriminatory activity such as attempting to 
recruit Medicare beneficiaries from higher income areas without making 
comparable efforts to enroll Medicare beneficiaries from lower income 
areas, or vice versa.
    (v) Target potential enrollees based on higher or lower income 
levels.
    (vi) Target potential enrollees based on health status.
    (vii) State or imply plans are only available to seniors rather 
than to all Medicare beneficiaries.
    (viii) Employ Part D plan names that suggest that a plan is not 
available to all Medicare beneficiaries.
    (ix) Display the names or logos or both of co-branded network 
pharmacies on the sponsor's member identification card, unless the 
pharmacy names or logos or both are related to the member selection of 
specific pharmacies.
    (x) Use a plan name that does not include the plan type. The plan 
type should be included at the end of the plan name, for example, 
``Super Medicare Drug Plan (PDP)''. Part D sponsors are not required to 
repeat the plan type when the plan name is used multiple times in the 
same material.
    (xi) Claim they are recommended or endorsed by CMS, Medicare, the 
Secretary, or HHS.
    (xii) Convey that a failure to pay premium will not result in 
disenrollment except for factually accurate descriptions of the PDP 
sponsor's policies adopted in accordance with Sec.  423.44(b)(1) and 
(d)(1) of this chapter.
    (xiii) Use the term ``free'' to describe a $0 premium, any type of 
reduction in premium, reduction in deductibles or cost sharing, low-
income subsidy, or cost sharing pertaining to dual eligible 
individuals.
    (xiv) State or imply a plan is available only to or is designed for 
Medicaid beneficiaries.
    (xv) Market a Part D plan not designed to serve dual eligible 
beneficiaries as if it were a plan designed to serve dual eligible 
beneficiaries.
    (xvi) Target marketing efforts primarily to dual eligible 
individuals.
    (xvii) Claim a relationship with the state Medicaid agency, unless 
a contract to coordinate Medicaid services for enrollees in that plan 
is in place.
    (2) Part D sponsors may do the following:
    (i) State that the Part D sponsor is approved to participate in 
Medicare programs or is contracted to administer Medicare benefits or 
both.
    (ii) Use the term ``Medicare-approved'' to describe benefits or 
services in materials or both.
    (b) Product endorsements and testimonials. (1) Product endorsements 
and testimonials may take any of the following forms:
    (i) Television or video ads.
    (ii) Radio ads.
    (iii) Print ads.
    (iv) Social media ads. In cases of social media, the use of a 
previous post, whether or not associated with or originated by the Part 
D sponsor, is considered a product endorsement or testimonial.
    (v) Other types of ads.
    (2) Part D sponsors may use individuals to endorse the Part D 
sponsor's product provided the

[[Page 6123]]

endorsement or testimonial adheres to the following requirements:
    (i) The speaker must identify the Part D sponsor's product or 
company by name.
    (ii) Medicare beneficiaries endorsing or promoting the Part D 
sponsor must have been an enrollee at the time the endorsement or 
testimonial was created.
    (iii) The endorsement or testimonial must clearly state that the 
individual was paid for the endorsement or testimonial, if applicable.
    (iv) If an individual is used (for example, an actor) to portray a 
real or fictitious situation, the advertisement must state that it is 
an actor portrayal.
    (c) Requirements when including certain telephone numbers in 
materials. (1) Part D sponsors must adhere to the following 
requirements for including certain telephone numbers in materials:
    (i) When a Part D sponsor includes its customer service number, the 
hours of operation must be prominently included at least once.
    (ii) When a Part D sponsor includes its customer service number, it 
must provide a toll-free TTY number in conjunction with the customer 
service number in the same font size.
    (iii) On every material where 1-800-MEDICARE or Medicare TTY 
appears, the Part D sponsor must prominently include, at least once, 
the hours and days of operation for 1-800-MEDICARE (that is, 24 hours a 
day/7 days a week).
    (2) The following advertisement types are exempt from these 
requirements:
    (i) Outdoor advertising.
    (ii) Banners or banner-like ads.
    (iii) Radio advertisements and sponsorships.
    (d) Standardized material identification (SMID). (1) Part D 
sponsors must use a standardized method of identification for oversight 
and tracking of materials received by beneficiaries.
    (2) The SMID consists of the following three parts:
    (i) The Part D sponsor's contract or Multi-Contract Entity (MCE) 
number, (that is, ``S'' for PDPs, or ``Y'' for MCE, a means of 
identification available for Plans/Part D sponsors that have multiple 
PDP contracts) followed by an underscore, except that the SMID for 
multi-plan marketing materials must begin with the word ``MULTI-PLAN'' 
instead of the Part D sponsor's contract number (for example, 
S1234_abc123_C or MULTI-PLAN_efg456_M).
    (ii) A series of alpha numeric characters (at the Part D sponsor's 
discretion) unique to the material followed by an underscore.
    (iii) An uppercase ``C'' for communication materials or an 
uppercase ``M'' for marketing materials (for example, S1234_abc123_C or 
S5678_efg456_M).
    (3) The SMID is required on all materials except the following:
    (i) Membership ID card.
    (ii) Envelopes, radio ads, outdoor advertisements, banners, banner-
like ads, and social media comments and posts.
    (iii) OMB-approved forms/documents, except those materials 
specified in Sec.  423.2267.
    (iv) Corporate notices or forms (that is, not Part D-specific) 
meeting the definition of communications such as privacy notices and 
authorization to disclose protected health information (PHI).
    (v) Agent-developed communications materials that are not 
marketing.
    (4) Non-English and alternate format materials, based on previously 
created materials, may have the same SMID as the material on which they 
are based.

0
78. Section 423.2263 is added to read as follows.


Sec.  423.2263  General marketing requirements.

    Marketing is a subset of communications and therefore must follow 
the requirements outlined in Sec.  423.2262 as well as this section. 
Marketing (as defined in Sec.  423.2260) must additionally meet the 
following requirements:
    (a) Part D sponsors may begin marketing prospective plan year 
offerings on October 1 of each year for the following contract year. 
Part D sponsors may market the current and prospective year 
simultaneously provided materials clearly indicate what year is being 
discussed.
    (b) In marketing, Part D sponsors may not do any of the following:
    (1) Provide cash or other monetary rebates as an inducement for 
enrollment or otherwise.
    (2) Offer gifts to beneficiaries, unless the gifts are of nominal 
value (as governed by guidance published by the HHS OIG), are offered 
to similarly situated beneficiaries without regard to whether or not 
the beneficiary enrolls, and are not in the form of cash or other 
monetary rebates.
    (3) Provide meals to potential enrollees regardless of value.
    (4) Market non-health care related products to prospective 
enrollees during any Part D sales activity or presentation. This is 
considered cross-selling and is prohibited.
    (5) Compare their plan to other plans, unless the information is 
accurate, not misleading, and can be supported by the Part D sponsor 
making the comparison.
    (6) Display the names or logos or both of pharmacy co-branding 
partners on marketing materials, unless the materials clearly indicate 
via a disclaimer or in the body that ``Other pharmacies are available 
in the network.''
    (7) Knowingly target or send unsolicited marketing materials to any 
Part D enrollee during the Open Enrollment Period (OEP).
    (i) During the OEP, a Part D sponsors may do any of the following:
    (A) Conduct marketing activities that focus on other enrollment 
opportunities, including but not limited to marketing to age-ins (who 
have not yet made an enrollment decision), marketing by 5-star plans 
regarding their continuous enrollment special election period (SEP), 
and marketing to dual-eligible and LIS beneficiaries who, in general, 
may make changes once per calendar quarter during the first nine months 
of the year;
    (B) Send marketing materials when a beneficiary makes a proactive 
request;
    (C) At the beneficiary's request, have one-on-one meetings with a 
sales agent;
    (D) At the beneficiary's request, provide information on the OEP 
through the call center; and
    (E) Include educational information, excluding marketing, on the 
Part D sponsor's website about the existence of OEP.
    (ii) During the OEP, a Part D sponsors may not:
    (A) Send unsolicited materials advertising the ability or 
opportunity to make an additional enrollment change or referencing the 
OEP;
    (B) Specifically target beneficiaries who are in the OEP because 
they made a choice during Annual Enrollment Period (AEP) by purchase of 
mailing lists or other means of identification;
    (C) Engage in or promote agent or broker activities that intend to 
target the OEP as an opportunity to make further sales; or
    (D) Call or otherwise contact former enrollees who have selected a 
new plan during the AEP.
    (c) The following requirements apply to how Part D sponsors must 
display CMS-issued Star Ratings:
    (1) References to individual Star Rating measure(s) must also 
include references to the overall Star Rating for MA-PDs and the 
summary rating for PDP plans.
    (2) May not use an individual underlying category, domain, or 
measure rating to imply overall higher Star Ratings.
    (3) Must be clear that the rating is out of 5 stars.
    (4) Must clearly identify the Star Ratings contract year.

[[Page 6124]]

    (5) May only market the Star Ratings in the service area(s) for 
which the Star Rating is applicable unless using Star Ratings to convey 
overall Part D sponsor performance (for example, ``Plan X has achieved 
4.5 stars in Montgomery, Chester, and Delaware Counties), in which case 
the Part D sponsor must do so in a way that is not confusing or 
misleading.
    (6) The following requirements apply to all 5 Star PDP contracts:
    (i) May not market the 5-star special enrollment period, as defined 
in Sec.  423.38(c)(20), after November 30 of each year if the contract 
has not received an overall 5 star for the next contract year.
    (ii) May use CMS' 5- star icon or may create their own icon.
    (7) The following requirements apply to all Low Performing MA 
contracts:
    (i) The Low Performing Icon must be included on all materials about 
or referencing the specific contract's Star Ratings.
    (ii) Must state the Low Performing Icon means that the Part D 
sponsor's contract received a summary rating of 2.5 stars or below in 
Part D for the last 3 years.
    (iii) May not attempt to refute or minimize Low Performing Status.

0
79. Section 423.2264 is revised to read as follows:


Sec.  423.2264  Beneficiary contact.

    For the purpose of this section, beneficiary contact means any 
outreach activities to a beneficiary or a beneficiary's caregivers by 
the Part D sponsor or its agents and brokers.
    (a) Unsolicited contact. Subject to the rules for contact for plan 
business in paragraph (b) of this section, the following rules apply 
when materials or activities are given or supplied to a beneficiary or 
their caregiver without prior request:
    (1) Part D sponsors may make unsolicited direct contact by 
conventional mail and other print media (for example, advertisements 
and direct mail) or email (provided every email contains an opt-out 
option).
    (2) Part D sponsors may not do any of the following if unsolicited:
    (i) Use door to door solicitation, including leaving information of 
any kind, except that information may be left when an appointment is 
pre-scheduled but the beneficiary is not home.
    (ii) Approach enrollees in common areas such as parking lots, 
hallways, lobbies.
    (iii) Send direct messages from social media platforms.
    (iv) Use telephone solicitation (that is, cold calling), robocalls, 
text messages, or voicemail messages, including, but not limited to, 
the following:
    (A) Calls based on referrals.
    (B) Calls to former enrollees who have disenrolled or those in the 
process of disenrolling, except to conduct disenrollment surveys for 
quality improvement purposes.
    (C) Calls to beneficiaries who attended a sales event, unless the 
beneficiary gave express permission to be contacted.
    (D) Calls to prospective enrollees to confirm receipt of mailed 
information.
    (3) Calls are not considered unsolicited if the beneficiary 
provides consent or initiates contact with the plan. For example, 
returning phone calls or calling an individual who has completed a 
business reply card requesting contact is not considered unsolicited.
    (b) Contact for plan business. Part D sponsors may contact current, 
and to a more limited extent, former members, including those enrolled 
in other products offered by the parent organization, to discuss plan 
business, in accordance with the following requirements:
    (1) A Part D sponsor may conduct the following activities as plan 
business:
    (i) Call current enrollees, including those in non-Medicare 
products, to discuss Medicare products. Examples of such calls include, 
but are not limited to the following:
    (A) Enrollees aging into Medicare from commercial products.
    (B) Existing enrollees, including Medicaid enrollees, to discuss 
other Medicare products or plan benefits.
    (C) Members in an MA or cost plan to discuss other Medicare 
products.
    (ii) Call beneficiaries who submit enrollment applications to 
conduct business related to enrollment.
    (iii) With prior CMS approval, call LIS enrollees that a plan is 
prospectively losing due to reassignment. CMS decisions to approve 
calls are for limited circumstances based on the following:
    (A) The proximity of cost of the losing plan as compared to the 
national benchmark; and
    (B) The selection of plans in the service area that are below the 
benchmark.
    (iv) Agents/brokers calling clients who are enrolled in other 
products they may sell, such as automotive or home insurance.
    (v) Part D sponsors may not make unsolicited calls about other 
lines of business as a means of generating leads for Medicare plans.
    (2) When reaching out to a beneficiary regarding plan business, as 
outlined in this section, Part D sponsor must offer the beneficiary the 
ability to opt out of future calls regarding plan business.
    (c) Events with beneficiaries. Part D sponsors and their agent or 
brokers may hold educational events, marketing or sales events, and 
personal marketing appointments to meet with Medicare beneficiaries, 
either face-to-face or virtually. The requirements for each type of 
event are as follows:
    (1) Educational events must be advertised as such and be designed 
to generally inform beneficiaries about Medicare, including Medicare 
Advantage, Prescription Drug programs, or any other Medicare program.
    (i) At educational events, Part D sponsors and agents/brokers may 
not market specific Part D sponsors or benefits.
    (ii) Part D sponsors holding or participating in educational events 
may do any of the following:
    (A) Distribute communication materials.
    (B) Answer beneficiary initiated questions pertaining to Part D 
plans.
    (C) Set up future personal marketing appointments.
    (D) Distribute business cards.
    (E) Obtain beneficiary contact information, including Scope of 
Appointment forms.
    (iii) Part D sponsors holding or participating in educational 
events may not conduct sales or marketing presentations or distribute 
or accept plan applications.
    (iv) Part D sponsors may schedule appointments with residents of 
long-term care facilities (for example, nursing homes, assisted living 
facilities, board and care homes) upon a resident's request. If a 
resident did not request an appointment, any visit by an agent or 
broker is prohibited as unsolicited door-to-door marketing.
    (2) Marketing or sales events are group events that fall within the 
definition of marketing at Sec.  423.2260.
    (i) If a marketing event directly follows an educational event, the 
beneficiary must be made aware of the change and given the opportunity 
to leave prior to the marketing event beginning.
    (ii) Part D sponsors holding or participating in marketing events 
may do any of the following:
    (A) Provide marketing materials.
    (B) Distribute and accept plan applications.
    (C) Collect Scope of Appointment forms for future personal 
marketing appointments.
    (D) Conduct marketing presentations.
    (iii) Part D sponsors holding or participating in marketing events 
may not do any of the following:

[[Page 6125]]

    (A) Require sign in sheets or require attendees to provide contact 
information as a prerequisite for attending an event.
    (B) Conduct activities, including health screenings, health 
surveys, or other activities that are used for or could be viewed as 
being used to target a subset of members (that is ``cherry-picking'').
    (C) Use information collected for raffles or drawings for any 
purpose other than raffles or drawings.
    (3) Personal marketing appointments are those appointments that are 
tailored to an individual or small group (for example, a married 
couple). Personal marketing appointments are not defined by the 
location.
    (i) Prior to the personal marketing appointment beginning, the Part 
D sponsor (or the agent or broker, as applicable) must agree upon and 
record the Scope of Appointment with the beneficiary(ies).
    (ii) Part D sponsors holding a personal marketing appointment may 
do any of the following:
    (A) Provide marketing materials.
    (B) Distribute and accept plan applications.
    (C) Conduct marketing presentations.
    (D) Review the individual needs of the beneficiary including, but 
not limited to, health care needs and history, commonly used 
medications, and financial concerns.
    (iii) Part D sponsors holding a personal marketing appointment may 
not do any of the following:
    (A) Market any health care related product during a marketing 
appointment beyond the scope agreed upon by the beneficiary, and 
documented by the plan, prior to the appointment.
    (B) Market additional health related lines of plan business not 
identified prior to an individual appointment without a separate scope 
of appointment identifying the additional lines of business to be 
discussed.
    (C) Market non-health related products such as annuities.

0
80. Section 423.2265 is added to read as follows:


Sec.  423.2265   Websites.

    As required under Sec.  423.128(d)(2), Part D sponsors must have a 
website.
    (a) General website requirements. (1) Part D sponsor websites must 
meet all of the following requirements:
    (i) Maintain current year contract content through December 31 of 
each year.
    (ii) Notify users when they will leave the Part D sponsor's 
Medicare site.
    (iii) Include or provide access to (for example, through a 
hyperlink) applicable notices, statements, disclosures, or disclaimers 
with corresponding content. Overarching disclaimers, such as the 
Federal Contracting Statement, are not required on every page.
    (iv) Reflect the most current information within 30 days of any 
material change
    (v) Keep PDP content separate and distinct from other lines of 
business, including Medicare Supplemental Plans.
    (2) Part D sponsor websites may not do any of the following:
    (i) Require beneficiaries to enter any information other than zip 
code, county, or state for access to non-beneficiary-specific website 
content.
    (ii) Provide links to foreign drug sales, including advertising 
links.
    (iii) State that the Part D sponsor is not responsible for the 
content of their social media pages or the website of any first tier, 
downstream, or related entity that provides information on behalf of 
the Part D sponsor.
    (b) Required content. A Part D sponsor's websites must include the 
following content:
    (1) A toll-free customer service number, TTY number, and days and 
hours of operation.
    (2) A physical or Post Office Box address.
    (3) A PDF or copy of a printable pharmacy directory.
    (4) A searchable pharmacy directory.
    (5) A searchable formulary.
    (6) Information on enrollees' and Part D sponsors' rights and 
responsibilities upon disenrollment. Part D sponsors may either post 
this information or provide specific information on where it is located 
in the Evidence of Coverage together with a link to that document.
    (7) A description of and information on how to file a grievance, 
request an organization determination, and an appeal.
    (8) Prominently displayed link to the Medicare.gov electronic 
complaint.
    (9) A Notice of Privacy Practices as required under the HIPAA 
Privacy Rule (45 CFR 164.520).
    (10) Prescription Drug Transition Policy.
    (11) LIS Premium Summary Chart.
    (12) Prescription Drug Transition Policy.
    (13) A separate section or page about MTM programs providing the 
following:
    (i) Explanation of MTM program, including eligibility requirements, 
the purpose and benefits of MTM, how to obtain MTM service documents 
including the Medication list, that the service is free, and a summary 
of services.
    (ii) Information on how to obtain information about the MTM 
program, including how the member will know they are eligible and 
enrolled into the MTM program, the comprehensive medication review and 
targeted medication reviews, a description of how reviews are conducted 
and delivered, including time commitments and materials beneficiaries 
will receive.
    (c) Required posted materials. A Part D sponsor's website must 
provide access to the following materials, in a printable format, 
within the timeframes specified in paragraphs (c)(1) and (2) of this 
section.
    (1) The following materials for each plan year must be posted on 
the website by October 15 prior to the beginning of the plan year:
    (i) Evidence of Coverage.
    (ii) Annual Notice of Change (for renewing plans).
    (iii) Summary of Benefits.
    (iv) Pharmacy Directory.
    (v) Formulary.
    (vi) Utilization Management Forms for physicians and enrollees.
    (2) The following materials must be posted on the website 
throughout the year and be updated as required:
    (i) Prior Authorization Forms for Physicians and Enrollees.
    (ii) Part D Model Coverage Determination and Redetermination 
Request Forms.
    (iii) Exception request forms for physicians (which must be posted 
by January 1 for new plans).
    (iv) CMS Star Ratings document, which must be posted within 21 days 
after its release on the Medicare Plan Finder.

0
81. Section 423.2266 is added to read as follows:


Sec.  423.2266  Activities with healthcare providers or in the 
healthcare setting.

    (a) Where marketing is prohibited. The requirements in paragraphs 
(c) through (e) of this section apply to activities in the health care 
setting. Marketing activities and materials are not permitted in areas 
where care is being administered, including but not limited to the 
following:
    (1) Exam rooms.
    (2) Hospital patient rooms.
    (3) Treatment areas where patients interact with a provider and 
his/her clinical team and receive treatment (including such areas in 
dialysis treatment facilities).
    (4) Pharmacy counter areas.
    (b) Where marketing is permitted. Marketing activities and 
materials are permitted in common areas within the health care setting, 
including the following:

[[Page 6126]]

    (1) Common entryways.
    (2) Vestibules.
    (3) Waiting rooms.
    (4) Hospital or nursing home cafeterias.
    (5) Community, recreational, or conference rooms.
    (c) Provider-initiated activities. Provider-initiated activities 
are activities conducted by a provider at the request of the patient, 
or as a matter of a course of treatment, and occur when meeting with 
the patient as part of the professional relationship between the 
provider and patient. Provider-initiated activities do not include 
activities conducted at the request of the Part D sponsor or pursuant 
to the network participation agreement between the Part D sponsor and 
the provider. Provider-initiated activities that meet this definition 
in this paragraph (c) fall outside of the definition of marketing in 
Sec.  423.2260. Permissible provider-initiated activities include:
    (1) Distributing unaltered, printed materials created by CMS, such 
as reports from Medicare Plan Finder, the ``Medicare & You'' handbook, 
or ``Medicare Options Compare'' (from https://www.medicare.gov) 
including in areas where care is delivered.
    (2) Providing the names of Part D sponsors with which they contract 
or participate or both.
    (3) Answering questions or discussing the merits of a Part D plan 
or plans, including cost sharing and benefit information including in 
areas where care is delivered.
    (4) Referring patients to other sources of information, such as 
State Health Insurance Assistance Program (SHIP) representatives, plan 
marketing representatives, State Medicaid Office, local Social Security 
Offices, CMS' website at https://www.medicare.gov, or 1-800-MEDICARE.
    (5) Referring patients to Part D marketing materials available in 
common areas.
    (6) Providing information and assistance in applying for the LIS.
    (7) Announcing new or continuing affiliations with Part D sponsors, 
once a contractual agreement is signed. Announcements may be made 
through any means of distribution.
    (d) Plan-initiated provider activities. Plan-initiated provider 
activities are those activities conducted by a provider at the request 
of a Part D sponsor. During a plan-initiated provider activity, the 
provider is acting on behalf of the Part D sponsor. For the purpose of 
plan-initiated activities, the Part D sponsor is responsible for 
compliance with all applicable regulatory requirements.
    (1) During plan-initiated provider activities, Part D sponsors must 
ensure that the provider does not:
    (i) Accept/collect scope of appointment forms.
    (ii) Accept Medicare enrollment applications.
    (iii) Make phone calls or direct, urge, or attempt to persuade 
their patients to enroll in a specific plan based on financial or any 
other interests of the provider.
    (iv) Mail marketing materials on behalf of a Part D sponsor.
    (v) Offer inducements to persuade patients to enroll with a 
particular Part D plan or sponsor.
    (vi) Conduct health screenings as a marketing activity.
    (vii) Distribute marketing materials or enrollment forms in areas 
where care is being delivered.
    (viii) Offer anything of value to induce enrollees to select the 
provider.
    (ix) Accept compensation from the Part D sponsor for any marketing 
or enrollment activities performed on behalf of the Part D sponsor.
    (2) During plan-initiated provider activities, the provider may do 
any of the following:
    (i) Make available, distribute, and display communications 
materials, including in areas where care is being delivered.
    (ii) Provide or make available marketing materials and enrollment 
forms in common areas.
    (e) Part D sponsor activities in the healthcare setting. Part D 
sponsor activities in the health care setting are those activities, 
including marketing activities that are conducted by Part D sponsor or 
on behalf of the Part D sponsor, or by any downstream entity, but not 
by a provider. All marketing must comply with the requirements in 
paragraphs (a) and (b) of this section. However, during Part D sponsor 
activities, the following is permitted:
    (1) Accepting and collect Scope of Appointment forms.
    (2) Accepting enrollment forms.
    (3) Making available, distributing, and displaying communications 
materials, including in areas where care is being delivered.

0
82. Section 423.2267 is added to read as follows:


Sec.  423.2267  Required materials and content.

    For information CMS deems to be vital to the beneficiary, including 
information related to enrollment, benefits, health, and rights, the 
agency may develop materials or content that are either standardized or 
provided in a model form. Such materials and content are collectively 
referred to as required.
    (a) Standards for required materials and content. All required 
materials and content, regardless of categorization as standardized in 
paragraph (b) of this section or model in paragraph (c) of this 
section, must meet the following:
    (1) Be in a 12pt font, Times New Roman or equivalent.
    (2) For markets with a significant non-English speaking population, 
be in the language of these individuals. Specifically, Part D sponsors 
must translate required materials into any non-English language that is 
the primary language of at least 5 percent of the individuals in a plan 
benefit package (PBP) service area.
    (3) Be provided to the beneficiary within CMS's specified 
timeframes.
    (b) Standardized materials. Standardized materials and content are 
required materials and content that must be used in the form and manner 
provided by CMS.
    (1) When CMS issues standardized material or content, a Part D 
sponsor must use the document without alteration except for the 
following:
    (i) Populating variable fields.
    (ii) Correcting grammatical errors.
    (iii) Adding customer service phone numbers.
    (iv) Adding plan name, logo, or both.
    (v) Deleting content that does not pertain to the plan type (for 
example, removing MA language for a Part D plan).
    (vi) Adding the SMID.
    (vii) A Notice of Privacy Practices as required under the HIPAA 
Privacy Rule (45 CFR 164.520).
    (2) When CMS issues standardized content, Part D sponsors--
    (3) The Part D sponsor may develop accompanying language for 
standardized material or content, provided that language does not 
conflict with the standardized material or content. For example, CMS 
may issue standardized content associated with an appeal notification 
and Part D sponsor may draft a letter that includes the standardized 
content in the body of the letter; the remaining language in the letter 
is at the sponsor's discretion, provided it does not conflict with the 
standardized content or other regulatory standards.
    (c) Model materials. Model materials and content are those required 
materials and content created by CMS as an example of how to convey 
beneficiary information. When drafting required materials or content 
based on CMS models, Part D sponsors:
    (1) Must accurately convey the vital information in the required 
material or content to the beneficiary, although the Part D sponsor is 
not required to use

[[Page 6127]]

CMS model materials or content verbatim; and
    (2) Must follow CMS's specified order of content, when specified.
    (d) Delivery of required materials. Part D sponsors must mail 
required materials in hard copy or provide them electronically, 
following the requirements in paragraphs (d)(1) and (2) of this 
section.
    (1) For hard copy mailed materials, each enrollee must receive his 
or her own copy, except in cases of non-beneficiary-specific 
material(s) where the Part D sponsor has determined multiple enrollees 
are living in the same household and it has reason to believe the 
enrollees are related. In that case, the Part D sponsor may mail one 
copy to the household. The Part D sponsor must provide all enrollees an 
opt-out process so the enrollees can each receive his or her own copy, 
instead of a copy to the household. Materials specific to an individual 
beneficiary must always be mailed to that individual.
    (2) Materials may be delivered electronically following the 
requirements in paragraphs (d)(2)(i) and (ii) of this section.
    (i) Without prior authorization from the enrollee, Part D sponsors 
may mail new and current enrollees a notice informing enrollees how to 
electronically access the following required materials: the Evidence of 
Coverage, Provider and Pharmacy Directories, and Formulary. The 
following requirements apply:
    (A) The Part D sponsor may mail one notice for all materials or 
multiple notices.
    (B) Notices for prospective year materials may not be mailed prior 
to September 1 of each year, but must be sent in time for an enrollee 
to access the specified materials by October 15 of each year.
    (C) The Part D sponsor may send the notice throughout the year to 
new enrollees.
    (D) The notice must include the website address to access the 
materials, the date the materials will be available if not currently 
available, and a phone number to request that hard copy materials be 
mailed.
    (E) The notice must provide the enrollee with the option to request 
hardcopy materials. Requests may be material specific, and must have 
the option of a one-time request or a permanent request that must stay 
in place until the enrollee chooses to receive electronic materials 
again.
    (F) Hard copies of requested materials must be sent within three 
business days of the request.
    (ii) With prior authorization from the enrollee, the Part D sponsor 
may provide any required material or content electronically. To do so, 
the Part D sponsor must do all of the following:
    (A) Obtain prior consent from the enrollee. The consent must 
specify both the media type and the specific materials being provided 
in that media type.
    (B) Provide instructions on how and when enrollees can access the 
materials.
    (C) Have a process through which an enrollee can request hard 
copies be mailed, providing the beneficiary with the option of a one-
time request or a permanent request (which must stay in place until the 
enrollee chooses to receive electronic materials again), and with the 
option of requesting hard copies for all or a subset of materials. Hard 
copies must be mailed within three business days of the request.
    (D) Have a process for automatic mailing of hard copies when 
electronic versions or the chosen media type is undeliverable.
    (e) CMS required materials and content. The following are required 
materials that must be provided to current and prospective enrollees, 
as applicable, in the form and manner outlined in this section. Unless 
otherwise noted or instructed by CMS and subject to Sec.  423.2263(a) 
of this chapter, required materials may be sent once a fully executed 
contract is in place, but no later than the due dates listed for each 
material in this section.
    (1) Evidence of Coverage (EOC). The EOC is a standardized 
communications material through which certain required information 
(under Sec.  423.128(b)) must be provided annually and must be 
provided:
    (i) To current enrollees of plan by October 15, prior to the year 
to which the EOC applies.
    (ii) To new enrollees within 10 calendar days from receipt of CMS 
confirmation of enrollment or by last day of month prior to effective 
date, whichever is later.
    (2) Part D explanation of benefits (EOB). The EOB is a model 
communications material through which plans must provide the 
information required under Sec.  423.128(e). Part D sponsors must 
provide enrollees with an EOB no later than the end of the month 
following any month in which the enrollee utilized their prescription 
drug benefit.
    (3) Annual Notice of Change (ANOC). The ANOC is a standardized 
marketing material through which plans must provide the information 
required under Sec.  423.128(g)(2) annually.
    (i) Must send for enrollee receipt no later than September 30 of 
each year.
    (ii) Enrollees with an October 1, November 1, or December 1 
effective date must receive within 10 calendar days from receipt of CMS 
confirmation of enrollment or by last day of month prior to effective 
date, whichever is later.
    (4) Pre-Enrollment Checklist (PECL). The PECL is a standardized 
communications material that plans must provide to prospective 
enrollees with the enrollment form so that the enrollees understand 
important plan benefits and rules. The PECL references information on 
the following:
    (i) The EOC.
    (ii) Provider directory.
    (iii) Pharmacy directory.
    (iv) Formulary.
    (v) Premiums/copayments/coinsurance.
    (vi) Emergency/urgent coverage.
    (vii) Plan-type rules.
    (5) Summary of Benefits (SB). Part D sponsors must disseminate a 
summary of highly utilized coverage that include benefits and cost 
sharing to prospective enrollees, known as the SB. The SB is a model 
marketing material. It must be in a clear and accurate format.
    (i) The SB must be provided with an enrollment form as follows:
    (A) In hardcopy with a paper enrollment form.
    (B) For online enrollment, the SB must be made available 
electronically (for example, via a link) prior to the completion and 
submission of enrollment request.
    (C) For telephonic enrollment, the beneficiary must be verbally 
told where the SB can be accessed.
    (ii) The SB must include the following information:
    (A) Information on prescription drug expenses, including:
    (1) Monthly plan premium
    (2) Deductible, the initial coverage phase, coverage gap, and 
catastrophic coverage.
    (3) A statement that costs may differ based on pharmacy type or 
status (for example, preferred/non-preferred, mail order, long-term 
care (LTC) or home infusion, and 30- or 90-day supply), when 
applicable.
    (4) For dual eligible enrollees with differing levels of cost must 
state how cost sharing and benefits differ depending on the level of 
Medicaid eligibility.
    (B) Plan sponsors may describe or identify other health related 
benefits in the SB.
    (6) Enrollment/Election form. This is the model communications 
material through which plans must provide the information required 
under Sec.  423.32(b).

[[Page 6128]]

    (7) Enrollment Notice. This is a model communications material 
through which plans must provide the information required under Sec.  
423.32(d).
    (8) Disenrollment Notice. This is a model communications material 
through which plans must provide the information required under Sec.  
423.36(b)(2).
    (9) Formulary. This is a model communications material through 
which Part D sponsors must provide information required under Sec.  
423.128(b)(4).
    (i) Must be provided to current enrollees of plan by October 15 of 
each year.
    (ii) Must also provide to new enrollees within 10 calendar days 
from receipt of CMS confirmation of enrollment or by last day of month 
prior to effective date, whichever is later.
    (10) Low Income Subsidy (LIS) Notice. This is a model 
communications content through which Part D sponsors must notify 
potential enrollees of what their plan premium will be once they are 
eligible for Extra Help and receive the low-income subsidy.
    (11) Low Income Subsidy (LIS) Rider. This is a model communications 
material provided to all enrollees who qualify for Extra Help. In the 
LIS Rider, the Part D sponsors must convey how much help the 
beneficiary will receive in the benefit year toward their Part D 
premium, deductible, and copayments provide to all beneficiaries who 
qualify for Extra Help.
    (i) The LIS Rider must be provided at least once per year by 
September 30.
    (ii) The LIS Rider must be sent to enrollees who qualify for Extra 
Help or have a change in LIS levels within 30 days of receiving 
notification from CMS.
    (12) Midyear Change Notification. This is a model communications 
material through which plans must provide a notice to enrollees when 
there is a midyear change in benefits or plan rules, under the 
following timelines:
    (i) Notices of changes in plan rules, unless otherwise addressed 
elsewhere in the regulation, must be provided 30 days in advance.
    (ii) National Coverage Determination (NCD) changes announced or 
finalized less than 30 days before effective date, a notification is 
required as soon as possible.
    (iii) Midyear NCD or legislative changes must be provided no later 
than 30 days after the NCD is announced or the legislative change is 
effective.
    (A) Plans may include the change in next plan mass mailing (for 
example, newsletter), provided it is within 30 days.
    (B) The notice must also appear on the MA organization's website.
    (13) Non-renewal Notice. This is a model communications material 
through which plans must provide the information required under Sec.  
423.507.
    (i) The Non-renewal Notice must be provided at least 90 calendar 
days before the date on which the nonrenewal is effective. For 
contracts ending on December 31, the notice must be dated October 2 to 
ensure national consistency in the application of Medigap Guaranteed 
Issue (GI) rights to all enrollees, except for those enrollees in 
Medicare-Medicaid Plans (MMPs) and special needs plans (SNPs). 
Information about non-renewals or service area reductions may not be 
released to the public, including the Non-renewal Notice in this 
section, until CMS provides notification to the plan.
    (ii) The Non-renewal Notice must do all of the following:
    (A) Inform the enrollee that the plan will no longer be offered and 
the date the plan will end.
    (B) Provide information about any applicable open enrollment 
periods or special election periods or both (for example, Medicare open 
enrollment, non-renewal special election period), including the last 
day the enrollee has to make a Medicare prescription drug plan 
selection.
    (C) Explain what the enrollee must do to continue receiving 
Medicare coverage and what will happen if the enrollee chooses to do 
nothing.
    (D) As required under Sec.  423.507(a)(2)(ii)(A), provide a CMS-
approved written description of alternative MA plan, MA-PD plan, and 
PDP options available for obtaining qualified Medicare services within 
the beneficiary's region in the enrollee's notice.
    (E) Specify when coverage will start after a new Medicare plan is 
chosen.
    (F) List 1-800-MEDICARE contact information together with other 
organizations that may be able to assist with comparing plans (for 
example, SHIPs).
    (H) Include the Part D sponsor's call center telephone number, TTY 
number, and hours and days of operation.
    (14) Part D Transition Letter. This is a model communications 
material that must be provided to the beneficiary when they receive a 
transition fill for a nonformulary drug. The Part D Transition Letter 
must be sent within three days of adjudication of temporary transition 
fill.
    (15) Pharmacy Directory. This is a model communications material 
through which Part D sponsors must provide the information required 
under Sec.  423.128. The pharmacy directory must meet all of the 
following:
    (i) Be provided to current enrollees by October 15 of the year 
prior to the applicable year.
    (ii) Be provided to new enrollees within 10 calendars days from 
receipt of CMS confirmation of enrollment or by last day of month prior 
to effective date, whichever is later.
    (iii) Be provided to current enrollees upon request, within three 
business days of the request.
    (iv) Be updated any time the Part D sponsor becomes aware of 
changes.
    (A) All updates to the online pharmacy directories must be 
completed within 30 days of receiving information requiring update.
    (B)(1) Updates to hardcopy provider directories must be completed 
within 30 days.
    (2) Hardcopy directories that include separate updates via addenda 
are considered up-to-date.
    (16) Prescription transfer letter. This is a model communications 
material that must be sent when a Part D sponsor requests permission 
from an enrollee to fill a prescription at a different network pharmacy 
than the one currently being used by enrollee.
    (17) Star Ratings Document. This is a standardized marketing 
material through which Star Ratings information is conveyed to 
prospective enrollees.
    (i) The Star Ratings Document is generated through HPMS.
    (ii) The Star Ratings Document must be provided with an enrollment 
form as follows:
    (A) In hardcopy with a paper enrollment form.
    (B) For online enrollment, made available electronically (for 
example, via a link) prior to the completion and submission of 
enrollment request.
    (C) For telephonic enrollment, the beneficiary must be verbally 
told where they can access the Star Ratings Document.
    (iii) New Part D sponsors that have no Star Ratings are not 
required to provide the Star Ratings Document until the following 
contract year.
    (iv) Updated Star Ratings must be used within 21 calendar days of 
release of updated information on Medicare Plan Finder.
    (v) Updated Star Ratings must not be used until CMS releases Star 
Ratings on Medicare Plan Finder.
    (18) Coverage Determination Notices. This is a model communications 
material through which plans must provide the information under Sec.  
423.568.
    (19) Excluded Provider Notices. This is a model communications 
material

[[Page 6129]]

through which plans must notify enrollees when a provider they use has 
been excluded from participating in the Medicare program based on an 
OIG exclusion or the CMS preclusion list.
    (20) Notice of Denial of Medicare Prescription Drug Coverage. This 
is a standardized material used to convey detailed descriptions of 
denied drug coverage and appeal rights.
    (21) Medicare Prescription Drug Coverage and Your Rights. This is a 
standardized communications material used to convey a beneficiary's 
appeal rights when a drug cannot be filled at point-of-sale.
    (22) Medicare Part D Coverage Determination Request Form. This is a 
model communications material used to collect additional information 
from a prescriber.
    (23) Request for Additional Information. This is a standardized 
communications material used by the Part D sponsor to request a 
beneficiary obtain additional information from the prescriber regarding 
a beneficiary's exception request.
    (24) Notice of Right to an Expedited Grievance. This is a model 
communications material used to convey a Medicare beneficiary's rights 
to request that a decision be made on a grievance or appeal within a 
shorter timeframe.
    (25) Notice of Inquiry. This is a model communications material 
from a prescription drug plan informing a beneficiary if a drug is 
covered by the formulary.
    (26) Notice of Case Status. This is a model communications material 
used to inform a beneficiary of the denial of an appeal and additional 
appeal rights.
    (27) Request for Reconsideration of Medicare Prescription Drug 
Denial. This is a model communications material used to inform the 
beneficiary of rights to an independent review of a Part D sponsor's 
decision.
    (28) Notice of Redetermination. This is a model communications 
material used to convey instructions for requesting an appeal of an 
adverse coverage determination.
    (29) LEP Reconsideration Request Form. This is a model 
communication used to request an appeal of a decision on an LEP by the 
independent review entity.
    (30) Request for Administrative Law Judge (ALJ) Hearing or Review 
of Dismissal. This is a model communication used by an enrollee to 
request a hearing by the ALJ or a review of the IRE dismissal.
    (31) Appointment of Representative (AOR). This is a standardized 
material used to assign an individual to act on behalf of a beneficiary 
for the purpose of an appeal, grievance, or coverage determination.
    (32) Federal Contracting Statement. This is model content through 
which plans must convey that they have a contract with Medicare and 
that enrollment in the plan depends on contract renewal.
    (i) The Federal Contracting Statement must include all of the 
following:
    (A) Legal or marketing name of the organization.
    (B) Type of plan (for example PDP).
    (C) A statement that the organization has a contract with Medicare 
(when applicable, Part D sponsors may incorporate a statement that the 
organization has a contract with the State/Medicaid program).
    (D) A statement that enrollment depends on contract renewal.
    (ii) Part D sponsors must include the Federal Contracting Statement 
on all marketing materials with the exception of the following:
    (A) Banner and banner-like advertisements.
    (B) Outdoor advertisements.
    (C) Text messages.
    (D) Social media.
    (E) Envelopes
    (33) Star Ratings Disclaimer. This is model content through which 
plans must:
    (i) Convey that plan sponsors are evaluated yearly by Medicare
    (ii) Convey that the ratings are based on a 5-star rating system
    (iii) Include the model content in disclaimer form or within the 
material whenever Star Ratings are mentioned in marketing materials, 
with the exception of when Star Ratings are published on small objects 
(that is, a give-away items such as a pens or rulers).
    (34) Accommodations Disclaimer. This is model content through which 
plans must:
    (i) Convey that accommodations for persons with special needs is 
available
    (ii) Provide a telephone number and TTY number
    (iii) Include the model content in disclaimer form or within the 
body of the material on any advertisement of invitation to all events 
as described under Sec.  423.2264(c).
    (35) Mailing Statements. This is standardized content. It consists 
of statements on envelopes that Part D sponsor must include when 
mailing information to current members, as follows:
    (i) Part D sponsors must include the following statement when 
mailing information about the enrollee's current plan: ``Important 
[Insert Plan Name] information.''
    (ii) Part D sponsors must include the following statement when 
mailing health and wellness information ``Health and wellness or 
prevention information.''
    (iii) The Part D sponsor must include the plan name; however, if 
the plan name is elsewhere on the envelope, the plan name does not need 
to be repeated in the disclaimer.
    (iv) Delegated or sub-contracted entities and downstream entities 
that conduct mailings on behalf of a multiple Part D sponsors must also 
comply with this requirement, however, they do not have to include a 
plan name.
    (36) Promotional Give-Away Disclaimer. This is model content. The 
disclaimer consists of a statement that must make clear that there is 
no obligation to enroll in a plan, and must be included when offering a 
promotional give-away such as a drawing, prizes, or a free gift.
    (37) Provider Co-Branded Material Disclaimer. This is model content 
through which Part D sponsors must:
    (i) Convey, as applicable, that other pharmacies, physicians or 
providers are available in the plan's network.
    (ii) Include the model content in disclaimer form or within the 
material whenever co-branding relationships with network provider are 
mentioned.


Sec.  423.2268  [Removed]

0
83. Section 423.2268 is removed.

0
84. Section 423.2274 is revised to read as follows:


Sec.  423.2274  Agent, broker, and other third party requirements.

    If a Part D sponsor uses agents and brokers to sell its Medicare 
Part D plans, the requirements in paragraphs (a) through (e) of this 
section are applicable. If a Part D sponsor makes payments to third 
parties, the requirements in paragraph (f) of this section are 
applicable.
    (a) Definitions. For purposes of this section, the following 
definitions are applicable:
    Compensation. (i) Includes monetary or non-monetary remuneration of 
any kind relating to the sale or renewal of a plan or product offered 
by a Part D sponsor including, but not limited to the following:
    (A) Commissions.
    (B) Bonuses.
    (C) Gifts.
    (D) Prizes or Awards.
    (ii) Does not include any of the following:
    (A) Payment of fees to comply with State appointment laws, 
training, certification, and testing costs.
    (B) Reimbursement for mileage to, and from, appointments with 
beneficiaries.

[[Page 6130]]

    (C) Reimbursement for actual costs associated with beneficiary 
sales appointments such as venue rent, snacks, and materials.
    Fair market value (FMV) means, for purposes of evaluating agent/
broker compensation under the requirements of this section only, the 
amount that CMS determines could reasonably be expected to be paid for 
an enrollment or continued enrollment into a Part D plan. Beginning 
January 1, 2021, the FMV is $81. For subsequent years, FMV is 
calculated by adding the current year FMV and the product of the 
current year FMV and the Annual Percentage Increase for Part D, which 
is published for each year in the rate announcement issued pursuant to 
Sec.  422.312 of this chapter.
    Initial enrollment year means the first year that a beneficiary is 
enrolled in a plan versus subsequent years (c.f., renewal year) that a 
beneficiary remains enrolled in a plan.
    Like plan type means one of the following:
    (i) PDP replaced with another PDP.
    (ii) MA or MA-PD replaced with another MA or MA-PD.
    (iii) Cost plan replaced with another cost plan.
    Plan year and enrollment year mean the year beginning January 1 and 
ending December 31.
    Renewal year means all years following the initial enrollment year 
in the same plan or in different plan that is a like plan type.
    Unlike plan type means one of the following:
    (i) An MA or MA-PD plan to a PDP or Section 1876 Cost Plan.
    (ii) A PDP to a Section 1876 Cost Plan or an MA or MA-PD plan.
    (iii) A Section 1876 Cost Plan to an MA or MA-PD plan or PDP.
    (b) Agent/broker requirements. Agents and brokers who represent 
Part D sponsors must follow the requirements in paragraphs (b)(1) 
through (3) of this section. Representation includes selling products 
(including Medicare Advantage plans, Medicare Advantage-Prescription 
Drug plans, Medicare Prescription Drug plans, and section 1876 Cost 
plans) as well as outreach to existing or potential beneficiaries and 
answering or potentially answering questions from existing or potential 
beneficiaries.
    (1) Be licensed and appointed under State law (if required under 
applicable State law).
    (2) Be trained and tested annually as required under paragraph 
(c)(4) of this section, and achieve an 85 percent or higher on all 
forms of testing.
    (3) Secure and document a Scope of Appointment prior to meeting 
with potential enrollees.
    (c) Part D sponsor oversight. Part D sponsors must oversee first 
tier, downstream, and related entities that represent Part D sponsor to 
ensure agents and brokers abide by all applicable State and Federal 
laws, regulations, and requirements. Part D sponsors must do all of the 
following:
    (1) As required under applicable State law, employ as marketing 
representatives only individuals who are licensed by the State to 
conduct marketing (as defined in this subpart) of health insurance in 
that State, and whom the Part D sponsor has informed that State it has 
appointed, consistent with the appointment process for agents and 
brokers provided for under State law.
    (2) As required under applicable State law, report the termination 
of an agent or broker to the State and the reason for termination if 
required by state law.
    (3) Report to CMS all enrollments made by unlicensed agents or 
brokers and for-cause terminations of agents or brokers.
    (4) On an annual basis, provide training and testing to agents and 
brokers on Medicare rules and regulations, the plan products that 
agents and brokers will sell including any details specific to each 
plan product, and relevant State and Federal requirements.
    (5) On an annual basis by the last Friday in July, report to CMS 
whether the Part D sponsor intends to use employed, captive, or 
independent agents or brokers in the upcoming plan year and the 
specific rates or range of rates the plan will pay independent agents 
and brokers. Following the reporting deadline, Part D sponsor may not 
change their decisions related to agent or broker type, or their 
compensation rates and ranges, until the next plan year.
    (6) On an annual basis by October 1, have in place full 
compensation structures for the following plan year. The structure must 
include details on compensation dissemination, including specifying 
payment amounts for initial enrollment year and renewal year 
compensation.
    (7) Submit agent or broker marketing materials to CMS through HPMS 
prior to use, following the requirements for marketing materials in 
this subpart.
    (8) Ensure beneficiaries are not charged marketing consulting fees 
when considering enrollment in Part D plans.
    (9) Establish and maintain a system for confirming that:
    (i) Beneficiaries enrolled by agents or brokers understand the 
product, including the rules applicable under the plan.
    (ii) Agents and brokers appropriately complete Scope of Appointment 
records for all marketing appointments (including telephonic and walk-
in).
    (10) Demonstrate that marketing resources are allocated to 
marketing to the disabled Medicare population as well as to Medicare 
beneficiaries age 65 and over.
    (11) Must comply with State requests for information about the 
performance of a licensed agent or broker as part of a state 
investigation into the individual's conduct. CMS will establish and 
maintain a memorandum of understanding (MOU) to share compliance and 
oversight information with States that agree to the MOU.
    (d) Compensation requirements. Part D sponsors must ensure they 
meet the requirements in paragraphs (d)(1) through (5) of this section 
in order to pay compensation. These compensation requirements only 
apply to independent agents and brokers.
    (1) General rules. (i) MA organizations may only pay agents or 
brokers who meet the requirements in paragraph (b) of this section.
    (ii) Part D sponsors may determine, through their contracts, the 
amount of compensation to be paid, provided it does not exceed 
limitations outlined in this section.
    (iii) Part D sponsors may determine their payment schedule (for 
example, monthly or quarterly). Payments (including payments for AEP 
enrollments) must be made during the year of the beneficiary's 
enrollment.
    (iv) Part D sponsors may only pay compensation for the number of 
months a member is enrolled.
    (2) Initial enrollment year compensation. For each enrollment in an 
initial enrollment year, Part D sponsors may pay compensation at or 
below FMV.
    (i) Part D sponsors may pay either a full or pro-rated initial 
enrollment year compensation for:
    (A) A beneficiary's first year of enrollment in any plan; or
    (B) A beneficiary's move from an employer group plan to a non-
employer group plan (either within the same parent organization or 
between parent organizations).
    (ii) Part D sponsors must pay pro-rated initial enrollment year 
compensation for:
    (A) A beneficiary's plan change(s) during their initial enrollment 
year.
    (B) A beneficiary's selection of an ``unlike plan type'' change. In 
that case,

[[Page 6131]]

the new plan would only pay the months that the beneficiary is 
enrolled, and the previous plan would recoup the months that the 
beneficiary was not in the plan.
    (3) Renewal compensation. For each enrollment in a renewal year, 
Part D sponsors may pay compensation at an amount up to 50 percent of 
FMV.
    (i) Part D sponsors may pay compensation for a renewal year:
    (A) In any year following the initial enrollment year the 
beneficiary remains in the same plan; or
    (B) When a beneficiary enrolls in a new ``like plan type''.
    (ii) [Reserved]
    (4) Other compensation scenarios. (i) When a beneficiary enrolls in 
a PDP, the Part D sponsor may pay only the PDP compensation (and not 
compensation for MA enrollment under Sec.  422.2274 of this chapter).
    (ii) When a beneficiary enrolls in both a section 1876 Cost Plan 
and a stand-alone PDP, the 1876 Cost Plan sponsor may pay compensation 
for the cost plan enrollment and the Part D sponsor must pay 
compensation for the Part D enrollment.
    (iii) When a beneficiary enrolls in a MA-only plan and a PDP, the 
MA plan may pay for the MA plan enrollment and the Part D sponsor may 
pay for the PDP enrollment.
    (5) Additional compensation, payment, and compensation recovery 
requirements (Charge-backs). (i) Part D sponsors must retroactively pay 
or recoup funds for retroactive beneficiary changes for the current and 
previous calendar years. Part D sponsors may choose to recoup or pay 
compensation for years prior to the previous calendar year, but they 
must do both (recoup amounts owed and pay amounts due) during the same 
year.
    (ii) Compensation recovery is required when:
    (A) A beneficiary makes any plan change (regardless of the parent 
organization) within the first three months of enrollment (known as 
rapid disenrollment), except as provided in paragraph (d)(5)(iii) of 
this section.
    (B) Any other time period a beneficiary is not enrolled in a plan, 
but the plan paid compensation based on that time period.
    (iii) Rapid disenrollment compensation recovery does not apply 
when:
    (A) A beneficiary enrolls effective October 1, November 1, or 
December 1 and subsequently uses the Annual Election Period to change 
plans for an effective date of January 1.
    (B) A beneficiary's enrollment change is not in the best interests 
of the Medicare program, including for the following reasons:
    (1) Other creditable coverage (for example, an employer plan).
    (2) Moving into or out of an institution.
    (3) Gain or loss of employer/union sponsored coverage.
    (4) Plan termination, non-renewal, or CMS imposed sanction.
    (5) To coordinate with Part D enrollment periods or the State 
Pharmaceutical Assistance Program.
    (6) Becoming LIS or dually eligible for Medicare and Medicaid.
    (7) Qualifying for another plan based on special needs.
    (8) Due to an auto, facilitated, or passive enrollment.
    (9) Death.
    (10) Moving out of the service area.
    (11) Non-payment of premium.
    (12) Loss of entitlement or retroactive notice of entitlement.
    (13) Moving into a 5-star plan.
    (14) Moving from an LPI plan into a plan with three or more stars.
    (iv)(A) When rapid disenrollment compensation recovery applies, the 
entire compensation must be recovered.
    (B) For other compensation recovery, plans must recover a pro-rated 
amount of compensation (whether paid for an initial enrollment year or 
renewal year) from an agent or broker equal to the number of months not 
enrolled.
    (1) If a plan has paid full initial compensation, and the enrollee 
disenrolls prior to the end of the enrollment year, the total number of 
months not enrolled (including months prior to the effective date of 
enrollment) must be recovered from the agent or broker.
    (2) Example: A beneficiary enrolls upon turning 65 effective April 
1 and disenrolls September 30 of the same year. The plan paid full 
initial enrollment year compensation. Recovery is equal to 6/12ths of 
the initial enrollment year compensation (for January through March and 
October through December).
    (e) Payments other than compensation (administrative payments). (1) 
Payments made for services other than enrollment of beneficiaries (for 
example, training, customer service, agent recruitment, operational 
overhead, or assistance with completion of health risk assessments) 
must not exceed the value of those services in the marketplace.
    (2) Administrative payments can be based on enrollment provided 
payments are at or below the value of those services in the 
marketplace.
    (f) Payments for referrals. Payments may be made to individuals for 
the referral (including a recommendation, provision, or other means of 
referring beneficiaries), recommendation, provision, or other means of 
referring beneficiaries to an agent, broker or other entity for 
potential enrollment into a plan. The payment may not exceed $100 for a 
referral into an MA or MA-PD plan and $25 for a referral into a PDP 
plan.

0
85. Section 423.2305 is amended by revising the definition for 
``Applicable discount'' to read as follows.


Sec.  423.2305  Definitions.

* * * * *
    Applicable discount means 50 percent or, with respect to a plan 
year after plan year 2018, 70 percent of the portion of the negotiated 
price (as defined in this section) of the applicable drug of a 
manufacturer that falls within the coverage gap and that remains after 
such negotiated price is reduced by any supplemental benefits that are 
available.
* * * * *

PART 455--PROGRAM INTEGRITY: MEDICAID

0
86. The authority citation for part 455 continues to read as follows:

    Authority: 42 U.S.C. 1302.

0
87. Section 455.2 is amended by--
0
a. In the definition of ``Credible allegation of fraud,'' revising 
paragraph (1); and
0
b. Adding the definition of ``Fraud hotline tip'' in alphabetical 
order.
    The revision and addition read as follows:


Sec.  455.2  Definitions.

* * * * *
    Credible allegation of fraud. * * *
    (1) Fraud hotline tips verified by further evidence.
* * * * *
    Fraud hotline tip. A fraud hotline tip is a complaint or other 
communications that are submitted through a fraud reporting phone 
number or a website intended for the same purpose, such as the Federal 
Government's HHS OIG Hotline or a health plan's fraud hotline.
* * * * *

PART 460--PROGRAMS OF ALL-INCLUSIVE CARE FOR THE ELDERLY (PACE)

0
88. The authority citation for part 460 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1395, 1395eee(f), and 1396u-4(f).


0
89. Section 460.6 is amended by revising the definition of ``Services'' 
to read as follows:

[[Page 6132]]

Sec.  460.6  Definitions.

* * * * *
    Service, as used in this part, means all services that could be 
required under Sec.  460.92, including items and drugs.
* * * * *

0
90. Section 460.56 is added to subpart D to read as follows:


Sec.  460.56  Procedures for imposing sanctions and civil money 
penalties.

    CMS provides notice and a right to request a hearing according to 
the procedures set forth in either of the following:
    (a) Section 422.756(a) and (b) of this chapter if CMS imposes a 
suspension of enrollment or payment under Sec.  460.42 or Sec.  
460.48(b).
    (b) Section 422.756(e)(2)(v) of this chapter if CMS imposes civil 
money penalties under Sec.  460.46.

0
91. Section 460.92 is revised to read as follows:


Sec.  460.92   Required services.

    (a) The PACE benefit package for all participants, regardless of 
the source of payment, must include the following:
    (1) All Medicare-covered services.
    (2) All Medicaid-covered services, as specified in the State's 
approved Medicaid plan.
    (3) Other services determined necessary by the interdisciplinary 
team to improve and maintain the participant's overall health status.
    (b) Decisions by the interdisciplinary team to provide or deny 
services under paragraph (a) of this section must be based on an 
evaluation of the participant that takes into account:
    (1) The participant's current medical, physical, emotional, and 
social needs; and
    (2) Current clinical practice guidelines and professional standards 
of care applicable to the particular service.


Sec.  460.96   [Amended]

0
92. Section 460.96 is amended by--
0
a. Removing paragraphs (a) and (b); and
0
b. Redesignating paragraphs (c) through (e) as paragraphs (a) through 
(c).

0
93. Section 460.98 is amended by--
0
a. Revising paragraph (a);
0
b. Adding a sentence to the end of paragraph (b)(1); and
0
c. Adding paragraphs (b)(4) and (5).
    The revision and additions read as follows:


Sec.  460.98  Service delivery.

    (a) Access to services. A PACE organization is responsible for 
providing care that meets the needs of each participant across all care 
settings, 24 hours a day, every day of the year, and must establish and 
implement a written plan to ensure that care is appropriately 
furnished.
    (b) * * *
    (1) * * * These services must be furnished in accordance with Sec.  
460.70(a).
* * * * *
    (4) Services must be provided as expeditiously as the participant's 
health condition requires, taking into account the participant's 
medical, physical, emotional, and social needs.
    (5) The PACE organization must document, track and monitor the 
provision of services across all care settings in order to ensure the 
interdisciplinary team remains alert to the participant's medical, 
physical, emotional, and social needs regardless of whether services 
are formally incorporated into the participant's plan of care.
* * * * *

0
94. Section 460.102 is amended by revising paragraphs (d)(1) and 
(d)(2)(ii) to read as follows:


Sec.  460.102  Interdisciplinary team.

* * * * *
    (d) * * *
    (1) The interdisciplinary team is responsible for the following:
    (i) The initial assessment, periodic reassessments, plan of care, 
and coordination of 24-hour care delivery.
    (ii) Documenting all recommendations for care or services and the 
reason(s) for not approving or providing recommended care or services, 
if applicable, in accordance with Sec.  460.210(b).
    (2) * * *
    (ii) Remaining alert to pertinent input from any individual with 
direct knowledge of or contact with the participant, including the 
following:
    (A) Other team members.
    (B) Participants.
    (C) Caregivers.
    (D) Employees.
    (E) Contractors.
    (F) Specialists.
    (G) Designated representatives.
* * * * *

0
95. Section 460.104 is amended by revising paragraph (d)(2) to read as 
follows:


Sec.  460.104  Participant assessment.

* * * * *
    (d) * * *
    (2) In response to a service determination request. In accordance 
with Sec.  460.121(h), the PACE organization must conduct an in-person 
reassessment if it expects to deny or partially deny a service 
determination request, and may conduct reassessments as determined 
necessary for approved services.
* * * * *

0
96. Section 460.112 is amended by--
0
a. Adding paragraph (b)(4);
0
b. Redesignating paragraph (c)(3) as paragraph (c)(5); and
0
c. Adding new paragraphs (c)(3) and (4).
    The additions read as follows:


Sec.  460.112  Specific rights to which a participant is entitled.

* * * * *
    (b) * * *
    (4) To contact 1-800-MEDICARE for information and assistance, 
including to make a complaint related to the quality of care or the 
delivery of a service.
    (c) * * *
    (3) To have reasonable and timely access to specialists as 
indicated by the participant's health condition and consistent with 
current clinical practice guidelines.
    (4) To receive necessary care in all care settings, up to and 
including placement in a long-term care facility when the PACE 
organization can no longer provide the services necessary to maintain 
the participant safely in the community.
* * * * *

0
97. Section 460.121 is added to read as follows:


Sec.  460.121  Service determination process.

    (a) Written procedures. Each PACE organization must have formal 
written procedures for identifying and processing service determination 
requests in accordance with the requirements of this Part.
    (b) What is a service determination request--(1) Requests that 
constitute a service determination request. Except as provided in 
paragraph (b)(2) of this section, the following requests constitute 
service determination requests:
    (i) A request to initiate a service.
    (ii) A request to modify an existing service, including to 
increase, reduce, eliminate, or otherwise change a service.
    (iii) A request to continue coverage of a service that the PACE 
organization is recommending be discontinued or reduced.
    (2) Requests that do not constitute a service determination 
request. Requests to initiate, modify, or continue a service do not 
constitute a service determination request if the request is made prior 
to completing the development of the initial plan of care.
    (c) Who can make a service determination request. Any of the

[[Page 6133]]

following individuals can make a service determination request:
    (1) The participant.
    (2) The participant's designated representative.
    (3) The participant's caregiver.
    (d) Method for making a service determination request. An 
individual may make a service determination request as follows:
    (1) Either orally or in writing.
    (2) To any employee or contractor of the PACE organization that 
provides direct care to a participant in the participant's residence, 
the PACE center, or while transporting participants.
    (e) Processing a service determination request. (1) Except as 
provided in paragraph (e)(2) of this section, the PACE organization 
must bring a service determination request to the interdisciplinary 
team as expeditiously as the participant's condition requires, but no 
later than 3 calendar days from the time the request is made.
    (2) If a member of the interdisciplinary team is able to approve 
the service determination request in full at the time the request is 
made, the PACE organization--
    (i) Must fulfill all of the following:
    (A) Notice of the decision to approve a service determination 
request requirements specified in paragraph (j)(1) of this section.
    (B) Effectuation requirements specified in paragraph (k) of this 
section.
    (C) Recordkeeping requirements specified in paragraph (m) of this 
section.
    (ii) Is not required to process the service determination request 
in accordance with paragraphs (f) through (i), (j)(2), and (l) of this 
section.
    (f) Who must review a service determination request. The full 
interdisciplinary team must review and discuss each service 
determination request and decide to approve, deny, or partially deny 
the request based on that review.
    (g) Interdisciplinary team decision making. The interdisciplinary 
team must consider all relevant information when evaluating a service 
determination request, including, but not limited to, the findings and 
results of any reassessments required in paragraph (h) of this section, 
as well as the criteria specified in Sec.  460.92(b).
    (h) Reassessments in response to a service determination request. 
(1) If the interdisciplinary team expects to deny or partially deny a 
service determination request, the appropriate members of the 
interdisciplinary team, as identified by the interdisciplinary team, 
must conduct an in-person reassessment before the interdisciplinary 
team makes a final decision. The team members performing the 
reassessment must evaluate whether the requested service is necessary 
to meet the participant's medical, physical, emotional, and social 
needs.
    (2) The interdisciplinary team may conduct a reassessment prior to 
approving a service determination request, either in-person or through 
the use of remote technology, if the team determines that a 
reassessment is necessary.
    (i) Notification timeframe. Except as provided in paragraph (i)(1) 
of this section, when the interdisciplinary team receives a service 
determination request, it must make its decision and notify the 
participant or their designated representative of its decision as 
expeditiously as the participant's condition requires, but no later 
than 3 calendar days after the date the interdisciplinary team receives 
the request.
    (1) Extensions. The interdisciplinary team may extend the timeframe 
for review and notification by up to 5 calendar days if either of the 
following occur:
    (i) The participant or other requestor listed in paragraph (c)(2) 
or (3) of this section requests the extension.
    (ii) The extension is in the participant's interest because the 
interdisciplinary team needs additional information from an individual 
not directly employed by the PACE organization that may change the 
interdisciplinary team's decision to deny a service. The 
interdisciplinary team must document the circumstances that led to the 
extension and demonstrate how the extension is in the participant's 
best interest.
    (2) Notice of extension. When the interdisciplinary team extends 
the timeframe, it must notify the participant or their designated 
representative in writing. The notice must explain the reason(s) for 
the delay and must be issued as expeditiously as the participant's 
condition requires, but no later than 24 hours after the IDT decides to 
extend the timeframe.
    (j) Notification requirements--(1) Notice of decisions to approve a 
service determination request. If the interdisciplinary team makes a 
determination to approve a service determination request, it must 
provide the participant or the designated representative either oral or 
written notice of the determination. Notice of any decision to approve 
a service determination request must explain the conditions of the 
approval in understandable language, including when the participant may 
expect to receive the approved service.
    (2) Notice of decisions to deny a service determination request. If 
the interdisciplinary team decides to deny or partially deny a service, 
it must provide the participant or the designated representative both 
oral and written notice of the determination. Notice of any denial 
must--
    (i) State the specific reason(s) for the denial, including why the 
service is not necessary to maintain or improve the participant's 
overall health status, taking into account the participant's medical, 
physical, emotional, and social needs, and the results of the 
reassessment(s) in understandable language.
    (ii) Inform the participant or designated representative of his or 
her right to appeal the decision under Sec.  460.122.
    (iii) Describe the standard and expedited appeals processes, 
including the right to, and conditions for, obtaining expedited 
consideration of an appeal of a denial of services as specified in 
Sec.  460.122.
    (iv) For a Medicaid participant, inform the participant of both of 
the following, as specified in Sec.  460.122(e)(1):
    (A) His or her right to continue receiving disputed services during 
the appeals process until issuance of the final determination.
    (B) The conditions for continuing to receive disputed services.
    (k) Effectuation requirements. If the interdisciplinary team 
approves a service determination request, in whole or in part, the PACE 
organization must provide the approved service as expeditiously as the 
participant's condition requires, taking into account the participant's 
medical, physical, emotional, and social needs. The interdisciplinary 
team must explain when the participant may expect to receive the 
service in accordance with paragraph (j)(1) of this section.
    (l) Effect of failure to meet the processing timeframes. If the 
interdisciplinary team fails to provide the participant with timely 
notice of the resolution of the request or does not furnish the 
services required by the revised plan of care, this failure constitutes 
an adverse decision, and the participant's request must be 
automatically processed by the PACE organization as an appeal in 
accordance with Sec.  460.122.
    (m) Recordkeeping. The PACE organization must establish and 
implement a process to document, track, and maintain records related to 
all

[[Page 6134]]

processing requirements for service determination requests received 
both orally and in writing. These records must be available to the 
interdisciplinary team to ensure that all members remain alert to 
pertinent participant information.

0
98. Section 460.122 is amended by--
0
a. Revising the introductory text and paragraphs (b) and (c)(1), (2), 
and (4);
0
b. Redesignating paragraphs (c)(5) and (6) as paragraphs (c)(6) and 
(7), respectively;
0
c. Adding a new paragraph (c)(5);
0
d. Revising paragraphs (d), (g) and (h);
    The revisions and additions read as follows:


Sec.  460.122  PACE organization's appeals process.

    For purposes of this section, an appeal is a participant's action 
taken with respect to the PACE organization's noncoverage of, or 
nonpayment for, a service including denials, reductions, or termination 
of services. A request to initiate, modify or continue a service must 
first be processed as a service determination request under Sec.  
460.121 before the PACE organization can process an appeal under this 
section.
* * * * *
    (b) Notification of participants. Upon enrollment, at least 
annually thereafter, and whenever the interdisciplinary team denies a 
service determination request or request for payment, the PACE 
organization must give a participant written information on the appeals 
process.
    (c) * * *
    (1) Timely preparation and processing of a written denial of 
coverage or payment as provided in Sec. Sec.  460.121(i) and (m).
    (2) How a participant or their designated representative files an 
appeal, including procedures for accepting oral and written appeal 
requests.
* * * * *
    (4) Review of an appeal by an appropriate third party reviewer or 
committee. An appropriate third party reviewer or member of a review 
committee must be an individual who meets all of the following:
    (i) Appropriately credentialed in the field(s) or discipline(s) 
related to the appeal.
    (ii) An impartial third party who meets both of the following:
    (A) Was not involved in the original action.
    (B) Does not have a stake in the outcome of the appeal.
    (5) The distribution of written or electronic materials to the 
third party reviewer or committee that, at a minimum, explain all of 
the following:
    (i) Services must be provided in a manner consistent with the 
requirements in Sec. Sec.  460.92 and 460.98.
    (ii) The need to make decisions in a manner consistent with how 
determinations under section 1862(a)(1)(A) of the Act are made.
    (iii) The rules in Sec.  460.90(a) that specify that certain 
limitations and conditions applicable to Medicare or Medicaid or both 
benefits do not apply.
* * * * *
    (d) Opportunity to submit evidence. A PACE organization must give 
all parties involved in the appeal a reasonable opportunity to present 
evidence related to the dispute, in person, as well as in writing.
* * * * *
    (g) Notification. A PACE organization must give all parties 
involved in the appeal appropriate written notification of the decision 
to approve or deny the appeal.
    (1) Notice of a favorable decision. Notice of any favorable 
decision must explain the conditions of the approval in understandable 
language.
    (2) Notice of partially or fully adverse decisions. (i) Notice of 
any denial must--
    (A) State the specific reason(s) for the denial;
    (B) Explain the reason(s) why the service would not improve or 
maintain the participant's overall health status;
    (C) Inform the participant of his or her right to appeal the 
decision; and
    (D) Describe the external appeal rights under Sec.  460.124.
    (ii) At the same time the decision is made, the PACE organization 
must also notify the following:
    (A) CMS.
    (B) The State administering agency.
    (h) Actions following a favorable decision. A PACE organization 
must furnish the disputed service as expeditiously as the participant's 
health condition requires if a determination is made in favor of the 
participant on appeal.
* * * * *

0
99. Section 460.124 is revised to read as follows:


Sec.  460.124  Additional appeal rights under Medicare or Medicaid.

    A PACE organization must inform a participant in writing of his or 
her appeal rights under Medicare or Medicaid managed care, or both, 
assist the participant in choosing which to pursue if both are 
applicable, and forward the appeal to the appropriate external entity.
    (a) Appeal rights under Medicare. Medicare participants have the 
right to a reconsideration by an independent review entity.
    (1) A written request for reconsideration must be filed with the 
independent review entity within 60 calendar days from the date of the 
decision by the third party reviewer under Sec.  460.122.
    (2) The independent outside entity must conduct the review as 
expeditiously as the participant's health condition requires but must 
not exceed the deadlines specified in the contract.
    (3) If the independent review entity conducts a reconsideration, 
the parties to the reconsideration are the same parties described in 
Sec.  460.122(c)(2), with the addition of the PACE organization.
    (b) Appeal rights under Medicaid. Medicaid participants have the 
right to a State Fair Hearing as described in part 431, subpart E, of 
this chapter.
    (c) Appeal rights for dual eligible participants. Participants who 
are eligible for both Medicare and Medicaid have the right to external 
review by means of either the Independent Review Entity described in 
paragraph (a) of this section or the State Fair Hearing process 
described in paragraph (b) of this section.

0
100. Section 460.200 is amended by--
0
a. Redesignating paragraphs (b)(1) through (4) as paragraphs (b)(1)(i) 
through (iv), respectively;
0
b. Adding a new paragraph (b)(2); and
0
c. Revising paragraph (d).
    The addition and revision read as follows:


Sec.  460.200  Maintenance of records and reporting of data.

* * * * *
    (b) * * *
    (2) CMS and the State administering agency must be able to obtain, 
examine or retrieve the information specified at paragraph (b)(1) of 
this section, which may include reviewing information at the PACE site 
or remotely. PACE organizations may also be required to upload or 
electronically transmit information, or send hard copies of required 
information by mail.
* * * * *
    (d) Safeguarding data and records. A PACE organization must do all 
of the following:
    (1) Establish written policies and implement procedures to 
safeguard all data, books, and records against loss, destruction, 
unauthorized use, or inappropriate alteration.
    (2) Maintain all written communications received from participants 
or other parties in their

[[Page 6135]]

original form when the communications relate to a participant's care, 
health, or safety in accordance with Sec.  460.210(b)(6).
* * * * *

0
101. Section 460.210 is amended by--
0
a. Redesignating paragraphs (b)(4) through (12) as (b)(7) through (15); 
and
0
b. Adding new paragraphs (b)(4) through (6).
    The additions read as follows:


Sec.  460.210  Medical records.

* * * * *
    (b) * * *
    (4) All recommendations for services made by employees or 
contractors of the PACE organization, including specialists.
    (5) If a service recommended by an employee or contractor of the 
PACE organization, including a specialist, is not approved or provided, 
the reason(s) for not approving or providing that service.
    (6) Original documentation, or an unaltered electronic copy, of any 
written communication the PACE organization receives relating to the 
care, health or safety of a participant, in any format (for example, 
emails, faxes, letters, etc.) and including, but not limited to the 
following:
    (i) Communications from the participant, his or her designated 
representative, a family member, a caregiver, or any other individual 
who provides information pertinent to a participant's health or safety 
or both.
    (ii) Communications from an advocacy or governmental agency such as 
Adult Protective Services.
* * * * *

    Dated: October 29, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: January 6, 2021.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2021-00538 Filed 1-15-21; 8:45 am]
BILLING CODE 4120-01-P