[Federal Register Volume 87, Number 247 (Tuesday, December 27, 2022)]
[Proposed Rules]
[Pages 79452-79749]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-26956]



[[Page 79451]]

Vol. 87

Tuesday,

No. 247

December 27, 2022

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 401, 405, 417, et al.





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Office of the Secretary





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45 CFR Part 170





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Medicare Program; Contract Year 2024 Policy and Technical Changes to 
the Medicare Advantage Program, Medicare Prescription Drug Benefit 
Program, Medicare Cost Plan Program, Medicare Parts A, B, C, and D 
Overpayment Provisions of the Affordable Care Act and Programs of All-
Inclusive Care for the Elderly; Health Information Technology Standards 
and Implementation Specifications; Proposed Rule

  Federal Register / Vol. 87 , No. 247 / Tuesday, December 27, 2022 / 
Proposed Rules  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 401, 405, 417, 422, 423, 455, and 460

Office of the Secretary

45 CFR Part 170

[CMS-4201-P]
RIN 0938-AU96


Medicare Program; Contract Year 2024 Policy and Technical Changes 
to the Medicare Advantage Program, Medicare Prescription Drug Benefit 
Program, Medicare Cost Plan Program, Medicare Parts A, B, C, and D 
Overpayment Provisions of the Affordable Care Act and Programs of All-
Inclusive Care for the Elderly; Health Information Technology Standards 
and Implementation Specifications

AGENCY: Centers for Medicare & Medicaid Services (CMS), Office of the 
National Coordinator for Health Information Technology, Department of 
Health and Human Services (HHS).

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the Medicare Advantage (Part 
C), Medicare Prescription Drug Benefit (Part D), Medicare cost plan, 
and Programs of All-Inclusive Care for the Elderly (PACE) regulations 
to implement changes related to Star Ratings, medication therapy 
management, marketing and communications, health equity, provider 
directories, coverage criteria, prior authorization, passive 
enrollment, network adequacy, identification of overpayments, formulary 
changes, and other programmatic areas. This proposed rule would also 
codify regulations implementing section 118 of Division CC of the 
Consolidated Appropriations Act, 2021, section 11404 of the Inflation 
Reduction Act, and includes a large number of provisions that would 
codify existing sub-regulatory guidance in the Part C, Part D, and PACE 
programs. This proposed rule would also amend the existing regulations 
for Medicare Parts A, B, C, and D regarding the standard for an 
identified overpayment.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on February 13, 
2023.

ADDRESSES: In commenting, please refer to file code CMS-4201-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-4201-P, P.O. Box 8013, 
Baltimore, MD 21244.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid 
Services,Department of Health and Human Services, Attention: CMS-4201-
P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-
1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: 
    Catherine Gardiner, (410) 786-7638--General Questions.
    Katie Parker, (410) 786-0537--Parts A and B Overpayment Provision.
    Carly Medosch, (410) 786-8633--Part C and Cost Plan Issues.
    Lucia Patrone, (410) 786-8621- Part D Issues.
    Nathan Jessen, (608) 520-1837--Part D Issues.
    Kristy Nishimoto, (206) 615-2367--Beneficiary Enrollment and 
Appeals Issues.
    Kelley Ordonio, (410) 786-3453--Parts C and D Payment Issues; Parts 
C and D Overpayment Provisions.
    Hunter Coohill, (720) 853-2804--Enforcement Issues.
    Lauren Brandow, (410) 786-9765--PACE Issues.
    Melissa Seeley, (212) 616-2329--D-SNP Issues.
    Alexander Baker, (202) 260-2048--Health IT Standards.
    [email protected]--Parts C and D Star Ratings 
Issues.

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

I. Executive Summary

A. Purpose

    The primary purpose of this proposed rule is to amend the 
regulations for the Medicare Advantage (Part C), Medicare Cost Plan, 
and Medicare Prescription Drug Benefit (Part D) programs, and Programs 
of All-Inclusive Care for the Elderly (PACE). This proposed rule 
includes a number of new policies that would improve these programs as 
well as codify existing Part C and Part D sub-regulatory guidance. This 
proposed rule would also amend the existing regulations for Medicare 
Parts A, B, C, and D regarding the standard for an identified 
overpayment.
    Additionally, this rule implements certain sections of the 
following Federal laws related to the Parts C and D programs:
     The Inflation Reduction Act (IRA) of 2022.
     The Consolidated Appropriations Act (CAA), 2021.
     The Bipartisan Budget Act (BBA) of 2018.
     The Substance Use-Disorder Prevention that Promotes Opioid 
Recovery and Treatment (SUPPORT) for Patients and Communities Act of 
2018.

B. Summary of the Major Provisions

1. Medicare Advantage/Part C and Part D Prescription Drug Plan Quality 
Rating System (Sec. Sec.  422.162, 422.164, 422.166, 422.260, 423.182, 
423.184, and 423.186)
    In this rule, we are proposing a health equity index (HEI) reward 
for the 2027 Star Ratings to further incentivize Parts C and D plans to 
focus on improving care for enrollees with social risk factors (SRFs); 
as part of this change, we are also proposing to remove the current 
reward factor. This proposal supports CMS efforts to ensure attainment 
of the highest level of health for all people. We are proposing to 
reduce the weight of

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patient experience/complaints and access measures to further align 
efforts with other CMS quality programs and the current CMS Quality 
Strategy, as well as to better balance the contribution of the 
different types of measures in the Star Ratings program. We are also 
proposing to remove the Part C Diabetes Care--Kidney Disease Monitoring 
and the stand-alone Medication Reconciliation Post-discharge measures; 
add the Part C Kidney Health Evaluation for Patients with Diabetes and 
the updated Colorectal Cancer Screening and Care for Older Adults--
Functional Status Assessment measures; add the Part D Concurrent Use of 
Opioids and Benzodiazepines, Polypharmacy Use of Multiple 
Anticholinergic Medications in Older Adults, and Polypharmacy Use of 
Multiple Central Nervous System Active Medications in Older Adults 
measures; and update the Part D Medication Adherence for Diabetes 
Medications, Medication Adherence for Hypertension (RAS Antagonists), 
and Medication Adherence for Cholesterol (Statins) measures. We are 
proposing to remove guardrails (that is, bi-directional caps that 
restrict upward and downward movement of a measure's cut points for the 
current year's measure-level Star Ratings compared to the prior year's 
measure-threshold specific cut points) when determining measure-
specific-thresholds for non-Consumer Assessment of Healthcare Providers 
and Systems (CAHPS) measures; modify the Improvement Measure hold 
harmless policy; add a rule for the removal of Star Ratings measures; 
and remove the 60 percent rule that is part of the adjustment for 
extreme and uncontrollable circumstances (also called the disaster 
adjustment). We are also proposing a series of technical clarifications 
related to the disaster adjustment, Quality Bonus Payment (QBP) appeals 
processes, treatment of ratings for contracts after consolidation, 
weighting of measures with a substantive specification change, and 
addressing the codification error related to use of Tukey outlier 
deletion. These changes would apply (that is, data would be collected 
and performance measured) for the 2024 measurement period and the 2026 
Star Ratings, except for the removal of the Part C Diabetes Care--
Kidney Disease Monitoring measure, which would apply for the 2022 
measurement period and the 2024 Star Ratings; the HEI reward, which 
would include data from the 2024 and 2025 measurement periods and apply 
for the 2027 Star Ratings; and the risk adjustment based on 
sociodemographic status characteristics to the three adherence 
measures, which would be implemented for the 2026 measurement period 
and the 2028 Star Ratings.
2. Medication Therapy Management (MTM) Program (Sec.  423.153)
    Section 1860D-4(c)(2) of the Act requires all Part D sponsors to 
have an MTM program designed to assure, with respect to targeted 
beneficiaries, that covered Part D drugs are appropriately used to 
optimize therapeutic outcomes through improved medication use, and to 
reduce the risk of adverse events, including adverse drug interactions. 
Section 1860D-4(c)(2)(A)(ii) of the Act requires Part D sponsors to 
target those Part D enrollees who have multiple chronic diseases, are 
taking multiple Part D drugs, and are likely to meet a cost threshold 
for covered Part D drugs established by the Secretary. CMS codified the 
MTM targeting criteria at Sec.  423.153(d)(2).
    Part D sponsors currently have significant flexibility in 
establishing their MTM eligibility criteria within the established 
framework. CMS has observed decreasing eligibility rates and near-
universal convergence among Part D sponsors to the most restrictive 
criteria currently permitted. Due to the increasing cost threshold and 
variations in the targeting criteria implemented by sponsors, Part D 
enrollees with more complex drug regimens who would benefit most from 
MTM services are often not eligible. In addition, enrollees with 
equivalent patient profiles may or may not be eligible for MTM 
depending on the criteria their plan requires.
    After an extensive analysis to identify potential disparities in 
MTM program eligibility and access, CMS is proposing changes to the MTM 
targeting criteria at Sec.  423.153(d)(2) to promote consistent, 
equitable, and expanded access to MTM services. The combination of 
proposed changes includes: (1) requiring plan sponsors to target all 
core chronic diseases identified by CMS, codifying the current 9 core 
chronic diseases \1\ in regulation, and adding HIV/AIDS for a total of 
10 core chronic diseases; (2) lowering the maximum number of covered 
Part D drugs a sponsor may require from 8 to 5 drugs and requiring 
sponsors to include all Part D maintenance drugs in their targeting 
criteria; and (3) revising the methodology for calculating the cost 
threshold ($4,935 in 2023) to be commensurate with the average annual 
cost of 5 generic drugs ($1,004 in 2020). The proposed changes would 
reduce eligibility gaps so that more Part D enrollees with complex drug 
regimens at increased risk of medication therapy problems would be 
eligible for MTM services. They would also better align MTM eligibility 
criteria with statutory goals to reduce medication errors and optimize 
therapeutic outcomes for beneficiaries with multiple chronic conditions 
and taking multiple Part D drugs, while maintaining a reasonable cost 
criterion.
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    \1\ The current core chronic diseases are: diabetes*, 
hypertension*, dyslipidemia*, chronic congestive heart failure*, 
Alzheimer's disease, end stage renal disease (ESRD), respiratory 
disease (including asthma*, chronic obstructive pulmonary disease 
(COPD), and other chronic lung disorders), bone disease-arthritis 
(osteoporosis, osteoarthritis, and rheumatoid arthritis), and mental 
health (including depression, schizophrenia, bipolar disorder, and 
other chronic/disabling mental health conditions). Enumerated in 
statute (*).
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    In this rule, we are also proposing to codify longstanding CMS 
guidance that a beneficiary is unable to accept an offer to participate 
in the comprehensive medication review (CMR) only when the beneficiary 
is cognitively impaired and cannot make decisions regarding their 
medical needs. We are also proposing other technical changes to clarify 
that the CMR must include an interactive consultation that is conducted 
in real-time, regardless of whether it is done in person or via 
telehealth.
3. Strengthening Translation and Accessible Format Requirements for 
Medicare Advantage, Part D, and D-SNP Enrollee Marketing and 
Communication Materials (Sec. Sec.  422.2267 and 423.2267)
    Sections Sec. Sec.  422.2267(a)(2) and 423.2267(a)(2) require MA 
organizations, cost plans, and Part D sponsors to translate required 
materials into any non-English language that is the primary language of 
at least 5 percent of individuals in a plan benefit package service 
area. In addition, 45 CFR 92.102(b) requires plans to provide 
appropriate auxiliary aids and services, including interpreters and 
information in alternate formats, to individuals with impaired sensory, 
manual, or speaking skills, where necessary to afford such persons an 
equal opportunity to benefit from the service in question. However, CMS 
has learned from oversight activities, enrollee complaints, and 
stakeholder feedback that enrollees often must make a separate request 
each time they would like a material in an alternate language or need 
auxiliary aids or services.
    In addition, an increasing number of dually eligible individuals 
are enrolled in managed care plans where the same plan covers both 
Medicare and Medicaid services. In some cases, Medicaid standards for 
Medicaid managed care plans require translation of plan materials into 
a language not

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captured by the Medicare Advantage requirements.
    We are proposing to specify in Medicare regulations that MA 
organizations, cost plans, and Part D sponsors must provide materials 
to enrollees on a standing basis in any non-English language that is 
the primary language of at least 5 percent of the individuals in a plan 
benefit package service area or accessible format using auxiliary aids 
and services upon receiving a request for the materials or otherwise 
learning of the enrollee's preferred language and/or need for an 
accessible format using auxiliary aids and services. We are also 
proposing at Sec. Sec.  422.2267(a)(3) and 423.2267(a)(3) to extend 
this requirement to individualized plans of care for special needs 
plans. We are also proposing to require that fully integrated dual 
eligible special needs plans (FIDE SNPs), highly integrated dual 
eligible special needs plans (HIDE SNPs), and applicable integrated 
plans (AIPs) as defined at Sec.  422.561, translate required materials 
into any languages required by the Medicare translation standard at 
Sec.  422.2267(a) plus any additional languages required by the 
Medicaid translation standard as specified through their Medicaid 
capitated contracts.
4. Health Equity in Medicare Advantage (MA) (Sec. Sec.  422.111 and 
422.112)
    CMS is working to achieve policy goals that advance health equity 
across its programs and pursue a comprehensive approach to advancing 
health equity for all, including those who have been historically 
underserved, marginalized, and adversely affected by persistent poverty 
and inequality.\2\ To that end, we are proposing the following 
regulatory updates.
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    \2\ https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/.
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    First, current regulations require MA organizations to ensure that 
services are provided in a culturally competent manner. The regulation 
provides examples of populations that may require consideration 
specific to their needs. In this proposed rule, we propose to further 
clarify the broad application of our policy. Specifically, we propose 
to amend the list of populations to include people: (1) with limited 
English proficiency or reading skills; (2) of ethnic, cultural, racial, 
or religious minorities; (3) with disabilities; (4) who identify as 
lesbian, gay, bisexual, or other diverse sexual orientations; (5) who 
identify as transgender, nonbinary, and other diverse gender 
identities, or people who were born intersex; (6) who live in rural 
areas and other areas with high levels of deprivation; and (7) 
otherwise adversely affected by persistent poverty or inequality.
    Next, CMS currently provides best practices for organizations to 
use in developing their provider directories, including incorporating 
non-English languages spoken by each provider and provider/location 
accessibility for people with physical disabilities. In this rule, we 
propose to codify these best practices by requiring organizations to 
include providers' cultural and linguistic capabilities (including 
American Sign Language, ASL) in their provider directories. If 
finalized, this change would improve the quality and usability of 
provider directories, particularly for non-English speakers, limited 
English proficient individuals, and enrollees who use ASL. We are also 
proposing to require organizations to identify certain providers waived 
to treat patients with medications for opioid use disorder (MOUD) in 
their provider directories.
    In addition, as the use of telehealth becomes more prevalent, there 
is evidence of disparities in telehealth access due in part to low 
digital health literacy, especially among populations who already 
experience health disparities. Low digital health literacy is one of 
the most significant obstacles in achieving telehealth equity, and many 
older adults with low digital health literacy experience gaps in access 
to the health care they need. This is concerning for the MA program 
because its enrollee population includes older adults who are age 65 or 
older, which is why we are proposing to address the issue by requiring 
MA organizations to develop and maintain procedures to identify and 
offer digital health education to enrollees with low digital health 
literacy to assist with accessing any medically necessary covered 
telehealth benefits.
    Finally, MA organizations' existing quality improvement (QI) 
programs are an optimal vehicle to develop and implement strategies and 
policies designed to reduce disparities in health and health care, and 
advance equity in the health and health care of MA enrollee 
populations, especially those that are underserved. To support these 
efforts, we propose to require MA organizations to incorporate one or 
more activities into their overall QI program that reduce disparities 
in health and health care among their enrollees. MA organizations may 
implement activities such as improving communication, developing and 
using linguistically and culturally appropriate materials (to 
distribute to enrollees or use in communicating with enrollees), hiring 
bilingual staff, community outreach, or similar activities. We believe 
adopting this proposed requirement for MA organizations as part of 
their required QI programs will align with health equity efforts across 
CMS policies and programs.
5. Utilization Management Requirements: Clarifications of Coverage 
Criteria for Basic Benefits and Use of Prior Authorization, Additional 
Continuity of Care Requirements, and Annual Review of Utilization 
Management Tools (Sec. Sec.  422.101, 422.112, 422.137, 422.138, and 
422.202)
    In recent years, CMS has received numerous inquiries regarding MA 
organizations' use of prior authorization and its effect on beneficiary 
access to care. We are proposing several regulatory changes to address 
these concerns regarding prior authorization. First, we propose that 
prior authorization policies for coordinated care plans may only be 
used to confirm the presence of diagnoses or other medical criteria 
and/or ensure that an item or service is medically necessary based on 
standards specified in this rule. Second, we propose that an approval 
granted through prior authorization processes be valid for the duration 
of the approved course of treatment and that plans provide a minimum 
90-day transition period when an enrollee who is currently undergoing 
treatment switches to a new MA plan. Third, we propose that MA plans 
must comply with national coverage determinations (NCD), local coverage 
determinations (LCD), and general coverage and benefit conditions 
included in Traditional Medicare statutes and regulations as 
interpreted by CMS. Further, we propose that MA plans cannot deny 
coverage of a Medicare covered item or service based on internal, 
proprietary, or external clinical criteria not found in Traditional 
Medicare coverage policies. We propose that when there is no applicable 
coverage criteria in Medicare statute, regulation, NCD, or LCD, MA 
organizations may create internal coverage criteria that are based on 
current evidence in widely used treatment guidelines or clinical 
literature that is made publicly available to CMS, enrollees, and 
providers.
    Finally, to ensure prior authorization is being used appropriately, 
we propose to require that all MA plans establish a Utilization 
Management Committee to review all utilization management, including 
prior authorization, policies

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annually and ensure they are consistent with current, traditional 
Medicare's national and local coverage decisions and guidelines. These 
proposed changes will help ensure enrollees have consistent access to 
medically necessary care, without unreasonable barriers or 
interruptions.
6. Medicare Advantage (MA) and Part D Marketing (Subpart V of Parts 422 
and 423)
    In accordance with our statutory authority to review marketing 
materials and application forms and to develop marketing standards 
under sections 1851(h), 1851(j), 1860D-1(b)(1)(vi), and 1860D-4(l) of 
the Act, as well as the statutory requirements in sections 1852(c) and 
1860D-4(a) of the Act requiring MA organizations and Part D sponsors 
disclose specific types of information to enrollees, we are proposing 
several changes to 42 CFR parts 422 and 423, subpart V, to strengthen 
beneficiary protections and improve MA and Part D marketing. These 
changes include: notifying enrollees annually, in writing, of the 
ability to opt out of phone calls regarding MA and Part D plan 
business; requiring agents to explain the effect of an enrollee's 
enrollment choice on their current coverage whenever the enrollee makes 
an enrollment decision; requiring agents to share key pre-enrollment 
information with potential enrollees when processing telephonic 
enrollments; simplifying plan comparisons by requiring medical benefits 
be in a specific order and listed at the top of a plan's Summary of 
Benefits; limiting the time that a sales agent can call a potential 
enrollee to no more than six months following the date that the 
enrollee first asked for information; limiting the requirement to 
record calls between third-party marketing organizations (TPMOs) and 
beneficiaries to marketing (sales) and enrollment calls; clarifying 
that the prohibition on door-to-door contact without a prior 
appointment still applies after collection of a business reply card 
(BRC) or scope of appointment (SOA); prohibiting marketing of benefits 
in a service area where those benefits are not available, prohibiting 
the marketing of information about savings available to potential 
enrollees that are based on a comparison of typical expenses borne by 
uninsured individuals, unpaid costs of dually eligible beneficiaries, 
or other unrealized costs of a Medicare beneficiary; requiring TPMOs to 
list or mention all of the MA organization or Part D sponsors that they 
sell; requiring MA organizations and Part D sponsors to have an 
oversight plan that monitors agent/broker activities and reports agent/
broker non-compliance to CMS; modifying the TPMO disclaimer to add 
SHIPs as an option for beneficiaries to obtain additional help; placing 
discrete limits around the use of the Medicare name, logo, and Medicare 
card; prohibit the use of superlatives (for example, words like 
``best'' or ``most'') in marketing unless the material provides 
documentation to support the statement, and the documentation is for 
the current or prior year; and, clarifying the requirement to record 
calls between TPMOs and beneficiaries, such that it is clear that the 
requirement includes virtual connections such as video conferencing and 
other virtual telepresence methods.
7. Behavioral Health in Medicare Advantage (MA) (Sec. Sec.  422.112 and 
422.116)
    As part of the Medicare Program; Contract Year 2023 Policy and 
Technical Changes to the Medicare Advantage and Medicare Prescription 
Drug Benefit Programs Proposed Rule, which appeared in the January 12, 
2022 Federal Register (87 FR 1842) (hereinafter referred to as the 
January 2022 proposed rule), we solicited comments from stakeholders 
regarding challenges in building MA behavioral health networks and 
opportunities for improving access to services. Stakeholders commented 
on the importance of ensuring adequate access to behavioral health 
services for enrollees and suggested expanding network adequacy 
requirements to include additional behavioral health specialty types.
    To strengthen our network adequacy requirements and reaffirm MA 
organizations' responsibilities to provide behavioral health services, 
we propose to: (1) add Clinical Psychology Licensed Clinical Social 
Worker, and Prescribers of Medication for Opioid Use Disorder as 
specialty types that will be evaluated as part of the network adequacy 
reviews under Sec.  422.116, and make these new specialty types 
eligible for the 10-percentage point telehealth credit as allowed under 
Sec.  422.116(d)(5); (2) amend our general access to services standards 
in Sec.  422.112 to include explicitly behavioral health services; (3) 
codify, from existing guidance on reasonable wait times for primary 
care visits, standards for wait times that apply to both primary care 
and behavioral health services; (4) clarify that some behavioral health 
services may qualify as emergency services and, therefore, must not be 
subject to prior authorization; and (5) extend current requirements for 
MA organizations to establish programs to coordinate covered services 
with community and social services to behavioral health services 
programs to close equity gaps in treatment between physical health and 
behavioral health.
8. Enrollee Notification Requirements for Medicare Advantage (MA) 
Provider Contract Terminations (Sec. Sec.  422.111 and 422.2267)
    CMS requires notification to MA enrollees when a provider network 
participation contract terminates. CMS is proposing to revise Sec.  
422.111(e) by establishing specific enrollee notification requirements 
for no-cause and for-cause provider contract terminations and adding 
specific and more stringent enrollee notification requirements when 
primary care and behavioral health provider contract terminations 
occur. CMS is also proposing to revise Sec.  422.2267(e)(12) to specify 
the requirements for the content of the notification to enrollees about 
a provider contract termination.
9. Transitional Coverage and Retroactive Medicare Part D Coverage for 
Certain Low-Income Beneficiaries Through the Limited Income Newly 
Eligible Transition (LI NET) Program (Sec. Sec.  423.2500-423.2536)
    CMS has operated the LI NET demonstration since 2010. The LI NET 
demonstration provides transitional, point-of-sale coverage for low-
income beneficiaries who demonstrate an immediate need for 
prescriptions, but who have not yet enrolled in a Part D plan, or whose 
enrollment is not yet effective. LI NET also provides retroactive and/
or temporary prospective coverage for beneficiaries determined to be 
eligible for the Part D low-income subsidy (LIS) by the Social Security 
Administration (SSA) or a State. In this proposed rule, we propose 
regulations to make the LI NET program a permanent part of Medicare 
Part D, as required by the Consolidated Appropriations Act, 2021 (CAA).
10. Medicare Parts A, B, C, and D Overpayment Provisions of the 
Affordable Care Act (Sec. Sec.  401.305(a)(2), 422.326(c), and 
423.360(c))
    The proposed regulatory provisions would amend the existing 
regulations for Medicare Parts A, B, C, and D regarding the standard 
for an ``identified overpayment'' and will align the regulations with 
the statutory language in section 1128J(d)(4)(A) of the Act, which 
provides that the terms ``knowing'' and ``knowingly'' have the meaning 
given those terms in the False

[[Page 79456]]

Claims Act at 31 U.S.C. 3729(b)(1)(A). Specifically, in this regulation 
we propose to remove the existing ``reasonable diligence'' standard and 
adopt by reference the False Claims Act definition of ``knowing'' and 
``knowingly'' as set forth at 31 U.S.C. 3729(b)(1)(A). Under the 
proposed rule, an MA organization, Part D sponsor, provider or supplier 
has identified an overpayment if it has actual knowledge of the 
existence of the overpayment, or acts in reckless disregard or 
deliberate ignorance of the overpayment.
11. Changes to an Approved Part D Formulary--Immediate Substitutions 
(Sec. Sec.  423.4, 423.100, 423.104, 423.120, and 423.128)
    Current regulations permit Part D sponsors to immediately remove 
from the formulary a brand name drug and substitute its newly released 
generic equivalent. Part D sponsors meeting the requirements can 
provide notice of specific changes, including direct notice to affected 
beneficiaries, after they take place; do not need to provide a 
transition supply of the substituted drug; and can make these changes 
at any time including in advance of the plan year. Consistent with 
these requirements, we propose to permit Part D sponsors to immediately 
substitute: (i) a new interchangeable biological product for its 
corresponding reference product; (ii) a new unbranded biological 
product for its corresponding brand name biological product; and (iii) 
a new authorized generic for its corresponding brand name equivalent.
12. Expanding Eligibility for Low-Income Subsidies (LIS) Under Part D 
of the Medicare Program (Sec. Sec.  423.773 and 423.780)
    Section 11404 of the IRA amended section 1860D-14 of the Act to 
expand eligibility for the full LIS to individuals with incomes up to 
150 percent of the Federal poverty level (FPL) beginning on or after 
January 1, 2024. In addition, the IRA allows for individuals to qualify 
for the full subsidy based on the higher resource requirements 
currently applicable to the partial LIS group. This change will provide 
the full LIS subsidy for those who currently qualify for the partial 
subsidy, and we are proposing to implement this change in this 
regulation.

C. Summary of Costs and Benefits

BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C

II. Implementation of Certain Provisions of the Bipartisan Budget Act 
of 2018, the Consolidated Appropriations Act, 2021, and the Inflation 
Reduction Act of 2022

A. Applying D-SNP Look-Alike Requirements to Plan Benefit Package 
Segments (Sec. Sec.  422.503(e), 422.504, 422.510 and 422.514)

    In 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 (85 FR 
33796) (hereinafter referred to as the June 2020 final rule), CMS 
finalized the contracting limitations for D-SNP look-alikes at Sec.  
422.514(d) and the associated authority and procedures for 
transitioning enrollees from a D-SNP look-alike at Sec.  422.514(e). 
For plan year 2022 and subsequent years, as provided in Sec.  
422.514(d)(1), CMS will not enter into a contract for a new non-SNP MA 
plan that projects, in its bid submitted under Sec.  422.254, that 80 
percent or more of the plan's total enrollment are enrollees entitled 
to medical assistance under a State plan under Title XIX. For plan year 
2023 and subsequent years, as provided in Sec.  422.514(d)(2), CMS will 
not renew a contract with a non-SNP MA plan that has actual enrollment, 
as determined by CMS using the January enrollment of the current year, 
consisting of 80 percent or more of enrollees who are entitled to 
medical assistance under a State plan under Title XIX, unless the MA 
plan has been active for less than 1 year and has enrollment of 200 or 
fewer individuals at the time of such determination.
    We established these contract limitations to address the 
proliferation and growth of D-SNP look-alikes, which raised concerns 
related to effective implementation of requirements for D-SNPs 
established by section 1859 of the Act (including amendments made by 
the Medicare Improvements for Patients and Providers Act of 2008 (Pub. 
L. 110-275) and the Bipartisan Budget Act of 2018 (Pub. L. 115-123)). 
We adopted the regulation to ensure full implementation of requirements 
for D-SNPs, such as contracts with State Medicaid agencies; a minimum 
integration of Medicare and Medicaid benefits; care coordination 
through health risk assessments (HRAs); evidence-based models of care. 
In addition, we noted how limiting these D-SNP look-alikes would 
address beneficiary confusion stemming from misleading marketing 
practices by brokers and agents that misrepresent to dually eligible 
individuals the characteristics of D-SNP look-alikes. For a more 
detailed discussion of D-SNP look-alikes and their impact on the 
implementation of D-SNP Medicare and Medicaid integration, we direct 
readers to the June 2020 final rule (85 FR 33805 through 33820) and the 
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 (85 FR 9018 
through 9021) (also known as the February 2020 proposed rule). We are 
proposing amendments to close unforeseen loopholes in the scope of the 
regulation adopted to prohibit D-SNP look-alikes.
1. Applying Contracting Limitations for D-SNP Look-Alikes to MA Plan 
Segments
    As written at Sec.  422.514(d) and (e), the contracting limitations 
for D-SNP look-alikes are based on analysis at the MA plan level. 
Section 1854(h) of the Act authorizes MA organizations to segment an MA 
plan and apply the uniformity requirements for MA plans at the segment 
level, provided that the segments are comprised of one or more MA 
payment areas. As implemented in Sec. Sec.  422.2 (defining ``MA 
plan''), 422.100(d), 422.254, and 422.262, MA plans may include 
multiple segments in an MA plan in which different benefit designs, 
cost-sharing, and premiums are available; bids are submitted at the 
segment level if an MA plan is segmented and evaluation of compliance 
with MA requirements is done at the segment level where appropriate. 
See Sec.  422.100(f)(6) providing for evaluation of cost-sharing at the 
segment level for segmented plans. In effect, each segment of an MA 
plan is like a plan itself. We discussed in the Medicare Program; 
Medicare+Choice Program (65 FR 40170, 40204 through 40205) final rule, 
which appeared in the Federal Register on June 29, 2000 (also known as 
the June 2000 final rule) how the authority in section 1854(h) of the 
Act for an MA organization to segment an MA plan has practical 
implications that are similar to offering multiple plans. One or more 
segments can be part of the same MA plan even though the Medicare Part 
C benefits, cost-sharing, premiums, and marketing materials can differ. 
For example, MA plan benefit package H1234-567 could offer multiple 
segments distinguished by three additional digits, such as H1234-567-
001, H1234-567-002, and H1234-567-003. Since adopting Sec.  422.514(d), 
we have seen MA plans where a specific segment looks like a D-SNP look-
alike and would be subject to the contracting prohibitions in Sec.  
422.514(d) if the segment were treated as an MA plan. As finalized, 
Sec.  422.514(d) does not clearly apply to a segment within an MA plan. 
However, we believe that by applying the D-SNP look-alike contracting 
limitations only at the MA plan level without applying it to segments 
of plans, our existing regulation has an unintended and unforeseen 
loophole through which D-SNP look-alikes could persist, contrary to the 
stated objectives in our prior rulemaking.
    Based on January 2022 Monthly Membership Report (MMR) data, we 
identified 47 non-SNP MA plans that meet the criteria outlined at Sec.  
422.514(d)(2) when we performed our analysis at the plan level. If we 
were to apply the Sec.  422.514(d)(2) criteria at the MA plan segment 
level, segments of three additional non-SNP MA plans would be 
identified as D-SNP look-alikes. The segments in those three plans 
collectively have approximately 3,000 enrollees. While the number of 
non-SNP MA plans at the segment level is currently small, this number 
could grow in the future and provide an opportunity for MA 
organizations to circumvent the D-SNP look-alike contracting 
limitations at Sec.  422.514(d). For example, in our analysis of 
proposed D-SNP look-alike transitions for contract year 2023, two D-SNP 
look-alikes in contract year 2022 are proposing to transition a 
combined total of approximately 7,800 D-SNP look-alike enrollees into 
two new non-SNP MA plan segments, which could create two new D-SNP 
look-alike segments for contract year 2023.
    We propose adding a new paragraph at 42 CFR 422.514(g) to provide 
that Sec.  422.514(d) through (f) apply to segments of the MA plan in 
the same way that those provisions apply to MA plans. As a result, CMS 
will not contract with or renew a contract with a plan segment where 
the MA plan or segment is not a D-SNP and the enrollment thresholds in 
paragraph (d)(1) or (d)(2) are met. This proposal, to treat a segment 
of an MA plan as an MA plan, would be consistent with CMS' annual 
review of MA plan bids and Medicare cost-sharing, in which each MA plan 
segment submits a separate bid pricing tool and plan benefit package 
like an unsegmented MA plan and CMS separately evaluates these 
submissions for compliance with MA requirements.

[[Page 79466]]

    As discussed in the June 2020 final rule, CMS implements the 
contracting prohibition in Sec.  422.514 at the plan level. Where an MA 
plan is one of several offered under a single MA contract and the MA 
organization does not voluntarily non-renew the D-SNP look-alike, CMS 
will sever the D-SNP look-alike from the overall contract using its 
authority under Sec.  422.503(e) to sever a specific MA plan from a 
contract and terminate the deemed contract for the look-alike plan (85 
FR 33812). However, CMS does not currently have clear regulatory 
authority to sever a segment from an MA plan to terminate a contract 
that has only a segment of an MA plan. CMS adopted the severability 
regulation at Sec.  422.503(e) in the Medicare Program; Establishment 
of the Medicare+Choice Program interim final rule (63 FR 35103, 
hereafter known as the June 1998 interim final rule) as part of 
implementing the statutory authority for MA contracts to cover more 
than one MA plan. Without amending Sec.  422.503(e), CMS would need to 
sever the entire MA plan that has the D-SNP look-alike segment such 
that other segments in that MA plan would be subject to the contracting 
prohibition and not renewed under Sec.  422.514(d) as proposed to be 
amended here if the MA organization failed to comply with Sec.  
422.514(d). Instead, we propose to amend Sec.  422.503(e) to allow for 
CMS to sever a segment from an MA plan and allow the remaining segments 
of that MA plan to continue along with any other MA plans offered under 
the same contract. We propose to rely on our authority to adopt MA 
standards under section 1856(b)(1) of the Act and our authority to 
adopt additional contract terms when necessary and appropriate, and not 
inconsistent with the MA statute, under section 1857(e)(1) of the Act. 
Our primary impetus for this proposal relates to D-SNP look-alikes, but 
our proposal at Sec.  422.503(e) is not specific to D-SNP look-alikes; 
because each segment of an MA plan is like a plan itself, we believe 
severability should apply similarly at the plan and segment level. We 
also propose to amend Sec.  422.504(a)(19) to adopt a new contract term 
that MA organizations agree not to segment an MA plan in a way that 
results in a D-SNP look-alike. In conjunction with the proposed 
amendments to Sec.  422.514(g) to apply the prohibitions on contracting 
with D-SNP look-alikes to segments of an MA plan, the amendments to 
Sec.  422.503(e) would allow CMS to eliminate existing D-SNP look-alike 
segments and the amendments to Sec.  422.504(a)(19) would allow CMS to 
prevent new D-SNP look-alikes.
2. Applying Contracting Limitations for D-SNP Look-Alikes to Existing 
MA Plans
    We identified a second loophole during our analysis of contract 
year 2023 MA plan bids to identify any new MA plans that meet the 
contract limitation at Sec.  422.514(d)(1). An existing (that is, 
renewing) MA plan that did not meet the criteria in Sec.  422.514(d)(2) 
(using January 2022 MMR data as provided in paragraph (e)(3)) projected 
in its contract year 2023 bid that the MA plan would have 80 percent or 
higher enrollment of dually eligible individuals in 2023. Because this 
MA plan is not a new MA plan for contract year 2023, the contract 
prohibition in Sec.  422.514(d)(1) did not apply. To prohibit similar 
situations in the future, we propose to amend Sec.  422.514(d)(1) to 
apply it to both new and existing (that is, renewing) MA plans that are 
not D-SNPs and submit bids with projected enrollment of 80 percent or 
more enrollees of the plan's total enrollment that are dually eligible 
for Medicare and Medicaid. We propose to revise paragraph (d)(1) to 
provide that CMS does not enter into or renew an MA contract for plan 
year 2024 and subsequent years when the criteria in paragraphs 
(d)(1)(i) and (ii) are met. We are proposing to begin this prohibition 
with 2024 because we expect that 2024 will be the first plan year after 
the final rule adopting this proposal. Pending finalization of this 
proposal, Sec.  422.514(d)(1) will continue to prohibit contracts with 
new MA plans that meet the criteria. As contracts for 2022 and 2023 
have been awarded as of the time this proposed rule is issued, the 
earliest our proposed revision to expand the scope of Sec.  
422.514(d)(1) can apply is 2024.
3. Contract Limitations for D-SNP Look-Alikes as a Basis for MA 
Contract Termination (Sec.  422.510(a)(4))
    Finally, we propose an amendment to Sec.  422.510(a)(4), which 
outlines the bases for termination of an MA contract. Specifically, we 
propose to add language at Sec.  422.510(a)(4) to add a new paragraph 
(a)(4)(xvi) that permits CMS to terminate an MA contract when the MA 
organization meets the criteria in Sec.  422.514(d)(1) or (d)(2). This 
proposed amendment is consistent with how Sec.  422.514(d) provides 
that CMS will not enter into or renew an MA contract in certain 
circumstances. In our view, Sec.  422.514(d) is sufficient authority 
for the non-renewal, that is termination, of MA contracts when Sec.  
422.514(d) applies. However, we believe that adopting a specific 
provision in Sec.  422.510(a)(4) will avoid any inadvertent ambiguity 
on this topic and make it clear that the procedures outlined in Sec.  
422.510, including notices, timeframes, and appeal rights, apply when 
CMS does not renew an MA contract based on application of Sec.  
422.514(d).

B. Part D Special Enrollment Period Change Based on CAA Medicare 
Enrollment Changes (Sec.  423.38)

    Section 101 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L 108-173) established a Part D--
Voluntary Prescription Drug Benefit program for Medicare-eligible 
individuals. The MMA added section 1860D-1(b)(3)(C) of the Act, which 
authorized the Secretary to establish Part D special enrollment periods 
(SEP) for Medicare-eligible individuals to enroll in a Part D plan 
based on exceptional circumstances--that is, an individual may elect a 
plan or change his or her current plan election when the individual 
meets an exceptional condition as determined by the Secretary.
    The SEPs for exceptional conditions were historically included in 
our manual instructions rather than through regulation. In 2020, we 
codified a number of SEPs that we had adopted and implemented through 
subregulatory guidance as exceptional circumstance SEPs, including the 
SEP for Individuals Who Enroll in Part B During the Part B General 
Enrollment Period (GEP) (85 FR 33909). This SEP, as codified at Sec.  
423.38(c)(16), allowed individuals who are not entitled to premium-free 
Part A and who enroll in Part B during the GEP for Part B (January-
March) to enroll in a Part D plan. This SEP begins April 1st and ends 
June 30th, with a Part D plan enrollment effective date of July 1st. 
This SEP effective date aligns with the entitlement date for Part B for 
individuals who enroll in Part B during the GEP.
    Currently, when an individual enrolls in Part B during the GEP, 
their Part B enrollment entitlement date is July 1st, regardless of 
when during the GEP they enrolled. Division CC, title I, subtitle B, 
section 120 of the Consolidated Appropriations Act, 2021 (CAA) Pub. L 
116-260 modified section 1838(a)(2) of the Act, to address the 
beginning of the entitlement for individuals enrolling during their GEP 
pursuant to section 1837(e) of the Act. As added by the CAA, section 
1838(a)(2)(D)(ii) of the Act requires that, for an individual who 
enrolls in Part B during the GEP on or

[[Page 79467]]

after January 1, 2023, entitlement begins the first day of the month 
following the month in which the individual enrolled. For example, if 
an individual enrolls in Part B in February 2023 (during the GEP), 
their Part B coverage will begin on March 1st.
    Based on Medicare enrollment statutory changes made by the CAA 
described previously, we are proposing to revise the start and end date 
for the SEP for Individuals Who Enroll in Part B During the Part B GEP 
to align with the Part B entitlement dates for someone who enrolls in 
Part B using the GEP that starts January 1, 2023. Accordingly, we are 
also proposing to revise the effective date of the individual's Part D 
plan enrollment, which is always July 1st under the current parameters 
of this Part D SEP. That is, we are proposing to modify Sec.  
423.38(c)(16) to provide that on or after January 1, 2023, an 
individual who is not entitled to premium-free Part A and who enrolls 
in Part B during the GEP is eligible to use the SEP for Individuals Who 
Enroll in Part B During the Part B GEP to request enrollment in a Part 
D plan, and that this SEP will begin when the individual submits the 
application for Part B, and will continue for the first 2 months of 
enrollment in Part B. Further, we propose to modify Sec.  438.38(c)(16) 
to provide that where an individual uses this Part D SEP to request 
enrollment in a Part D plan, the Part D plan enrollment would be 
effective the first of the month following the month the Part D plan 
sponsor receives the enrollment request. For example, an individual who 
enrolls in Part B on February 10th for a Part B entitlement date of 
March 1st can use the Part D SEP to request enrollment in a Part D plan 
during the period from February 10th to April 30th. If the individual 
submitted an enrollment request for a Part D plan on February 10th and 
the enrollment is accepted, the effective date of their Part D coverage 
would be March 1st. Note that an individual's Part D enrollment 
effective date cannot be prior to the Part A and/or Part B entitlement 
date, and the individual must also meet other Part D plan eligibility 
criteria as described in Sec.  423.30(a). Per current practice, the 
Part D plan would need to confirm that the individual had enrolled in 
Part B (or Part B and premium Part A) prior to the individual's Part D 
enrollment effective date. The Social Security Administration (SSA) 
will have to first process the individual's Part B application and 
submit that information into SSA systems, which, in turn, would be 
populated in the CMS enrollment systems, for a Part D plan to have 
access to that entitlement information.
    We expect this proposed change in enrollment and effective dates 
using this Part D SEP would simplify the enrollment process and reduce 
the potential for gaps in prescription drug coverage. Also, we believe 
it will be easier for beneficiaries to understand the effective date of 
their Medicare coverage using this Part D SEP, as we are proposing that 
the Part D effective date will be the first of the month following the 
month the beneficiary submits an enrollment request, which aligns with 
most Part D enrollment and SEP timeframes. Although the current SEP for 
Individuals Who Enroll in Part B During the Part B GEP lasts for 3 
calendar months, and the proposed timeframe for use of this SEP would 
be shorter, the proposed timeframe aligns with most of our other Part D 
SEPs. In addition, this proposed timeframe would provide the individual 
the opportunity for a Part D plan enrollment effective date that is 
within 63 days of the Part B entitlement. For individuals who have 
maintained creditable drug coverage prior to enrolling in Part B, this 
proposed SEP timeframe will help to ensure that an individual would not 
incur a Part D late enrollment penalty (LEP). For example, if an 
individual enrolls in Part B in February and is entitled to Part B 
effective March 1st, they could enroll in a Part D plan for an 
effective date of March 1st, April 1st or May 1st, depending on whether 
the Part D plan sponsor received the enrollment request in February, 
March or April, respectively. Any of these Part D plan effective dates 
would provide Part D coverage to an individual who maintained 
creditable coverage prior to enrolling in Part B in February within the 
63-day timeframe to avoid the penalty. Proposing this exceptional 
condition SEP also supports President Biden's April 5, 2022 Executive 
Order on Continuing to Strengthen Americans' Access to Affordable, 
Quality Health Coverage, which, among other things, requires agencies 
to examine policies or practices that make it easier for all consumers 
to enroll in and retain coverage, understand their coverage options, 
and select appropriate coverage, and also examine policies or practices 
that strengthen benefits and improve access to healthcare providers.
    This proposal would revise the timeframes for use of the Part D SEP 
described in Sec.  423.38(c)(16) based on the change in effective date 
for GEP enrollments made by section 120 of the CAA. These proposed 
revisions are needed to align the timeframe for use of this Part D SEP 
based on new Part B GEP enrollment effective date parameters.
    Because an individual may elect a Part D plan only during an 
election period, Medicare Part D sponsors already have procedures in 
place to determine the election period(s) for which an applicant is 
eligible. Our proposal would not add to existing enrollment processes, 
so we believe any burden associated with this aspect of enrollment 
processing would remain unchanged from the current practice, and would 
not impose any new requirements or burden.
    All information impacts of this provision have already been 
accounted for under OMB control number 0938-1378 (CMS-10718). We do not 
believe the proposed changes will adversely impact individuals 
requesting enrollment in Medicare plans, the plans themselves, or their 
current enrollees. Similarly, we do not believe the proposed changes 
would have any impact to the Medicare Trust Funds.

C. Alignment of Part C and Part D Special Enrollment Periods With 
Medicare Exceptional Condition Enrollment (Sec. Sec.  422.62 and 
423.38)

    Section 1851(e)(4)(D) of the Act authorizes the Secretary to create 
special enrollment periods (SEPs) for an individual to disenroll from 
an MA plan or elect another MA plan if the individual meets an 
exceptional condition provided by the Secretary. This authority was 
originally codified at Sec.  422.62(b)(4) in the June 1998 interim 
final rule as a general SEP for CMS to apply on an ad hoc basis. (63 FR 
35073)
    As noted previously, section 1860D-1(b)(3)(C) of the Act authorizes 
the Secretary to establish Part D SEPs for Medicare-eligible 
individuals to enroll in a Part D plan if they meet certain exceptional 
circumstances. This authority was originally codified at Sec.  
423.38(c)(8)(ii) (70 FR 4529). The MMA also added section 1860D-
1(b)(1)(B) of the Act which provides that in adopting the Part D 
enrollment process, the Secretary ``shall use rules similar to (and 
coordinated with) the rules for enrollment, disenrollment, termination, 
and change of enrollment with an MA-PD plan under the following 
provisions of section 1851.''
    Historically, we had included in our regulations those MA and Part 
D SEPs that have been specifically named in the statute, and 
established SEPs for exceptional conditions in our subregulatory 
guidance. In the June 2020 final rule, we codified, at Sec. Sec.  
422.62(b) and 423.38(c), respectively, the MA and Part D SEPs that we 
had adopted and implemented through

[[Page 79468]]

subregulatory guidance as exceptional condition SEPs (85 FR 33796). 
Codifying these SEPs provided transparency and stability to the MA and 
Part D programs by ensuring that these SEPs are known to plans and 
beneficiaries.
    As required by section 1851(a)(3) of the Act (for the MA program) 
and section 1860D-1(a)(3)(A) of the Act (for the Part D program) and 
described in Sec. Sec.  422.50(a)(1) and 423.30(a)(1)(i), eligibility 
for MA or Part D plan enrollment requires that an individual first have 
Medicare Parts A and B for MA eligibility and either Part A or B for 
Part D eligibility. Individuals who are entitled to premium-free Part A 
are generally auto-enrolled when they are first eligible, if they are 
already receiving retirement or disability benefits from the SSA or 
Railroad Retirement Board, or they may submit an application to enroll 
in premium-free Part A at any time after meeting the requirements for 
entitlement. Under normal conditions, individuals who want to enroll in 
premium Part A, Part B, or both, must submit a timely enrollment 
request during their Initial Enrollment Period (IEP), the GEP, or an 
existing SEP for which they are eligible. Those who fail to enroll 
during their IEP may face a lengthy penalty for late enrollment (life-
long for Part B) and a potential gap in coverage. Prior to the 
enactment of the Consolidated Appropriations Act, 2021 (CAA) (Pub. L 
116-260), CMS did not have broad authority to create SEPs based on 
exceptional conditions for enrollment into Medicare Parts A and B. 
However, Division CC, title I, subtitle B, Section 120 of the CAA 
established section 1837(m) of the Act to authorize the Secretary to 
establish Part B SEPs for individuals who are eligible to enroll in 
Medicare and meet such exceptional conditions as the Secretary 
provides. Per section 1818(c) of the Act, the provisions of section 
1837 of the Act, excluding subsection (f) thereof, applies to the 
premium Part A program. This authority to adopt exceptional conditions 
SEPs for premium Part A and Part B is effective January 1, 2023. The 
ability to grant SEPs for exceptional conditions is an important tool 
that will allow CMS to provide relief to individuals who missed an 
opportunity to enroll in Medicare due to circumstances that were 
outside of their control, ensure continuous health coverage, and avoid 
late enrollment penalties on the premium Part A or Part B premiums. CMS 
finalized new exceptional condition SEPs under section 1837(m) of the 
Act in 42 CFR 406.27 and 407.23 for Medicare parts A and B, 
respectively, in a final rule that was published in the Federal 
Register on November 3, 2022, titled ``Medicare Program; Implementing 
Certain Provisions of the Consolidated Appropriations Act, 2021 and 
Other Revisions to Medicare Enrollment and Eligibility Rules'' (87 FR 
66454). These SEPs would be available to individuals who have missed an 
enrollment period due to an exceptional condition that is specified in 
the final rule. Specifically, individuals who miss an IEP, GEP, or 
another SEP, such as the Group Health Plan SEP, due to a specified 
exceptional condition, would be eligible to enroll in Medicare premium 
Part A or Part B using the new SEPs.
    Based on Medicare enrollment changes made by the CAA described 
previously, we are proposing to add corresponding exceptional condition 
SEPs for MA and Part D enrollment, as authorized under sections 
1851(e)(4)(D) and 1860D-1(b)(3)(C) of the Act, to align with the new 
Medicare premium Part A and B exceptional condition SEPs that CMS has 
finalized in 42 CFR 406.27 and 407.23. These new Medicare Part C and D 
SEPs would be based on an individual's use of a Medicare premium Part A 
or Part B exceptional conditions SEP. That is, individuals who use an 
exceptional condition SEP to enroll in premium Part A and/or Part B 
will be provided an opportunity to enroll in a MA or Part D plan, 
provided that the individual meets applicable eligibility requirements 
for the plan.
    We are proposing at Sec.  422.62(b) to redesignate current 
paragraphs (26) as (27) and add a new paragraph (26) to provide an SEP 
for individuals to enroll in a MA plan or MA plan that includes Part D 
benefits (MA-PD plan), when they use a Medicare exceptional condition 
SEP to enroll in premium Part A and/or Part B. We are also proposing at 
Sec.  423.38(c) to redesignate current paragraph (34) as (35) and add 
new paragraph (34) to provide an SEP for individuals to enroll in a 
stand-alone Part D prescription drug plan (PDP) when they use a 
Medicare exceptional condition SEP to enroll in premium Part A or Part 
B.
    The proposed new MA SEP would begin when the individual submits the 
application for premium Part A and Part B, or only Part B, and would 
continue for the first 2 months of enrollment in Part A (premium or 
premium-free) and Part B. Similarly, the proposed new Part D SEP would 
begin when the individual submits their premium Part A or Part B 
application and would continue for the first 2 months of enrollment in 
premium Part A or Part B. The MA or Part D plan enrollment would be 
effective the first of the month following the month the MA or Part D 
plan receives the enrollment request. For example, an individual who 
enrolls in premium Part A or Part B using an exceptional conditions 
SEP, as codified in 42 CFR 406.27 and 407.23, on July 10th for an 
entitlement ate of August 1st, can use the MA or Part D exceptional 
circumstance SEP to request enrollment in a MA or Part D plan during 
the period from July 10th to September 30th. If the individual 
submitted an enrollment request for an MA or Part D plan on July 10th 
and the enrollment is accepted, the effective date of their MA or Part 
D coverage would be August 1st.
    An individual's MA or Part D plan enrollment effective date cannot 
be prior to the Part A and/or Part B enrollment date, and the 
individual must also meet other MA or Part D plan eligibility criteria 
as described in Sec. Sec.  422.50(a) or 423.30(a), respectively, in 
order to use the new MA or Part D SEP we are proposing. Per current 
practice, the MA or Part D plan would need to confirm that the 
individual had enrolled in premium Part A and/or Part B, as applicable, 
using one of the new SEPs for exceptional conditions prior to the 
individual's MA or Part D enrollment effective date. The SSA will have 
to first process the individual's premium Part A and/or Part B 
application and submit that information into SSA systems, which, in 
turn, would be populated in the CMS enrollment systems, for an MA or 
Part D plan to have access to that enrollment information.
    Providing an opportunity for Part D enrollment at the time of 
Medicare premium Part A or Part B enrollment using an exceptional 
condition SEP will help ensure that an individual will have timely 
access to Part D drugs, within the timeframe of 63 days \3\ established 
in regulation at Sec.  423.46(a), to prevent a Part D late enrollment 
penalty from being assessed. For example, if an individual enrolls in 
premium Part A or Part B using an exceptional condition SEP in July and 
is entitled to premium Part A and/or Part B effective August 1st, they 
could enroll in a Part D plan

[[Page 79469]]

for an effective date of August 1st, September 1st, or October 1st, 
depending on whether the Part D plan sponsor received the enrollment 
request in July, August, or September respectively. Any of these Part D 
plan effective dates would provide an individual with Part D coverage 
within the 63-day timeframe of Medicare eligibility to avoid the 
penalty. This is an important beneficiary protection, especially for 
those individuals who have to bear the cost of paying a premium for 
Part A.
---------------------------------------------------------------------------

    \3\ 42 CFR 423.46(a) states that, a Part D eligible individual 
must pay the late penalty described under Sec.  423.286(d)(3), 
except as described at Sec.  423.780(e), if there is a continuous 
period of 63 days or longer at any time after the end of the 
individual's initial enrollment period during which the individual 
meets all of the following conditions:
    (1) The individual was eligible to enroll in a Part D plan.
    (2) The individual was not covered under any creditable 
prescription drug coverage.
    (3) The individual was not enrolled in a Part D plan.
---------------------------------------------------------------------------

    This proposed MA exceptional condition SEP will allow beneficiaries 
who are enrolled in premium Part A and in Part B to exercise their 
option to receive their healthcare from an MA plan, instead of Original 
Medicare, as soon as the individual is enrolled in both Parts A and B, 
without waiting for the annual coordinated election period. Proposing 
exceptional condition SEPs for MA and Part D also supports President 
Biden's April 5, 2022 E.O. on Continuing to Strengthen Americans' 
Access to Affordable, Quality Health Coverage, which, among other 
things, requires agencies to examine policies or practices that make it 
easier for all consumers to enroll in and retain coverage, understand 
their coverage options, and select appropriate coverage, and also 
examine policies or practices that strengthen benefits and improve 
access to healthcare providers.
    Because an individual may elect an MA or Part D plan only during an 
election period, MA organizations and Part D sponsors already have 
procedures in place to determine the election period(s) for which an 
applicant is eligible. Our proposal would not add to existing 
enrollment processes, so we believe any burden associated with this 
aspect of enrollment processing would remain unchanged from the current 
practice, and would not impose any new requirements or burden.
    Consequently, this provision will not have added impact. All burden 
impacts of these provisions have already been accounted for under OMB 
control number 0938-1378 (CMS-10718). We do not believe the proposed 
changes will adversely impact individuals requesting enrollment in 
Medicare plans, the plans themselves, or their current enrollees. 
Similarly, we do not believe the proposed changes would have any impact 
to the Medicare Trust Funds.

D. Transitional Coverage and Retroactive Medicare Part D Coverage for 
Certain Low-Income Beneficiaries Through the Limited Income Newly 
Eligible Transition (LI NET) Program (Sec. Sec.  423.2500 through 
423.2536)

1. Background on the LI NET Demonstration and Introduction to the 
Proposals
a. Background on the LI NET Demonstration
    The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA) established the Medicare Part D prescription drug 
benefit, which became effective on January 1, 2006. Prior to 2006, 
beneficiaries who were eligible for both Medicaid and Medicare (dual 
eligible) received prescription drug benefits through Medicaid. When 
the MMA went into effect, dual eligible beneficiaries began receiving 
their prescription drug benefits through Medicare Part D.
    From the beginning of Part D, CMS recognized the need to provide 
both immediate and retroactive coverage for full benefit dual eligible 
(FBDE) beneficiaries who were newly identified by either CMS or a 
State. Prior to 2010, CMS automatically enrolled newly identified 
beneficiaries eligible for the Part D low-income subsidy (LIS) into a 
Part D plan with a premium at or below the low-income benchmark 
(``benchmark'' plans), which have no or reduced premiums for LIS-
eligible beneficiaries. Each benchmark plan receiving these 
beneficiaries was required to grant retroactive coverage to the 
beginning of a beneficiary's LIS-eligible status or their last 
uncovered month, whichever date was later. At the time, there were 
around 300 Part D benchmark plans, and each needed to develop the 
capacity to provide transitional and retroactive coverage for these 
beneficiaries. Conducting retroactive claims adjudication and providing 
point-of-sale coverage was not efficient for Part D sponsors and 
accordingly, in 2010, CMS established the Medicare Part D Demonstration 
for Retroactive and Point of Sale Coverage for Certain Low-Income 
Beneficiaries, also known as Medicare's Limited Income Newly Eligible 
Transition (LI NET demonstration). The LI NET demonstration 
consolidates administration of transitional and retroactive Part D 
coverage for eligible beneficiaries to a single Part D sponsor.
    Part D coverage under the LI NET demonstration differs from 
coverage under traditional Part D plans in that the LI NET 
demonstration provides point-of-sale coverage for beneficiaries who 
demonstrate an immediate need for prescriptions, and also provides 
retroactive and/or temporary coverage for beneficiaries determined to 
be eligible, or likely to be eligible, for the Part D LIS by the Social 
Security Administration (SSA) or a State. The LI NET demonstration 
provides temporary, transitional Part D prescription drug coverage for 
LIS-eligible beneficiaries, including beneficiaries who are eligible 
for the Part D LIS but who are not yet enrolled in a Part D drug plan, 
or are enrolled in a plan but for whom coverage has not yet taken 
effect.
    The purposes of the demonstration are to provide the following:
     More efficient prescription drug coverage and claims 
reimbursement for newly eligible low-income beneficiaries, including 
periods of retroactive eligibility;
     More efficient prescription drug coverage and claims 
reimbursement for individuals who are not enrolled in a PDP and whose 
LIS status is not yet established in CMS' systems, but who arrive at a 
pharmacy with an immediate need for their prescription. This may occur, 
for instance, when a State has determined that a beneficiary is 
eligible for Medicaid but that information does not yet appear in CMS' 
systems;
     A seamless transition for LIS-eligible beneficiaries from 
LI NET into a qualifying PDP with basic prescription drug coverage 
absent a beneficiary's choice otherwise; and
     More efficient prescription drug coverage and claims 
reimbursement for LIS-eligible beneficiaries who are losing existing 
coverage in a PDP. For example, a beneficiary could be terminated for 
moving out of the service area of their current PDP. The beneficiary 
would be automatically enrolled into LI NET for that month and the 
following month, with enrollment into a qualifying PDP with basic 
prescription drug coverage that would become effective at the end of 
the LI NET enrollment absent the beneficiary's choice otherwise.
b. Introduction to the Proposals To Implement LI NET as a Permanent 
Program
    Division CC, title I, subtitle B, section 118 of the Consolidated 
Appropriations Act 2021 (CAA) (Pub. L. 116-260) modified section 1860D-
14 of the Act by redesignating subsection (e) of section 1860D-14 as 
subsection (f) and by establishing a new subsection (e) Limited Income 
Newly Eligible Transition Program. New subsection (e)(1) requires the 
Secretary to ``carry out a program to provide transitional coverage for 
covered Part D drugs for LI NET eligible individuals. . .'' no later

[[Page 79470]]

than January 1, 2024. This directive in section 118 of the CAA makes LI 
NET a permanent program within Part D, beginning in 2024.
    The proposed rulemaking to establish the LI NET program is 
consistent with President Biden's Executive Order 13985 on Advancing 
Racial Equity and Support for Underserved Communities Through the 
Federal Government (January 20, 2021) and Executive Order 14085 on 
Transforming Federal Customer Experience and Service Delivery to 
Rebuild Trust in Government (December 13, 2021). LI NET ensures that 
low-income beneficiaries transitioning from Medicaid to Medicare do not 
experience a gap in coverage for their prescription medications. 
Executive Order 14085 calls for the Federal Government to design and 
deliver services with ``a focus on the actual experience of the people 
whom it is meant to serve'' and ``deliver services more equitably and 
effectively, especially for those who have been historically 
underserved.'' We have designed the proposed LI NET program with 
beneficiary needs foremost in mind, ensuring continuous drug coverage 
and access for eligible low-income individuals.
    LI NET policies, infrastructure, and operations have evolved over 
the past 12 years to balance providing needed coverage with responsible 
stewardship of taxpayer dollars and efficiency in administering the 
program. The LI NET demonstration has proven successful in providing 
low-income individuals transitional Part D coverage. Approximately 8 
million low-income individuals received the benefits of the LI NET 
program under the demonstration, with over 100,000 beneficiaries 
enrolled in LI NET in any given month. It has become a program that 
beneficiary advocacy groups rely on when supporting low-income 
individuals and connecting them with services. LI NET works directly 
with over a dozen advocacy groups and 51 State Health Insurance 
Assistance Programs (SHIPs), which collectively work with LIS 
beneficiaries to remove access barriers and provide health insurance 
counseling.
    We believe the LI NET demonstration has become a reliable, stable 
program that has been successful in providing transitional and 
retroactive Part D coverage to millions of beneficiaries. In developing 
our proposals for implementing the permanent LI NET program, we have 
taken into consideration our experience under the LI NET demonstration. 
Where appropriate, we discuss the policies and practices under the LI 
NET demonstration that inform our proposals for how to implement 
aspects of the LI NET program that are not directly specified by the 
statute.
    We rely on the premise that Part D regulations apply to the LI NET 
program and to the LI NET sponsor as part of the Part D program and as 
a type of Part D sponsor, except for when the statute requires us to 
deviate or when existing regulations would not apply. For example, as 
discussed further in this proposed rule, because the LI NET sponsor is 
required to have an open formulary, existing Part D requirements on 
formulary development would not be applicable.
    Our proposals to make LI NET a permanent program start with Sec.  
423.2500. In Sec.  423.2500(a), we propose the basis of the LI NET 
program would be based on section 1860D-14 of the Act. We propose in 
Sec.  423.2500(b) the scope of the LI NET program, which would begin no 
later than January 1, 2024. Under this program, eligible individuals 
would be provided transitional coverage for part D drugs. Section Sec.  
423.2504 sets forth the LI NET eligibility and enrollment proposals and 
Sec.  423.2508 proposes LI NET benefits and beneficiary protections. 
Next, we propose in Sec.  423.2512 the requirements to be an LI NET 
sponsor and Sec.  423.2516 proposes how the Part D sponsor 
administering LI NET in partnership with CMS will be selected and the 
requirements set forth in the LI NET contract to provide services and 
coverage. Section 423.2518 provides a proposal for intermediate 
sanctions in the event of contract violations. Section 423.2520 
proposes how an LI NET contract would be non-renewed or terminated. 
Section 423.2524 lays out our proposals for bidding and determining the 
LI NET payment rate. Finally, Sec.  423.2536 enumerates the Part D 
requirements we propose waiving for LI NET.
    We propose to align sunsetting the demonstration seamlessly with 
the start of the LI NET program under this section. Specifically, the 
LI NET demonstration would continue to operate until December 31, 2023, 
and the LI NET program would start to operate on January 1, 2024 
according to the regulations that we finalize.
2. Eligibility and Enrollment
a. Eligibility
    Section 1860D-14(e)(2) of the Act provides that an individual is 
eligible for LI NET coverage if they: (A) meet the requirements of 
section 1860D-14(a)(3)(A)(ii) and (iii) of the Act; and (B) have not 
yet enrolled in a prescription drug plan or an MA-PD plan, or, who have 
so enrolled, but with respect to whom coverage under such plan has not 
yet taken effect. This means that to be eligible, the individual would 
need to be a full-benefit dual-eligible individual or low-income 
subsidy (LIS) eligible individual as defined at Sec.  423.773 and--
     Not yet be enrolled in a prescription drug plan or an MA-
PD plan; or
     Be enrolled but their coverage has not yet taken effect.
    Under these requirements, LI NET would be available to all 
categories of individuals who are LIS-eligible, including:
     Full Subsidy-Full Benefit Dual Eligible (FBDE) 
individuals, including institutionalized beneficiaries and 
beneficiaries receiving home and community-based services;
     Full Subsidy-Non-FBDE Individuals, including those who 
have applied or are eligible for QMB/SLMB/QI or SSI, with income and 
resource thresholds at or below the amounts set by CMS each year; and
     Partial Subsidy Individuals, including those who have 
applied and have income and resource amounts below the thresholds set 
by CMS each year.
    We propose to codify at Subpart Y the LI NET eligibility 
requirements set forth in section 1860D-14(e)(2) of the Act. We propose 
to establish in paragraph (a) of new Sec.  423.2504 two categories of 
individuals eligible to enroll in LI NET that encompass the previously 
noted categories of low-income individuals recognized by Part D. The 
first category, which we term ``LIS-eligible'' in proposed paragraph 
(a)(1), would be composed of individuals whose low-income status has 
been confirmed either through CMS's data in our system of record or 
because the individual can demonstrate their current or future low-
income status. The second category, which we term ``immediate need'' in 
proposed paragraph (a)(2), would consist of individuals whose low-
income status has not been confirmed, because CMS's data do not yet 
reflect the individual's low-income status, but the individual has 
indicated that they are eligible for the LIS.
    We refer to the individuals in the category established in proposed 
paragraph (a)(2) as ``immediate need'' because they present at a 
pharmacy or to the LI NET sponsor in immediate need of a prescription 
and have no Part D coverage. Ideally, these beneficiaries would be able 
to show documentation of their pending LIS status, such as a letter 
received from the State showing the beneficiary's LIS status. However,

[[Page 79471]]

we do not believe an absence of documentation in hand at the point-of-
sale should be a barrier to entry to LI NET for immediate need 
individuals. This is because our experience in the demonstration is 
that 80 percent of immediate need individuals do have their eligibility 
confirmed,\4\ and we would not want to turn away these individuals who 
imminently require access to their prescription drugs. Under the LI NET 
demonstration, individuals can indicate the likelihood of their low-
income status by providing the evidence they have, which can include 
verbal explanations of why they consider themselves eligible.
---------------------------------------------------------------------------

    \4\ Of the 80 percent of immediate need LI NET beneficiaries 
whose LIS status is ultimately confirmed, for 89 percent 
confirmation was within 10 days, and for 97 percent confirmation was 
within 21 days. In the demonstration, beneficiaries whose LIS status 
is not able to be confirmed within 21 days continue to be enrolled 
in LI NET for two months, but they can no longer fill prescriptions 
after 21 days.
---------------------------------------------------------------------------

    We propose in Sec.  423.2504(a)(2) to grant immediate access to 
covered Part D drugs at the point-of-sale for individuals whose 
eligibility as defined at Sec.  423.773 cannot be confirmed at the 
point-of-sale. Under proposed paragraph (a)(2)(i), immediate need 
individuals may provide documentation to the LI NET sponsor to confirm 
LIS eligibility. Documentation could include, but would not be limited 
to--
     A copy of the beneficiary's Medicaid card that includes 
their name and eligibility date;
     A copy of a letter from the State or SSA showing LIS 
status;
     The date that a verification call was made to the State 
Medicaid Agency, the name and telephone number of the State staff 
person who verified the Medicaid period, and the Medicaid eligibility 
dates confirmed on the call;
     A copy of a State document that confirms active Medicaid 
status;
     A screen-print from the State's Medicaid systems showing 
Medicaid status; or
     Evidence at point-of-sale of recent Medicaid billing and 
payment in the pharmacy's patient profile.
    Under proposed paragraph (a)(2)(ii), if an immediate need 
individual's LIS status cannot be confirmed within a period of 2 
months, that individual would not be automatically enrolled into a Part 
D plan. This is the same as current practice under the LI NET 
demonstration. We solicit comment on the proposal to align the 2 months 
of enrollment with the ability to fill prescriptions for these 
immediate need beneficiaries.
    We propose in Sec.  423.2504(a)(2)(i) that immediate need 
beneficiaries whose eligibility cannot be confirmed can continue to 
fill prescriptions throughout their 2-month enrollment in LI NET. We 
believe this ensures access to LI NET benefits and is an 
administratively simple approach as compared with alternative ideas, 
such as the approach under the demonstration of keeping immediate need 
beneficiaries with uncertain eligibility enrolled in LI NET but unable 
to fill prescriptions. We propose in Sec.  423.2504(a)(2)(ii) that if, 
by the end of an immediate need individual's enrollment in LI NET, 
neither CMS's systems nor the beneficiary's provision of documentation 
confirms low-income status, then that individual would not be auto-
enrolled into a qualifying standalone Part D plan following their LI 
NET coverage.
b. Enrollment
    Section 1860D-14(e) of the Act does not specify a process for 
enrollment into the LI NET program. Therefore, in forming our proposed 
enrollment process, we look to the process used in the demonstration. 
Under the LI NET demonstration, there are four ways for eligible 
individuals to be enrolled into the demonstration. They are as follows:
    Automatic enrollment. Individuals who are LIS-eligible but do not 
yet have Part D coverage, and those individuals who have selected a 
Part D plan but whose enrollment has not taken effect, are enrolled by 
CMS into the LI NET demonstration unless the beneficiary has 
affirmatively declined enrollment in Part D.
    Point of sale enrollment. Immediate need individuals whose claims 
are submitted by the pharmacy at the point-of-sale and billed to LI NET 
are enrolled into the LI NET demonstration by the LI NET sponsor.
    Direct reimbursement request. Individuals who are LIS-eligible and 
who submit receipts for reimbursement for claims paid out of pocket are 
retroactively enrolled into the LI NET demonstration by the LI NET 
sponsor, with 36-month retroactive coverage for full dual eligible 
individuals and those who receive supplemental security income (SSI) 
benefits.
    LI NET application form. Beneficiaries who are not enrolled into LI 
NET through auto-enrollment, point-of-sale enrollment or via an 
approved direct reimbursement request may submit an application form to 
the LI NET sponsor with supporting documentation demonstrating their 
LIS status. The LI NET sponsor will periodically check for eligibility 
and enroll applicants once eligibility is confirmed.
    The majority of LI NET beneficiaries are enrolled into the LI NET 
demonstration automatically by CMS; about 90 to 95 percent of LI NET 
beneficiaries are those we identify in our systems and enroll into the 
demonstration. To do this, CMS ``sweeps'' our data monthly to identify 
all beneficiaries who are--
     Eligible for LIS;
     Eligible for Part D;
     Not enrolled in a Part D plan or receiving the Retiree 
Drug Subsidy (RDS) or coverage through Veterans Affairs;
     Have not opted-out of Part D enrollment for any reason 
(for example, because they declined it);
     Not incarcerated, are lawfully present in the US, and do 
not live in another country; and
     Are not enrolled in a Part C plan that disallows 
concurrent enrollment in a Part D plan.
    Beneficiaries identified in the monthly sweep are automatically 
enrolled into the LI NET demonstration for that month and the following 
month. CMS then prospectively enrolls the beneficiary into a 
traditional Part D plan, with coverage under that plan taking effect 
immediately after the LI NET coverage ends. This population of 
beneficiaries includes those who may be gaining Part D eligibility or 
LIS status but have not made an election into a Part D plan.
    A smaller number of beneficiaries, about five to ten percent of LI 
NET beneficiaries, enroll in the LI NET demonstration outside of the 
sweeps process. Some enroll at the point-of-sale, as described 
previously. An even smaller number of beneficiaries contact the LI NET 
sponsor directly to enroll in the LI NET demonstration. Individuals can 
submit a request for reimbursement to the LI NET sponsor. If the person 
is LIS-eligible, the LI NET sponsor enrolls them into the LI NET 
demonstration and reimburses them for out-of-pocket costs during the 
duration of their retroactive enrollment. As with an individual who is 
enrolled at the point-of-sale, the start date of LI NET enrollment 
would be the first of the month the request is received. There may be 
individuals who do not have an immediate need for medication and 
believe they are eligible for LI NET. These individuals can fill out an 
application form, which allows the LI NET sponsor to periodically check 
their eligibility and enroll them into LI NET if they become eligible.
    Consistent with the enrollment processes under the demonstration, 
we propose in Sec.  423.2504(b) to codify the ways in which individuals 
can be enrolled into LI NET: auto-enrollment,

[[Page 79472]]

point-of-sale for immediate need individuals, direct reimbursement, and 
LI NET enrollment form.
    In Sec.  423.2504(b)(1), we propose that individuals who are LIS-
eligible and whose auto-enrollment into a Part D plan (as outlined in 
Sec.  423.34(d)(1)) has not taken effect will be automatically enrolled 
by CMS into the LI NET program unless they have affirmatively declined 
enrollment in Part D per Sec.  423.34(e). LIS-eligible beneficiaries 
who have made the decision to opt out of enrollment in Part D must take 
a proactive step to contact CMS for us to record that decision in our 
systems by placing a flag on the beneficiary's record. Beneficiaries 
may opt out of Part D enrollment if they have other insurance or do not 
want to participate as a matter of principle. We assume that a 
beneficiary who opts out of Part D enrollment would also want to opt 
out of transitional coverage under the LI NET program. Therefore, 
proposed Sec.  423.2504(b)(1) would provide that when a beneficiary 
affirmatively declines enrollment in Part D per Sec.  423.34(e), that 
would also entail opting out of LI NET enrollment.
    In defining ``transitional coverage'' for LI NET, the statute sets 
forth requirements for the duration of LI NET coverage under section 
1860D-14(e)(3). Section 1860D-14(e)(3)(A) of the Act establishes that 
``immediate access to covered part D drugs at the point of sale during 
the period that begins on the first day of the month such individual is 
determined to meet the requirements of clauses (ii) and (iii) of 
subsection (a)(3)(A) and ends on the date that coverage under a 
prescription drug plan or MA-PD plan takes effect with respect to such 
individual.'' The starting point of enrollment into LI NET for these 
types of LIS-eligible beneficiaries, whether they are automatically 
enrolled or immediate need individuals, is required by statute but the 
duration of time they prospectively remain enrolled in LI NET is not 
specified. Under the demonstration, we have typically capped non-
retroactive coverage in LI NET to 2 months. Consistent with the statute 
and with our operations under the demonstration, in Sec.  423.2504(c), 
we propose that LI NET enrollment begins on the first day of the month 
an individual is identified as eligible under Sec.  423.2504 and ends 
after 2 months.
    Section 1860D-14(e)(3)(B) of the Act sets a limit on how far back 
retroactive LI NET coverage can extend. Full-benefit dual eligible 
individuals (as defined in section 1935(c)(6)) and recipients of 
supplemental security income (SSI) benefits under title XVI) are 
eligible for up to 36 months of retroactive coverage. In proposed Sec.  
423.2504(c)(2), retroactive LI NET coverage would begin on the date an 
individual is identified as full-benefit dual or an SSI benefit 
recipient, or 36 months prior to the date such individual enrolls in 
(or opts out of) Part D coverage, whichever is later. This duration of 
time is similar to retroactive coverage under the demonstration, which 
provides for a maximum retroactive period of 36 months for Full Subsidy 
LIS eligible individuals.\5\ As with LI NET beneficiaries without 
retroactive coverage, we propose that LI NET coverage would end with 
enrollment into a Part D plan or opting out of Part D coverage.
---------------------------------------------------------------------------

    \5\ The LI NET demonstration provides an exception to the 36-
month maximum period of retroactive enrollment if there is a 
Medicaid determination within the last 90 days that confers Medicaid 
eligibility going back further than 36 months. In these situations, 
LI NET enrollment under the demonstration goes back to the start of 
Medicaid eligibility. We are not proposing an exception to the 36-
month limit on retroactive coverage in this rulemaking as the 
statute does not provide for such an exception.
---------------------------------------------------------------------------

    We propose in Sec.  423.2504(d) that enrollment in LI NET would end 
on the date that coverage under Part D takes effect, consistent with 
section 1860D-14(e)(3) of the Act. In the case of immediate need 
beneficiaries for whom LIS-eligibility is not confirmed and who are not 
enrolled into a PDP, enrollment would end 2 months after the immediate 
need enrollment begins. No matter the method of enrollment, we propose 
that the minimum duration of LI NET enrollment is 2 months unless the 
beneficiary elects to disenroll from LI NET or to enroll in a Part D 
plan. For example, an individual whom we auto-assign into LI NET 
starting April 1, 2024 would remain in LI NET for April and May 2024 
before being enrolled into an appropriate Part D plan starting June 1, 
2024.
    We provide two beneficiary examples to further explain how LI NET 
enrollment and disenrollment would work under our proposals:
    Example 1: Beneficiary Kristy is a full-benefit dual eligible and 
arrives at a pharmacy on May 5, 2024, with documentation showing that 
her LIS application is pending. She would have immediate coverage in LI 
NET for May and June 2024. If, in the course of adjudicating her LIS 
application, it is discovered that she was actually LIS-eligible dating 
back to January 2016, Kristy would be retroactively enrolled in LI NET 
as of July 1, 2021, which is the later of 36 months prior to the date 
she is enrolled in a Part D plan or the date she was first LIS eligible 
(since January 2016 is more than 36 months prior to her Part D plan 
enrollment, her retroactive coverage under LI NET is capped at 36 
months prior to such enrollment). Kristy's LI NET coverage would end 
June 30, 2024, upon her enrollment into a benchmark PDP starting July 
1, 2024, unless she makes the choice to opt-out.
    Example 2: The Social Security Administration notifies CMS in 
February 2024 that Beneficiary Ravi was eligible for both Medicare and 
SSI starting in November 2022. CMS provides Ravi retroactive Medicare 
drug coverage from November 2022, which is the later of 36 months prior 
to enrollment in a Part D plan or the date Ravi was first LIS eligible, 
through March 2024. After March 2024, if Ravi does not actively enroll 
in a plan of their choosing, CMS would randomly enroll them into a 
benchmark PDP with an April 1, 2024 effective date.
    As noted previously, our goal in the proposals is to match current 
eligibility and enrollment policy in effect in the demonstration and 
the Part D program, to the extent the statute permits. We seek comment 
on whether revised or additional regulations are required to achieve 
accurate, streamlined, and beneficiary friendly eligibility 
determinations and enrollment in the LI NET program.
3. Benefits and Beneficiary Protections
    Section 1860D-14(e)(4)(B)(i) of the Act requires the LI NET program 
to provide eligible beneficiaries with access to all Part D drugs under 
an open formulary. The statute, at clauses (ii) and (iii) of section 
1860D-14(e)(4)(B) of the Act, also requires the LI NET program to 
permit all pharmacies that are determined by the Secretary to be in 
good standing to process claims under the program, and to be consistent 
with such requirements as the Secretary considers necessary to improve 
patient safety and ensure appropriate dispensing of medication. These 
requirements are consistent with how the LI NET demonstration has 
operated, and we propose to codify the requirement that the LI NET 
program provide access to all Part D drugs under an open formulary in 
Sec.  423.2508(a). We propose in Sec.  423.2508(b) to require the LI 
NET sponsor to permit all pharmacies that CMS determines to be in good 
standing to process claims under the program, whether or not the 
pharmacy is a network or out-of-network (OON) pharmacy for the LI NET 
sponsor. Under the demonstration, we consider a pharmacy, including 
retail, mail-order, and institutional pharmacies, to be ``in good 
standing'' when it is licensed and does not have a fraud, waste, or 
abuse

[[Page 79473]]

determination against it. For the permanent LI NET program, we propose 
that a pharmacy would be in good standing if it is licensed, has not 
been revoked from Medicare under Sec.  424.535, does not appear on the 
Office of Inspector General's list of entities excluded from Federally 
funded health care programs pursuant to section 1128 of the Act and 
from Medicare under section 1156 of the Act (unless the OIG waives the 
exclusion, which the OIG has authority to do in certain specified 
circumstances), and does not appear on the preclusion list as defined 
in Sec.  423.100. A pharmacy will appear on the preclusion list if it:
     Is currently revoked from Medicare, is under an active 
reenrollment bar, and CMS has determined that the underlying conduct 
that led to the revocation is detrimental to the best interests of the 
Medicare program, including LI NET;
     Has engaged in behavior for which CMS could have revoked 
the entity to the extent applicable if they had been enrolled in 
Medicare, and CMS determines that the underlying conduct that would 
have led to the revocation is detrimental to the best interests of the 
Medicare program, including LI NET; or
     Has been convicted of a felony under Federal or State law 
within the previous 10 years that CMS deems detrimental to the best 
interests of the Medicare program, including LI NET.
    In Sec.  423.2508(c), we propose requirements we consider necessary 
to improve patient safety and ensure appropriate dispensing of 
medication consistent with subpart D of the Part D regulations. 
Existing Part D requirements related to appropriate dispensing, patient 
safety, electronic dispensing, quality improvement organization (QIO) 
activities, compliance, and accreditation would improve patient safety 
and appropriate dispensing. Specifically, we propose to apply the 
following provisions to the LI NET program and LI NET sponsor, as 
appropriate:
     Sec.  423.153(b) and (c) for dispensing and point-of-sale 
safety edits.
     Sec.  423.154 for appropriate dispensing of prescription 
drugs in long-term care facilities.
     Sec.  423.159, requiring an electronic prescription drug 
program.
     Sec.  423.160, excepting the requirements pertaining to 
formulary standards in Sec.  423.160(b)(5), setting forth standards for 
electronic prescribing.
     Sec.  423.162, for quality improvement organization (QIO) 
activities.
     Sec.  423.165, regarding compliance deemed on the basis of 
accreditation.
    We solicit comment on whether any of these provisions would not be 
compatible with the LI NET program proposed in this rulemaking.
    Section 1860D-14(e)(4)(B)(iv) of the Act provides the Secretary the 
authority to establish requirements for the LI NET coverage provided to 
LI NET eligible individuals. We draw upon our experience under the 
demonstration to propose cost sharing and appeals policy for LI NET in 
sections Sec.  423.2508(d) and (e), respectively.
    We propose in Sec.  423.2508(d)(1) that LI NET beneficiaries under 
Sec.  423.2504(a)(1) (that is, beneficiaries whose LIS-eligibility is 
established and who have not yet enrolled in a prescription drug plan 
or MA-PD plan, or who have enrolled in a prescription drug or MA-PD 
plan but coverage under such plan has not yet taken effect) would pay 
the applicable cost sharing for their low-income category as 
established in the yearly Announcement of Calendar Year Medicare 
Advantage (MA) Capitation Rates and Part C and Part D Payment Policies 
(the Rate Announcement publication specified in Sec.  422.312). Under 
the demonstration, LI NET beneficiaries pay the reduced cost-sharing 
aligned with the LIS categories defined in the Part D program. Because 
there is already the existing statutory requirement for CMS to update 
the parameters for the LIS benefit each year using statutory indexing 
methods, and because CMS and pharmacy systems are already set up to 
reflect the appropriate cost-sharing based on the LIS category of the 
individual, we believe it is reasonable to calculate and charge cost-
sharing in alignment with the Part D LIS categories. For immediate need 
beneficiaries, we propose in Sec.  423.2508(d)(2) these individuals 
would by default pay the cost-sharing associated with the category of 
non-institutionalized FBDE individuals with incomes above 100 percent 
of the Federal poverty level and full-subsidy-non-FBDE individuals 
(that is, Category Code 1). Of the four LIS eligibility categories, 
this category has the highest level of cost-sharing. Proposed Sec.  
423.2508(d)(2) would further provide that if the beneficiary is later 
confirmed to belong to a different LIS category, the beneficiary would 
be refunded by the LI NET sponsor for the difference between the cost 
sharing they paid versus what they would have paid in their confirmed 
LIS category. This approach allows for the least government liability 
for individuals whose LIS eligibility is unable to be confirmed while 
still allowing prescription drug access for immediate need individuals.
    We propose in Sec.  423.2508(e) that LI NET enrollees have rights 
with respect to Part D grievances, coverage determinations, and appeals 
processes set out in subpart M of the Part D regulations. The 
established processes would adequately adjudicate LI NET beneficiary 
concerns. This approach of using existing processes avoids needing to 
devote resources to establishing separate grievance, coverage 
determinations. Furthermore, consistency with other Part D contracts as 
it relates to grievances, coverage determinations, and appeals would be 
simplest for LI NET sponsors.
4. LI NET Sponsor Requirements
    Section 1860D-14(e)(4)(A) of the Act specifies that, as determined 
appropriate by the Secretary, the LI NET program is to be administered 
through a contract with a single administrator. Since the beginning of 
the demonstration, CMS has had one Part D sponsor serve as the sole 
contractor for administering the program. We have found that this 
approach supports our goal of administrative simplicity by making it 
unnecessary for each individual plan sponsor to check eligibility and 
conduct a retroactive enrollment/reimbursement process. In our 
experience, the benefits of having a single Part D sponsor administer 
LI NET include the following:
     Providing a single point of contact for beneficiaries and 
pharmacies attempting to have their claims paid.
     Providing a single point of contact for State Medicaid 
agencies submitting Medicaid eligibility and attempting to reconcile 
and coordinate claims.
     Simplifying the filing of retroactive beneficiary claims.
    There may be circumstances in which CMS may want to consider 
contracting with more than one Part D sponsor to administer LI NET. 
Though we have had stability in LI NET in terms of only having the 
single LI NET sponsor for the duration of the demonstration, we 
recognize the need for some protections should it become necessary for 
another entity to take over as LI NET sponsor and assume responsibility 
for providing LI NET coverage. The downside of consolidating LI NET 
functions into a single sponsor is the potential for beneficiary impact 
should there be a reason that the single LI NET sponsor no longer 
continues its functions. We believe that this potential of beneficiary 
impact is mitigated by our proposals to non-renew or terminate the LI 
NET contract, which are discussed in greater detail in section II.D.5. 
of this proposed rule, titled ``Contractor Selection and Contracting 
Guidelines.'' Accordingly,

[[Page 79474]]

while we propose at new Sec.  423.2512 that the program will be 
operated by ``one or more'' Part D sponsors, we intend to initially 
continue with the current practice of operating the program through a 
single sponsor because we determined the benefits outweigh potential 
beneficiary impacts, which have not come to bear since the start of the 
demonstration in 2010.
    We propose to establish at Sec.  423.2512 the requirements the LI 
NET sponsor must meet when administering the LI NET program.
     Because LI NET may enroll beneficiaries from across the 
nation, we propose to specify at Sec.  423.2512(a)(1) that the LI NET 
sponsor(s) would be selected from among the Part D sponsors with a 
national presence, with an established contracted pharmacy network in 
all geographic areas of the United States in which LIS is available, 
which as of the date of this proposed rule is the 50 States and the 
District of Columbia. Because LIS is not available in the territories, 
CMS would not require the LI NET sponsor to have network pharmacies in 
territories. LI NET beneficiaries could still access LI NET benefits 
while in the territories if needed, however, through out-of-network 
pharmacies.
     We find that some experience as a Part D sponsor should be 
a pre-requisite for being an LI NET sponsor, and propose at Sec.  
423.2512(b) that any candidates to be an LI NET sponsor have a minimum 
of 2 consecutive years contracting with CMS as a Part D sponsor.
     We propose at Sec.  423.2512(c) some technical and 
operational requirements of the LI NET sponsor. In Sec.  423.2512(c)(1) 
and (c)(2) we propose that the LI NET sponsor have the technical 
capability and the infrastructure to provide immediate, current, and 
retroactive coverage for LI NET enrollees and the technical capability 
to develop the infrastructure necessary for verifying Medicaid dual 
eligibility status for presumed eligible LI NET enrollees. In Sec.  
423.2512(c)(3), we propose requiring the LI NET sponsor to identify, 
develop, and implement outreach plans in consultation with CMS 
targeting key stakeholders to inform them about the LI NET program. 
Under the demonstration, CMS enrolls over 90 percent of LI NET 
beneficiaries into the LI NET plan and we expect CMS would continue to 
be responsible for most enrollees in a permanent LI NET program. For 
the beneficiaries who are not auto-enrolled, outreach is important so 
that stakeholders like the states, SHIPs, and pharmacies to have 
awareness and knowledge about the LI NET program. Under the 
demonstration, the LI NET sponsor routinely conducts outreach in 
consultation with CMS to inform stakeholders about the program. We 
propose to adopt this approach for the permanent LI NET program.
    As discussed further in this section of this rule, we propose to 
waive requirements under Sec. Sec.  423.128(d)(2)(ii), 
423.128(d)(2)(iii), and 423.128(d)(4). We also propose in Sec.  
423.2512(c)(4) that the LI NET sponsor be required to establish and 
manage a toll-free customer service telephone line and fax line that 
can be accessed by pharmacy providers and beneficiaries, or others 
acting on their behalf, for purposes that include but are not limited 
to: handling inquiries about services under the LI NET program, 
providing the status of eligibility or claims, and having the ability 
to accept documentation for evidence of eligibility.
    Reimbursement to beneficiaries with retroactive coverage is 
provided for in section 1860D-14(e)(3)(B) of the Act, as the ``amounts 
that would have been paid under this Part had such individual been 
enrolled in a prescription drug plan or MA-PD plan.'' This entails 
establishing a process for beneficiaries to request and receive such 
reimbursement. In the demonstration we provide a means for 
beneficiaries who receive retroactive coverage to submit a direct 
member out-of-pocket reimbursement request for Part D covered drugs for 
any past month(s) in which they were entitled to retroactive coverage 
under LI NET. The LI NET sponsor provides reimbursement to eligible 
beneficiaries based on the submitted cost minus any applicable 
copayments. Once the LI NET sponsor receives a written reimbursement 
request, they follow timeframes that are consistent with those Part D 
sponsors are already accustomed to in Sec.  423.636(a)(2) when they 
authorize payment for a benefit due to a reversal in their coverage 
determination. That is, under the demonstration, the LI NET sponsor has 
14 calendar days to reply with whether the claim is eligible for 
reimbursement, including the reason for denying the request if 
applicable. If the request for reimbursement is granted, the LI NET 
sponsor issues the reimbursement no later than 30 days after it 
determines the claim is eligible for reimbursement. As these timelines 
have proved workable under the demonstration, we propose in Sec.  
423.2512(c)(5) that the LI NET sponsor meet these deadlines related to 
direct reimbursement in the permanent LI NET program.
    In Sec.  423.2512(c)(6), we propose requiring the LI NET sponsor to 
adjudicate claims from out-of-network pharmacies according to the LI 
NET sponsor's standard reimbursement for their network pharmacies. As 
the LI NET sponsor must provide access to all Part D drugs under an 
open formulary, we believe there is the need for some protection 
against unreasonably high drug costs for OON claims in LI NET. Other 
Part D sponsors have the option to deny such claims, or to pay OON 
claims according to their standard reimbursement for their network 
pharmacies (with beneficiaries paying any difference between the cost 
of the OON claim the negotiated price). Because this restraint on 
unreasonable drug costs borne by the Medicare Trust Funds would not 
otherwise be present for LI NET, we believe a limit on how much the LI 
NET sponsor can be reimbursed for OON claims is needed.
5. Selection of LI NET Sponsor and Contracting Provisions
    Section 1860D-14(e)(6) of the Act authorizes us to implement LI NET 
without regard to laws relating to the making, performance, amendment, 
or modification of contracts of the United States as we may determine 
to be inconsistent with the furtherance of the purpose of Title XVIII. 
Thus, CMS is not required to follow the Federal Acquisition Regulation 
(FAR) or the contracting authority used under the Part D program. 
Neither is CMS required to contract with every qualified plan sponsor 
to provide LI NET Part D coverage, as we are required to do for 
qualified plan sponsors providing non-LI NET Part D coverage. If we 
followed the same approach for LI NET, we could have many points of 
contact for beneficiaries and pharmacies attempting to have their 
retroactive claims paid and multiple points of contact for State 
Medicaid agencies submitting Medicaid eligibility and attempting to 
reconcile and coordinate claims. This approach would not serve the 
purpose of providing smooth, transitional coverage for Part D drugs for 
LI NET eligible individuals through the LI NET program, which is a Part 
D program under Medicare in Title XVIII.
    Using the authority in section 1860D-14(e)(6) of the Act, we 
propose to follow the contracting approach set forth in proposed Sec.  
423.2516 to select the LI NET sponsor for the 2024 plan year and 
onwards.
    In Sec.  423.2516(a), we propose that CMS would appoint a Part D 
sponsor that meets the requirements at Sec.  423.2512 to serve as the 
LI NET sponsor. To determine this appointment, we propose that CMS may 
choose to conduct discussions with potentially eligible

[[Page 79475]]

entities to establish mutual interest and ability to administer the 
program. This circumstance could arise if, for example, CMS needs 
additional information in any particular year to learn more about a 
Part D sponsor's ability to administer the LI NET program. Under the 
demonstration, there is a multi-year contract approved by the Office of 
Management and Budget, and each year CMS and the LI NET sponsor have 
executed an addendum to the contract that included such information as 
the payment rates and risk corridors as determined in the final bid. As 
we consider options for establishing regulations to implement the 
permanent LI NET program, we find it is appropriate that we bring the 
LI NET contractor into closer alignment with other contracts in the 
Part D program by executing an LI NET contract with a Part D plan 
sponsor each plan year that contains, among other information, payment 
information for that year. Our expectation is that unless circumstances 
shift to prompt a change, the existing LI NET sponsor would continue in 
that role in the succeeding year. Therefore, in Sec.  423.2516(b), we 
propose selection criteria CMS may use in appointing an LI NET sponsor 
based on some features of the LI NET program that are related to a Part 
D sponsor's ability to successfully administer the program. These are--
     Experience covering low-income beneficiaries, including 
but not limited to enrolling and providing coverage to low-income 
subsidy individuals as defined in Sec.  423.34;
     Pharmacy access as outlined in Sec.  423.120;
     Past performance consistent with Sec.  423.503(b), 
including Star Ratings (as detailed in Sec.  423.186), and previous 
intermediate sanctions (as detailed in Sec.  423.750); and
     Ability to meet the requirements listed in Sec.  423.505 
that are not waived under Sec.  423.2536.
    As we are proposing that Part D requirements apply to the LI NET 
program unless waived, we intend for Sec.  423.505 to apply to LI NET, 
with the exception of Sec.  423.505(k)(6), which we propose to waive in 
proposed Sec.  423.2536(g). For example, the contract between the LI 
NET sponsor and CMS would be required to contain provisions in which 
the LI NET sponsor agrees to accept new enrollments, make enrollments 
effective, process voluntary disenrollments, and limit involuntary 
disenrollments (see Sec.  423.505(a) and (b)(2)). As another example, 
consistent with Sec.  423.505(b)(22), the LI NET contract would be 
required to include a provision in which the LI NET sponsor agrees to 
use the CMS complaint tracking system to address and resolve complaints 
received by CMS against the sponsor. Per Sec.  423.505(k), the LI NET 
contract would also require the LI NET sponsor to submit certifications 
of data that determine payment as applicable, such as for enrollment 
and payment information, claims data, bid submission information, DIR 
data, and overpayments. The only certification the LI NET sponsor would 
not submit is the one pertaining to data for price comparison under 
Sec.  423.505(k)(6); we believe this certification is unnecessary given 
that the LI NET plan is not one for which beneficiaries shop and thus 
would not be comparing against other plan options based on price 
considerations. We intend to exclude LI NET from Medicare Plan Finder, 
consistent with past practice under the demonstration. Therefore, it 
would not make sense to require certification to data for price 
comparison purposes, and we propose to waive this requirement in Sec.  
423.2536(g).
    In Sec.  423.2516(c), we propose that the term of the appointment 
will be ongoing provided mutual agreement between CMS and the selected 
party, subject to an annual contracting and bid process (per proposed 
Sec.  423.2524(c)) to determine payment rates for the upcoming year. 
This approach has worked well during the demonstration and we see no 
reason to propose a different approach for the permanent program.
    If the LI NET sponsor violates its contract, we propose in Sec.  
423.2518 that CMS would have the authority to impose intermediate 
sanctions as outlined in subpart O of the Part D regulations, just as 
we would for any other Part D sponsor.
    In Sec.  423.2520(a) we propose that if the LI NET sponsor decides 
for any reason to non-renew its existing contract, it must notify CMS 
by January 1 of the year before the next contract year. Except as 
provided in paragraph (c) of this section, if CMS decides for any 
reason to non-renew the existing contract with the incumbent LI NET 
sponsor, CMS would notify the LI NET sponsor by January 1 of the year 
before the next contract year. We propose that CMS could non-renew for 
any reason, without cause, and the LI NET sponsor would not have a 
right to appeal the non-renewal. To provide CMS the authority to non-
renew the LI NET contract with that particular sponsor for any reason 
with no appeal, we propose in Sec.  423.2536(e) waiving the appeals 
requirements in Subpart N except for those relevant to a contract 
termination. As there has only been a single LI NET sponsor for the 
duration of the demonstration, and we are anticipating a single LI NET 
sponsor for the permanent LI NET program, we do not want to assume the 
risk of the appeals process not providing finality by the time an LI 
NET sponsor would need to begin preparing the LI NET bid. Even if we 
required the appeals process to be complete by the April timeframe and 
while the appeal was pending moved forward with selection process, we 
would be cutting into or needing to forgo entirely the transition time 
of 3 months we propose in Sec.  423.2520(b) to ensure seamless 
transition of the LI NET program. Proposing to assume these risks would 
not further the purpose of the LI NET program being ready and available 
to provide immediate, current, and retroactive coverage for LI NET 
enrollees. We note that non-renewal, whether at the election of CMS or 
the LI NET sponsor, would not have an impact on the sponsor's 
eligibility to be selected as the LI NET sponsor in future years. As 
discussed in section II.D.4. of this proposed rule, we intend to 
initially contract with a single Part D sponsor to administer the LI 
NET program. Unlike beneficiaries in traditional Part D plans, 
beneficiaries enrolled in LI NET would not have the option of simply 
choosing to enroll in LI NET under a different sponsor. For these 
reasons, ample notice is needed if the LI NET sponsor does not intend 
to continue as the LI NET sponsor in the following year. We anticipate 
that CMS would be able to provide the same amount of notice to the LI 
NET sponsor if we were contemplating changing the LI NET sponsor for 
the following year. A decision to non-renew the LI NET contract with a 
particular Part D sponsor would not bar or prohibit that sponsor from 
being considered to be the LI NET sponsor in a future year. Any CMS 
decisions regarding LI NET sponsor selection would have no bearing on a 
Part D sponsor proceeding with the application process for other, non-
LI NET, Medicare prescription drug plans.
    In Sec.  423.2520(b), we propose that after a notice of non-
renewal, CMS would select a successor LI NET sponsor from among the 
other eligible entities (as detailed in proposed Sec.  423.2516). 
Similar to how our multi-year contracts with our contractors require an 
outgoing contractor to coordinate with any successor contractor during 
a transition period, proposed Sec.  423.2520(b) would require the 
outgoing LI NET sponsor to coordinate with the successor LI NET sponsor 
appointed by CMS for a period of no less than 3 months to ensure 
seamless transition for LI NET enrollees,

[[Page 79476]]

including timely transfer of any data or files. All data, files, 
written materials, and LI NET work products would be considered CMS's 
property. During the transition period, the outgoing and incoming LI 
NET sponsors would work together to develop a transition plan, 
including setting up a training schedule and a schedule of events for a 
smooth changeover.
    There may be exigent circumstances of risk to beneficiaries in 
which a more immediate termination is warranted. Referencing portions 
of CMS's immediate termination authority in Sec.  423.509, we propose 
to establish in Sec.  423.2520(c) that CMS may terminate the LI NET 
contract immediately if:
     CMS determinates that a delay in termination, resulting 
from non-compliance with the procedures provided in this Part prior to 
termination, would pose an imminent and serious risk to the health of 
the individuals enrolled with the LI NET sponsor, per Sec.  
423.509(b)(2)(i)(A);
     The LI NET sponsor has experienced financial difficulties 
so severe that its ability to make necessary health services available 
is impaired to the point of posing an imminent and serious risk to 
beneficiary health, or otherwise fails to make services available to 
the extent that such a risk to health exists per Sec.  
423.509(b)(2)(i)(B); or
     The LI NET sponsor has had one or more of the issues 
enumerated in paragraphs (a)(4)(i) and (xii) of Sec.  423.509.
    Proposed Sec.  423.2520(d) would provide that if CMS intends to 
terminate the contract under proposed Sec.  423.2520(c), CMS provides 
written notice to the LI NET sponsor informing it of its termination 
appeal rights in accordance with subpart N of this Part.
    We expect to identify the LI NET contract as X0001, and advance the 
plan benefit package number by one each year so that we can update the 
payment rates in our systems for the new payment year. If the LI NET 
contract with a particular LI NET sponsor is terminated, we would not 
discontinue use of the contract number X0001. Instead, we would 
terminate the relationship with that specific LI NET sponsor to provide 
LI NET coverage, and continue to allow enrollment under contract X0001.
6. Bidding and Payments to the LI NET Sponsor
    Section 1860D-14(e) of the Act does not specify how CMS is to 
determine the amounts that it pays to the LI NET sponsor under the 
contract or how payments are to be made. We propose to establish the 
methodology and formulas that we would use to determine the amounts we 
pay to the LI NET sponsor under the contract. We use our payment 
policies under the demonstration, including the bidding requirements, 
as the basis for the proposed LI NET payment policies in this rule. We 
do so because LI NET payment activities bear many similarities to those 
of typical Part D plans, because the infrastructure to pay in this 
manner is already established, and because we are proposing that the LI 
NET sponsor must be a Part D sponsor who would be familiar with these 
payment activities already, in this proposed rule.
    We propose in Sec.  423.2524(a) that CMS payments for the LI NET 
program would be made from the Medicare Prescription Drug Account, as 
payments are made to other Part D sponsors.
    In Sec.  423.2524(b) we propose requirements related to the LI NET 
bid. Because most of the provisions in Subpart F would not be 
applicable to LI NET, we propose to waive Subpart F except for those 
provisions we propose to apply to LI NET.
    Section 423.2524(b)(1) proposes that the submission of LI NET bids 
and related information will follow the requirements and limitations in 
Part 423, Subpart F, Sec. Sec.  423.265(b), (c), (d)(1), (d)(2)(i), 
(d)(2)(ii), (d)(2)(iv), (d)(2)(v), (d)(4), (d)(6), and (e). This 
proposal would require the LI NET sponsor to submit a bid and 
supplemental information in a format specified by CMS, with the same 
deadline as other Part D bids of no later than the first Monday of June 
each year. It also gives CMS the ability to request additional 
information from the LI NET sponsor to support bid amounts, and the 
ability to require revisions to the submitted LI NET bid before it is 
accepted. As with other Part D bids, a qualified actuary, whether 
internal or external to the plan sponsor, would certify the LI NET 
sponsor's actuarial valuation (which may be prepared by others under 
the qualified actuary's direction or review). The qualified actuary 
would need to be a member of the American Academy of Actuaries.
    We propose in Sec.  423.2524(b)(2) that the following provisions 
would apply in the review, negotiation, and approval of the LI NET bid: 
Sec.  423.272(a), (b)(1), and (b)(4). This would allow CMS to review 
the LI NET bid, conduct negotiations regarding the terms and conditions 
of the proposed bid, and approve it only if the bidding LI NET sponsor 
and the LI NET plan comply with all applicable CMS Part D requirements. 
As in typical Part D bid reviews, CMS would be able to decline the LI 
NET bid if it proposes significant increases in cost sharing (Sec.  
423.272(b)(4)). This approach follows the bid process under the 
demonstration, in which the LI NET sponsor submits a bid that estimates 
their costs and includes assumptions for enrollment and utilization 
based on prior experience. Starting with PY2021, the LI NET sponsor 
began using an LI NET Bid Pricing Tool (BPT) and accompanying 
instructions that were adapted from the traditional Part D BPT and 
instructions. Once the LI NET bid is accepted, we update this 
information in our systems for the new payment year for the LI NET 
demonstration. Each year, we advance by one the number designating the 
current plan benefit package. For example, the contract-PBP was X0001-
011 for plan year 2021 and X0001-012 for plan year 2022.
    Proposed Sec.  423.2524(b)(3) specifies the basic rule and major 
components of the LI NET bid, which are the LI NET sponsor's estimate 
of its revenue needs for Payment Rates A and B, which are discussed in 
greater detail in proposing Sec.  423.2524(d).
    In Sec.  423.2524(c) we propose that CMS would provide advance 
monthly LI NET payments, on a per-member, per-month (PMPM) basis, equal 
to the sum of Payment Rates A and B as established in the LI NET 
sponsor's approved bid submitted annually under paragraph (b) of this 
proposed section. Paying on a PMPM basis would align with other Part D 
payments and with our operations under the LI NET demonstration in 
which we provide a capitated PMPM amount established by the bid for 
each beneficiary enrolled in the demonstration. Unlike typical Part D 
monthly payments, the monthly LI NET payment under the demonstration is 
a PMPM amount that represents the sum of Payment Rates A and B, as 
determined by the LI NET bid. The bid represents the LI NET sponsor's 
total expected cost, minus any beneficiary co-pays, and with a 
reasonable margin that represents the LI NET sponsor's profit. Also, 
unlike other Part D payments, payments under the LI NET demonstration 
would not be risk adjusted. Because payments under the LI NET 
demonstration are cost reconciled (with the exception of risk 
corridors) and there is no concern about the LI NET sponsor cherry-
picking beneficiaries, we use a simpler payment methodology that does 
not include risk adjustment.
    We propose in Sec.  423.2524(c)(1) that Payment Rate A would be a 
monthly payment for projected administrative costs, constrained by an 
annual percentage cap set as part of the bid

[[Page 79477]]

review and negotiation under Sec.  423.272(a). Payment Rate A would 
include two elements, as it does under the demonstration. The first 
would be the LI NET sponsor's estimated administrative costs, which 
would represent the administrative costs to run the LI NET program 
inclusive of an amount for the margin, which represents the LI NET 
sponsor's profit. The second element in Payment Rate A would be the LI 
NET sponsor's estimated costs to pay pharmacy claims for prescriptions 
filled by immediate need individuals, for which the LI NET sponsor may 
not be able to submit a prescription drug event (PDE) record to CMS due 
to the individual's unconfirmed LIS status. We expect that these are 
generally the ``immediate need'' beneficiaries discussed in section 
II.D.2.a. of this proposed rule (under the heading ``Eligibility and 
Enrollment'') who are not confirmed to be LIS-eligible. We propose in 
Sec.  423.2524(c)(1)(i) that for the 2024 plan year, the LI NET sponsor 
includes in its bid the assumption that Payment Rate A cannot exceed a 
2 percent increase from the prior year's Payment A, which is a figure 
CMS will provide to the LI NET sponsor. For the 2025 plan going 
forward, we propose in Sec.  423.2524(c)(1)(ii) the LI NET sponsor will 
specify their assumption for any increase needed to the prior year's 
Payment Rate A, submitting justification to CMS in its bid if the cap 
exceeds 2 percent. Any proposed increase in Payment Rate A from year-
to-year would not be able to exceed the percentage cap. Similar to how 
CMS determines reasonableness in evaluating a plan's anticipated profit 
in the bid, we would use the same reasonableness standard in setting 
and negotiating the cap on Payment Rate A in the bid.
    In Sec.  423.2524(c)(2), we propose that Payment Rate B would 
reflect the projected net costs of the Part D drugs dispensed to 
individuals who receive the LI NET benefit. Payment Rate B would be the 
estimated actual drug costs minus direct and indirect remuneration 
(DIR). In the demonstration, we apply risk corridors to Payment Rate B 
so that excess gains and losses are shared between CMS and the LI NET 
sponsor. These risk corridors are symmetrical in sharing upside and 
downside risk, but are narrower than the risk corridors provided for 
under section 1860D-15(e) of the Act and applicable to other Part D 
plans. Because the risk corridors in the demonstration are so narrow, 
the LI NET sponsor has not assumed as much risk for LI NET as 
traditional Part D plans assume. CMS has not shared risk on Payment 
Rate A, in keeping with typical Part D plans for which CMS does not 
share risk on margin or administrative costs. In 2012, CMS revised the 
risk corridors under the LI NET demonstration to limit payment 
adjustments on Payment Rate B. For the portion of a plan's cost for 
drugs that is between the target amount and the threshold upper limit 
(101 percent of the target amount), the LI NET sponsor pays 100 percent 
of this amount. For the portion of the plan's cost for drugs that 
exceeds the threshold upper limit, the government pays 99.9 percent and 
the plan pays 0.1 percent. Similarly, if a plan's cost for drugs is 
between the target amount and the threshold lower limit (99 percent of 
the target amount), the LI NET sponsor keeps 100 percent of the 
difference between the drug cost and the target amount. If a plan's 
cost for drugs is lower than the threshold lower limit, the government 
keeps 99.9 percent and the plan keeps 0.1 percent of the difference 
between the plan's drug cost and the threshold lower limit.
    Both under the demonstration and for other Part D plans, after a 
payment year is over and the deadline for submitting payment data for 
that payment year has passed, we reconcile the payments for the year. 
This allows us to narrow the gap between what predicted and actual 
costs were in a given year, as well as share risk with plan sponsor in 
gains and losses. To provide for payment reconciliation and risk 
sharing in the LI NET program, we propose in Sec.  423.2524(d) to 
establish the payment policies for reconciliation and risk corridors, 
including adopting targeted provisions of existing risk sharing 
requirements. Proposed Sec.  423.2524(d)(1) provides that CMS would 
conduct LI NET payment reconciliation each year for Payment Rates A and 
B after the annual PDE data submission deadline has passed and make the 
resulting payment adjustment consistent with Sec.  423.343(a).
    In Sec.  423.2524(d)(2), we propose to establish the same risk 
corridors for Payment Rate B that apply under the demonstration: no 
risk sharing within 1 percent of the target amount and symmetrical 0.1 
percent risk sharing beyond the 1 percent corridor. To carry out risk 
sharing as part of reconciliation, we propose to have Sec.  423.336(c) 
apply to LI NET, which requires a plan sponsor to provide necessary 
cost data information to CMS and authorizes CMS to make either lump-sum 
payments or adjustments based on the risk corridor calculations.
    Proposed Sec.  423.2524(e) would establish that the LI NET contract 
is subject to the existing provision at Sec.  423.346 pertaining to 
payment reopenings. Per Sec.  423.346, CMS may reopen and revise an 
initial or reconsidered final payment determination for up to 5 payment 
years. Under the demonstration, each LI NET reconciliation has been in 
alignment with Sec.  423.346 and included the prior 5 years of PDEs. 
The most recently completed payment year gets reconciled for the first 
time along with reopening the prior 4 years. For example, in 2019, PBP 
008 for payment year 2018 was reconciled for the first time while PBPs 
004-007 (for payment years 2014 through 2017) were reopened. 
Sequestration is not used or accounted for in reconciliation, 
consistent with how we apply sequestration for other Part D plans. 
Under the demonstration, we maintain consistency between LI NET's PDE 
and DIR reporting deadlines and the reporting deadlines that apply to 
Part D plans (for example, the yearly deadline for data used for 
payment year reconciliation is June 30th). Enrollment, risk adjustment, 
and PDE certifications (attestations) are collected under the LI NET 
demonstration just like other contracts, and we propose to adopt the 
requirements in Sec.  423.505(k)(1) through (5), except for certifying 
to reinsurance data because LI NET does not receive a reinsurance 
subsidy. This proposal would require the LI NET sponsor to certify to 
the accuracy, completeness, and truthfulness of all data related to 
payment.
    As noted earlier in this section of this proposed rule, as a 
general matter, all payment rights and responsibilities under Part D 
that otherwise apply and are not explicitly waived in proposed Sec.  
423.2536 would apply to the LI NET program, as appropriate. Proposed 
Sec.  423.2524(f) would provide that the LI NET sponsor could appeal 
the payment calculation under Sec.  423.350. Proposed Sec.  423.2524(g) 
would establish that the LI NET contractor is subject to the ``report 
and return'' overpayment requirements under Sec.  423.360.
7. Part D Program Waivers
    Because the LI NET sponsor is a Part D sponsor and the LI NET 
contract is a PDP contract, many existing provisions in Part 423 apply 
to LI NET. The exceptions are those provisions waived by the statute, 
those provisions that are inapplicable to LI NET, and the requirements 
we propose to waive through this rulemaking.
    The LI NET statute at section 1860D-14(e)(5)(A) of the Act provides 
that paragraphs (1) and (3)(B) of section 1860D-4(a) of the Act, 
subparagraphs

[[Page 79478]]

(A) and (B) of section 1860D-4(b)(3) of the Act, and paragraphs (1)(C) 
and (2) of section 1860D-4(c) of the Act do not apply to the LI NET 
program; thus, requirements relating to dissemination of general 
information and the provision of formulary information, formulary 
requirements, and medication therapy management (MTM) program 
requirements do not apply to LI NET. For this reason, we propose to 
waive formulary requirements in Sec. Sec.  423.120(b), 423.128(e)(5), 
and 423.128(e)(6) and MTM program requirements in Sec.  423.153.
    Section 1860D-14(e)(5)(B) of the Act contains broad waiver 
authority to ``waive such other requirements of title XI and this title 
as may be necessary to carry out the purposes of the program 
established under this subsection''. We also propose to waive for LI 
NET some of the cost control and quality improvement requirements in 
Part 423 Subpart D, except for the provisions we explicitly propose to 
adopt in Sec.  423.2508(d)(1) through (d)(5) that relate to appropriate 
dispensing, patient safety, electronic dispensing, QIO activities, 
compliance, and accreditation. This proposal would waive requirements 
that would not make sense in the context of temporary coverage with 
access to an open formulary. The requirements we propose to waive 
pertain to drug utilization management programs, medication therapy 
management programs, and consumer satisfaction surveys.
    We solicit comment on whether we should waive any additional 
regulatory provisions related to paragraphs (1) and (3)(B) of section 
1860D-4(a) of the Act and subparagraphs (A) and (B) of section 1860D-
4(b)(3) of the Act.
    As discussed in section II.D.4. of this proposed rule, we are 
proposing that the LI NET sponsor submit most of the certifications 
listed in Sec.  423.505(k), with the exception that we are waiving the 
certification of accuracy of data for price comparison in paragraph 
(k)(6), given that the LI NET plan is not one for which beneficiaries 
shop.
    Part D beneficiaries receiving a low-income subsidy are not 
eligible for the coverage gap discount program, and under the 
demonstration LI NET was not subject to coverage gap discount 
requirements under subpart W of Part 423. Thus, we propose in Sec.  
423.2536(i) to waive subpart W in full for LI NET.
    We propose in Sec.  423.2536(j) to waive the MLR requirements in 
subpart X of Part 423.
    Section 1857 as incorporated into 1860D-14(e) of the Act does not 
speak to MLR requirements for LI NET. Under the LI NET demonstration, 
CMS does not require the LI NET sponsor to meet the minimum medical 
loss ratio (MLR) requirement or to report the MLR for the LI NET 
contract as it does for other Part D contracts. This is due to the 
unique payment structure for the contract. Under Part D, a sponsor 
submits a single bid including estimated administrative costs, returns 
on investment, and drug costs, which are risk-adjusted. After a payment 
year concludes, Part D sponsors are required under subpart X of Part 
423 to report the MLR for each contract, and if the MLR for a contract 
is below 85 percent, the sponsor is required to remit payment to CMS. 
Enrollment sanctions are applied to contracts that fail to meet the 
minimum MLR requirement for three3 consecutive years, and contracts 
that fail to meet the requirement for 5 consecutive years are subject 
to termination. The minimum MLR requirement is intended to create 
incentives for Part D sponsors to reduce administrative costs such as 
marketing costs, profits, and other such uses of plan revenues, and to 
help ensure that taxpayers and enrolled beneficiaries receive value 
from Medicare health plans. Because of the limits we are proposing to 
place on how much administrative costs in LI NET under Payment Rate A 
can increase year over year and because of the differing payment 
structure, we do not believe MLR reporting should be applicable to LI 
NET.
    The Affordable Care Act amended section 1893(h) of the Act to 
expand the use of Recovery Audit Contractors (RACs) to include the MA 
and Part D programs. Section 1893(h)(9) of the Act specifies that, 
under contracts with the Secretary, Part D RACs are required to ensure 
that each PDP has an anti-fraud plan in effect and to review the 
effectiveness of each such anti-fraud plan, to examine claims for 
reinsurance payments to determine whether PDPs submitting such claims 
incurred costs in excess of the costs allowed, and to review estimates 
submitted by PDPs with respect to the enrollment of high-cost 
beneficiaries and compare such estimates with the numbers of such 
beneficiaries actually enrolled by such plans. Because the LI NET 
sponsor must enroll every eligible LI NET beneficiary, and because LI 
NET does not receive reinsurance, a Part D RAC's review or examination 
of LI NET claims would likely be extremely limited in scope. As other 
audit, oversight, and compliance requirements would continue to apply 
to the LI NET program, the other program integrity safeguards we have 
proposed for the LI NET program would be adequate, and we therefore 
propose to waive application of the RAC requirements in subpart Z of 
Part 423.
    In surveying the items under Part 423 for the Voluntary Medicare 
Prescription Drug Benefit, we attempted to categorize existing 
requirements as applicable, inapplicable, or a candidate for waiver. We 
solicit comment on whether there are additional provisions in part 423 
that we have not mentioned in this proposed rule and that we should 
address for LI NET.
8. Technical Corrections
    In the course of this rulemaking, we noticed the need for a 
technical correction in Sec.  423.505(b)(22), which requires Part D 
sponsors to address and resolve complaints received by CMS against the 
Part D sponsor. The regulation text currently refers to MA organization 
when it should refer to Part D sponsor, and thus we propose to make the 
correction.
    We also propose to make a technical correction in the header of 
subpart Z of Part 423. The header in regulation text currently is 
``Recovery Audit Contractor Part C Appeals Process'' when it should be 
referring to Part D. Thus, we propose to make the technical correction 
so the header correctly reads, ``Recovery Audit Contractor Part D 
Appeals Process.''

E. Expanding Eligibility for Low-Income Subsidies Under Part D of the 
Medicare Program (Sec. Sec.  423.773 and 423.780)

    The Part D low income subsidy (LIS) helps people with Medicare who 
meet certain statutory income and resource criteria pay for 
prescription drugs and lowers the costs of prescription drug coverage. 
Individuals who qualify for the full LIS receive assistance to pay 
their full premiums and deductibles (in certain Part D plans) and have 
reduced cost sharing. Individuals who qualify for the partial LIS pay 
reduced premiums (on a sliding scale based on their income) and also 
have reduced deductibles and cost sharing.
    Currently, in order to qualify for the full subsidy, an individual 
must live in 1 of the 50 States or the District of Columbia and meet 
the income and resource standards established in at section 1860D-
14(a)(3)(D) of the Act and codified at Sec.  423.773. To be eligible 
for the full subsidy, individuals must have countable income below 135 
percent of the Federal poverty level (FPL) for the individual's family 
size. In addition, an individual must have resources that do not exceed 
three times the resource limit under section 1613 for applicants for 
Supplemental Security Income (SSI) under title XVI. The resource limit 
increases annually by

[[Page 79479]]

the percentage increase in the Consumer Price Index (CPI, all items, 
U.S. city average) as of September for the year before and is rounded 
to the nearest multiple of $10. The resource limits in 2006 (at the 
start of the Part D benefit) were $6,000 for a beneficiary who was 
single or $9,000 if the beneficiary was married, and in 2022 the 
amounts are $8,400, if single, or $12,600, if married.
    Individuals who are not eligible for the full LIS subsidy may be 
eligible for the partial LIS subsidy if they live in 1 of the 50 States 
or the District of Columbia and have incomes below 150 percent of the 
FPL for their family size and have resources that do not exceed the 
amounts specified in section 1860D-14(a)(3)(E)(I) of the Act. Similar 
to the resource limits for the full subsidy group, these amounts are 
increased annually by the percentage increase in the CPI as of 
September for the year before and rounded to the nearest multiple of 
$10. The resource limits for the partial subsidy in 2006 were $10,000 
for a beneficiary who was single or $20,000 if the beneficiary was 
married, and the limits in 2022 are $14,010, if single, or $27,950, if 
married.
    Section 11404 of the Inflation Reduction Act (IRA) (Pub. L. 117-
169), enacted on August 16, 2022, amended section 1860D-14 of the Act 
to expand eligibility for the full LIS subsidy group to individuals 
with incomes below 150 percent of the FPL and who meet either the 
resource standard in paragraph (3)(D) or paragraph (3)(E) of section 
1860D-14(a) of the Act, beginning on or after January 1, 2024. This 
change will provide the full LIS subsidy for those who currently 
qualify for the partial subsidy.
    To implement the changes to the LIS income requirements, we propose 
to amend Sec.  423.773(b)(1) to add that to be eligible for the full 
subsidy for plan years beginning on or after January 1, 2024, an 
individual must have an income below 150 percent of the FPL. To 
coordinate with this change, we are also proposing to amend Sec.  
423.773(d) to specify that the requirement that an individual have an 
income below 150 percent of the FPL to be eligible for the partial 
subsidy applies only to plan years beginning before January 1, 2024. 
This latter change will effectively sunset the partial subsidy income 
requirements after 2023.
    To implement the changes to the resource limits, we propose to 
amend Sec.  423.773 to state that the current resource limits 
applicable for the full subsidy at paragraph (b)(2)(ii) apply to years 
2007 through 2023. We also propose to add a new Sec.  
423.773(b)(2)(iii) to state that for years beginning on or after 
January 1, 2024, the resource limits at paragraph (d)(2) of Sec.  
423.773--the resource standards currently applicable for the partial 
subsidy--would apply to full subsidy eligible individuals.
    Lastly, we propose to amend Sec.  423.780(d) to specify that the 
sliding scale premium amounts currently applicable for individuals with 
the partial subsidy apply with respect to plan years beginning before 
January 1, 2024. These individuals who have incomes between 135 and 150 
percent of the FPL and who meet the resource requirements will now 
qualify for the full subsidy beginning in 2024, and will be entitled to 
a premium subsidy of 100 percent of the premium subsidy amount, as 
outlined in Sec.  423.780(a).

III. Enhancements to the Medicare Advantage and Medicare Prescription 
Drug Benefit Programs

A. Health Equity in Medicare Advantage (MA) (Sec. Sec.  422.111, 
422.112, and 422.152)

1. Introduction
    On January 20, 2021, President Biden issued Executive Order (E.O.) 
13985: ``Advancing Racial Equity and Support for Underserved 
Communities Through the Federal Government,'' (hereinafter referred to 
as E.O. 13985).\6\ E.O. 13985 describes the Administration's policy 
goals to advance equity across Federal programs and directs Federal 
agencies to pursue a comprehensive approach to advancing equity for 
all, including those who have been historically underserved, 
marginalized, and adversely affected by persistent poverty and 
inequality. In response, CMS announced its 2022 CMS Strategic Plan, and 
``Advance Equity'' is the first pillar of that Strategic Plan.\7\ This 
pillar emphasizes the importance of advancing health equity by 
addressing the health disparities that impact our health system. CMS 
defines health equity as ``the attainment of the highest level of 
health for all people, where everyone has a fair and just opportunity 
to attain their optimal health regardless of race, ethnicity, 
disability, sexual orientation, gender identity, socioeconomic status, 
geography, preferred language, or other factors that affect access to 
care and health outcomes.'' \8\ This is the definition of health equity 
that we use for all health equity provisions in this proposed rule.
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    \6\ https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/.
    \7\ https://www.cms.gov/cms-strategic-plan.
    \8\ https://www.cms.gov/pillar/health-equity.
---------------------------------------------------------------------------

    CMS continues to work diligently to identify regulatory actions 
that can help support CMS's goal to advance health equity or that 
already address health equity topics but should be expanded in order to 
meet the increasingly diverse needs of enrollees served by MA 
organizations. In order to support the Administration's goal of 
advancing equity for all, it is imperative that we ensure our 
regulations address topics that enable disadvantaged populations to 
fully access the care that the regulations already allow them to 
receive. Consequently, we are proposing several regulatory updates in 
the MA program related to health equity. These proposals include 
requirements intended to ensure equitable access to MA services, ensure 
MA provider directories reflect providers' cultural and linguistic 
capabilities and notate MOUD-waivered providers, ensure MA enrollees 
with low digital health literacy are identified and offered digital 
health education to assist them in accessing any medically necessary 
covered telehealth benefits, and ensure MA organizations incorporate 
one or more activities into their overall quality improvement program 
that reduce disparities in health and health care among their 
enrollees. CMS believes that the proposed changes included in this 
proposed rule would address health disparities in the MA program and 
could be essential to more broadly supporting other equity-focused 
efforts across CMS policies and programs.
2. Ensuring Equitable Access to Medicare Advantage (MA) Services (Sec.  
422.112)
    As discussed extensively in section III.A.1. of this proposed rule, 
E.O. 13985 describes the Administration's policy goals to advance 
equity across the Federal Government. Currently, Sec.  422.112(a)(8) 
requires MA organizations that offer coordinated care plans to ensure 
that services are provided in a culturally competent manner to all 
enrollees, including those with limited English proficiency or reading 
skills, and diverse cultural and ethnic backgrounds.
    As discussed in the interim final rule with comment period titled, 
``Medicare Program; Establishment of the Medicare+Choice Program,'' 
which appeared in the Federal Register on June 26, 1998 (63 FR 34968, 
34989) (the June 1998 IFC), the goal of this regulatory requirement was 
to ensure that enrollees with limited English proficiency, limited 
education, or other socioeconomic disadvantages receive the health care 
to which they are entitled. This requirement was part of

[[Page 79480]]

several provisions implementing and setting standards for ensuring 
access to covered services. CMS later finalized the provision in the 
final rule titled Medicare Program; Medicare+Choice Program, which 
appeared in the Federal Register on June 29, 2000 (65 FR 40170) (the 
June 2000 final rule) with a somewhat detailed discussion of the 
objectives served by this provision (65 FR 40217 through 40218). The 
principle objective underlying the current requirement to provide 
services in a culturally competent manner is to address unique racial 
and ethnically-related health care concerns. However, the regulation 
explicitly applies to all enrollees and does not include an exception 
for any enrollees; therefore, this consideration must be part of an MA 
organization's work in ensuring that all covered benefits are available 
and accessible to all enrollees. The regulation applies to ``all 
enrollees'' even though specific populations are mentioned as examples 
of enrollees to whom services must be provided in a culturally 
competent manner.
    In the June 2000 final rule (65 FR 40217), CMS discussed that 
appropriate care delivery should accommodate the unique health-related 
beliefs, attitudes, practices, and communication patterns of 
beneficiaries and their caregivers to improve services, strengthen 
programs, increase community participation and eliminate disparities in 
health status among diverse population groups; CMS also emphasized the 
importance for health care providers and administrative staff to 
possess a set of attitudes, skills, behaviors, and policies that 
enables the organization to effectively provide services to diverse 
population groups. While Sec.  422.112(a)(8) already applies to all 
enrollees, CMS believes that amendments to the current regulatory text 
would better reflect the broad scope of underserved populations that MA 
organizations must ensure have access to services provided in a 
culturally competent manner. As the populations that CMS serves become 
increasingly diverse, it is imperative to keep regulations updated to 
ensure broad protections are available that minimize the potential for 
discriminatory barriers, including any electronic tools that use 
discriminatory algorithms, to surface. Thus, CMS is proposing the 
following changes and additions to the regulatory language at Sec.  
422.112(a)(8) with an intention to clarify the scope of the existing 
requirements, consistent with the direction and goals of E.O. 13985. 
CMS notes that the requirements at Sec.  422.112(a)(8) were originally 
codified using our authority in section 1852(d) of the Act (concerning 
access to services) as well as our authority in section 1856(b)(1) of 
the Act to establish standards under Part C; the intent of this 
proposal is to update the regulatory language at Sec.  422.112(a)(8) 
for clarification purposes rather than to make actual changes in 
requirements. We continue to rely on sections 1852(d) and 1856(b)(1) of 
the Act as the basis for Sec.  422.112, including these changes, 
consistent with the June 1998 IFC and finalization in a February 1999 
final rule (64 FR 7981) of these existing requirements.
    The current paragraph heading at Sec.  422.112(a)(8), which 
precedes the existing equitable access provisions, is titled ``Cultural 
considerations.'' CMS acknowledges that the term ``cultural 
considerations'' could create the misconception that the protections of 
the provisions apply only to some populations and not others. CMS is 
proposing to revise this heading to ``Ensuring Equitable Access to 
Medicare Advantage (MA) Services.'' The term ``equitable access'' is a 
broader and more suitable description for the paragraph, as it does not 
suggest an emphasis on protecting access to care for one population 
over another. We believe these changes will more clearly reflect the 
inclusive nature of the protections MA organizations must guarantee for 
all enrollees under these provisions.
    Additionally, the current regulatory language describes some 
underserved groups as examples of populations that may require 
accommodations that are specific to their needs--those with limited 
English proficiency or reading skills, and diverse cultural and ethnic 
backgrounds. Amending the text to identify additional types of 
underserved groups will provide clarity with regard to the populations 
MA organizations must accommodate in order to meet requirements for 
access to services. At Sec.  422.112(a)(8), CMS proposes to replace the 
phrase ``those with limited English proficiency or reading skills, and 
diverse cultural and ethnic backgrounds'' after the word ``including'' 
and to add in its place additional paragraphs listing more examples of 
underserved populations to whom an MA organization must ensure that 
services are provided in a culturally competent manner and promote 
equitable access to services in order to satisfy the existing 
requirement. The proposed new list would be as follows: (i) people with 
limited English proficiency or reading skills; (ii) people of ethnic, 
cultural, racial, or religious minorities; (iii) people with 
disabilities; (iv) people who identify as lesbian, gay, bisexual, or 
other diverse sexual orientations; (v) people who identify as 
transgender, nonbinary, and other diverse gender identities, or people 
who were born intersex; (vi) people who live in rural areas and other 
areas with high levels of deprivation; and (vii) people otherwise 
adversely affected by persistent poverty or inequality. CMS notes that 
MA organizations must provide all enrollees, without exception, 
accommodations to equitably access services according to applicable 
statutory, regulatory, and other guidance. These provisions should not 
be construed to mean that accommodations are required only for 
enrollees who belong to the groups listed herein.
    CMS believes these clarifications are necessary and are consistent 
with the Administration's goal of ensuring equity across Federal 
programs, consistent with E.O. 13985. CMS welcomes public comment in 
response to this proposal.
3. Medicare Advantage (MA) Provider Directories (Sec.  422.111)
    Section 1852(c)(1) of the Act requires an MA organization to 
disclose, among other things, the number, mix, and distribution of plan 
providers in a clear, accurate, and standardized form to each enrollee 
in an MA plan offered by the MA organization at the time of enrollment 
and at least annually thereafter. We implemented this requirement in a 
regulation at Sec.  422.111(a) and (b)(3)(i), requiring that an MA 
organization must disclose the number, mix, and distribution 
(addresses) of providers from whom enrollees may reasonably be expected 
to obtain services, in the manner specified by CMS, to each enrollee 
electing an MA plan it offers; in a clear, accurate, and standardized 
form; and at the time of enrollment and at least annually thereafter, 
by the first day of the annual coordinated election period. In 
addition, under Sec.  417.427, the MA disclosure requirements at Sec.  
422.111 also apply to section 1876 cost plans.
    CMS has historically interpreted the disclosure requirement at 
Sec.  422.111(b)(3)(i)--``the number, mix, and distribution (addresses) 
of providers from whom enrollees may reasonably be expected to obtain 
services''--as referring to the provider directory. CMS developed the 
MA and Section 1876 Cost Plan Provider Directory Model,\9\ a model 
material created as an example of how to convey the required 
information

[[Page 79481]]

to enrollees. In accordance with Sec.  422.2267(c), when drafting their 
provider directories based on CMS's model, organizations must 
accurately convey the required information and follow the order of 
content specified by CMS.
---------------------------------------------------------------------------

    \9\ The current MA and Section 1876 Cost Plan Provider Directory 
Model is located at: https://www.cms.gov/Medicare/Health-Plans/ManagedCareMarketing/MarketngModelsStandardDocumentsandEducationalMaterial.
---------------------------------------------------------------------------

    The current provider directory model contains an array of specific 
required information based on Sec.  422.111(b)(3)(i); we refer to this 
information collectively as required provider directory data elements. 
For example, organizations must list only the office or practice 
location(s) where the provider regularly practices, must clearly 
identify the capacity in which the provider is serving (that is, 
specialty type), and must clearly identify whether or not a provider is 
accepting new patients or provide a notice directing beneficiaries to 
contact a provider to determine if he or she is accepting new patients. 
Other examples of required provider directory data elements include up-
to-date provider practice names and notations next to providers' 
listings indicating any restrictions on access. Several of these data 
elements are tied to how Sec.  422.111(b)(3)(i) requires the 
organization to disclose information about providers from whom 
enrollees may reasonably be expected to obtain services; issues of 
access, including whether the provider is accepting new patients, are 
integral to whether an enrollee may reasonably be expected to obtain 
covered services from that provider. In addition, some of these 
provider directory data elements (for example, restrictions on access 
notations, accepting new patients indicator) contain important 
information that organizations should be taking into account to verify 
that their networks are truly adequate. This enables the organization 
to ensure that all covered services are available and accessible under 
the plan, as required by section 1852 of the Act and Sec.  422.112(a).
    In addition to the required provider directory data elements, CMS 
guidance addresses best practices for provider directories, including 
encouraging organizations to identify non-English languages spoken by 
each provider and provider/location accessibility for people with 
physical disabilities. CMS proposes to codify these two best practices 
(the latter in terms of deaf or hard of hearing individuals) as a 
regulatory requirement at Sec.  422.111(b)(3)(i). Specifically, we 
propose to mirror the Medicaid provider directory requirements at Sec.  
438.10(h)(1)(vii) by adding the phrase ``each provider's cultural and 
linguistic capabilities, including languages (including American Sign 
Language) offered by the provider or a skilled medical interpreter at 
the provider's office'' to paragraph (b)(3)(i). This would change these 
two best practices to required data elements that all organizations 
must include in their provider directories. Currently, the Medicaid 
managed care regulation at Sec.  438.10(h)(1)(vii) requires that 
provider directories for Medicaid managed care plans include 
information on the provider's cultural and linguistic capabilities, 
including languages (including American Sign Language (ASL)) offered by 
the provider or a skilled medical interpreter at the provider's office 
as well as other information identifying the provider's location, 
contact information, specialty, and other information important for 
beneficiaries in selecting a healthcare provider. The proposal here 
makes use of the precedent established by the Medicaid program and 
helps move the agency closer to its goal of aligning the various CMS 
program requirements.
    We note that the phrase ``cultural and linguistic capabilities'' as 
proposed here for Sec.  422.111(b)(3)(i) refers to the capabilities of 
a provider (or skilled medical interpreter at the provider's office) to 
deliver culturally and linguistically appropriate services (CLAS), 
which are defined by the HHS Office of Minority Health as ``services 
that are respectful of and responsive to individual cultural health 
beliefs and practices, preferred languages, health literacy levels, and 
communication needs.'' \10\ As indicated by several research studies, 
language concordance between providers and limited English proficient 
individuals is associated with better health outcomes, and so better 
matching patients with providers who speak the same language is 
expected to improve quality of care and reduce disparities.\11\ CMS 
believes this important proposed regulatory change would enhance the 
quality and usability of provider directories, particularly for non-
English speaking enrollees searching for providers who speak their 
preferred language, for limited English proficient individuals, and for 
those enrollees seeking providers who use ASL themselves or have an ASL 
interpreter available in their office.
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    \10\ https://www.minorityhealth.hhs.gov/Assets/PDF/TCH%20Resource%20Library_CLAS%20CLC%20CH.pdf.
    \11\ https://pubmed.ncbi.nlm.nih.gov/20878497/; https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2599011; 
https://link.springer.com/article/10.1007/s11606-019-04847-5.
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    This proposal does not implement, take the place of, or supersede 
an organization's or provider's obligations to take reasonable steps to 
ensure meaningful access to such programs or activities by limited 
English proficient individuals and appropriate steps to ensure that 
communications with individuals with disabilities are as effective as 
communications with others in such programs or activities, including 
the provision of oral language assistance services and/or auxiliary 
aids and services when required by applicable law (section 1557 of the 
Patient Protection and Affordable Care Act (PPACA) and 45 CFR part 92). 
We are proposing this new requirement for MA provider directories as a 
standard for implementing and ensuring compliance with section 
1852(c)(1)(C) of the Act and as a necessary and appropriate standard to 
ensure that MA enrollees have the information they need in order to 
access covered services from an MA plan.
    This proposal is also consistent with the health equity objectives 
of CMS's first strategic pillar ``Advance Equity'' under the 2022 CMS 
Strategic Plan.\12\ It supports current CMS efforts to advance health 
equity by giving enrollees a fair and just opportunity to access health 
care services regardless of preferred language. Please refer to 
sections III.A.1. and III.A.2. of this proposed rule for more extensive 
discussion of health equity issues in the MA program.
---------------------------------------------------------------------------

    \12\ https://www.cms.gov/cms-strategic-plan.
---------------------------------------------------------------------------

    To further enhance our requirements for MA provider directories in 
the area of behavioral health, we also propose to add a new required 
provider directory data element for certain providers who offer 
medications for opioid use disorder (MOUD). Access to MOUD can be life-
saving, but too often, patients do not know how to access this type of 
care. MA enrollees may have little insight as to which providers can 
provide MOUD. This problem is especially urgent, as overdose deaths 
from opioids have skyrocketed during the COVID-19 pandemic.\13\ 
Therefore, we propose to require organizations to identify certain 
providers in their provider directories who have obtained a waiver 
under section 303(g)(2) of the Controlled Substances Act (CSA) (21 
U.S.C. 823(g)(2)(B)(i)-(ii)) from the Substance Abuse and Mental Health 
Services Administration (SAMHSA) and the Drug Enforcement 
Administration (DEA) to treat patients with MOUD (for example, 
methadone, buprenorphine, naltrexone, naloxone, or Suboxone) and who 
are listed on SAMHSA's

[[Page 79482]]

Buprenorphine Practitioner Locator (BPL).\14\
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    \13\ https://www.cdc.gov/nchs/nvss/vsrr/drug-overdose-data.htm.
    \14\ https://www.samhsa.gov/medication-assisted-treatment/find-treatment/treatment-practitioner-locator.
---------------------------------------------------------------------------

    Specifically, we propose to include this new regulatory requirement 
at Sec.  422.111(b)(3)(i) by adding the phrase ``notations for MOUD-
Waivered Providers as defined in Sec.  422.116(b)(1)(xxx) who are 
listed on the Substance Abuse and Mental Health Services 
Administration's Buprenorphine Practitioner Locator'' to paragraph (i). 
We are using the term ``MOUD-Waivered Providers'' as section III.B.2. 
of this proposed rule is proposing to define this term at proposed 
Sec.  422.116(b)(1)(xxx) as ``providers who are waived by the Substance 
Abuse and Mental Health Services Administration and the Drug 
Enforcement Agency to administer, dispense, or prescribe narcotic drugs 
in schedule III, IV, or V or combinations of such drugs to patients for 
maintenance or detoxification treatment for opioid use disorder in 
accordance with section 303(g)(2) of the Controlled Substances Act.'' 
Thus, to avoid duplication and ensure consistency in application of the 
term, at proposed Sec.  422.111(b)(3)(i), we cross-reference the 
definition at proposed Sec.  422.116(b)(1)(xxx). This proposed change 
to the content requirements for provider directories would allow MA 
enrollees to use their provider directories to search for the providers 
that have special training to provide MOUD and are allowed to 
administer, dispense, or prescribe the medications in an office 
setting.
    In order for the organization to flag the provider in its provider 
directory, the provider must: (1) possess a waiver currently approved 
by SAMHSA and the DEA; (2) have a valid and active ``X-number'' from 
the DEA in order to administer, dispense, or prescribe MOUD; and (3) be 
listed on SAMHSA's BPL (have allowed their practice location to be 
disclosed publicly).\15\ For more information on how providers can 
become MOUD-waivered providers, see the SAMHSA website.\16\ This 
proposal would require organizations to identify such providers in 
their provider directories by including notations next to the 
providers' listings indicating that the providers are able to treat 
patients with MOUD. No reference to the actual waiver in the provider 
directory is necessary to provide the necessary notices to the 
enrollee; however, the organization would need to determine which 
providers in their network currently have the waiver, have the valid 
and active ``X-number,'' and are listed in SAMHSA's BPL in order to 
know which providers to flag in the provider directory as able to treat 
patients with MOUD. The provider directory would need to include 
language to indicate the meaning of the MOUD-waivered providers 
notation, which is that these providers have completed the training so 
that they may administer, dispense, or prescribe MOUD in an office 
setting and have agreed to be publicly identified, but that such 
notations are not inclusive of all providers who may do so.
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    \15\ https://www.samhsa.gov/medication-assisted-treatment/find-treatment/treatment-practitioner-locator.
    \16\ https://www.samhsa.gov/medication-assisted-treatment/become-buprenorphine-waivered-practitioner.
---------------------------------------------------------------------------

    We believe that this new proposed MA provider directory data 
element is important and necessary for ensuring access to behavioral 
health services for MA enrollees. It supports both national and CMS 
efforts related to behavioral health priorities and strategies, as 
described in section III.B.1. of this proposed rule. This proposal will 
help MA enrollees struggling with OUD find providers who can treat them 
by prescribing MOUD, moving them further along the path towards long-
term recovery.
    If finalized, CMS intends to monitor organization compliance with 
the proposed new requirements described here through periodic online 
provider directory reviews, as CMS deems necessary, and other 
activities that are consistent with CMS's existing compliance 
monitoring regarding provider directory requirements.
    These proposals to amend Sec.  422.111(b)(3)(i) both codify as new 
requirements certain existing guidance on best practices and introduce 
a new provider directory data element. Organizations that do not 
currently collect data on their contracted providers' cultural and 
linguistic capabilities or their status as a MOUD-waivered provider may 
do so by using the same means and methods by which they already collect 
other information from contracted providers for inclusion in provider 
directories. Also, organizations would use SAMHSA's BPL to identify 
approved providers who have allowed their practice location to be 
disclosed. We expect this proposed provision to impose an additional 
minimal amount of information collection requirements (that is, 
reporting, recordkeeping, or third-party disclosure requirements) on 
organizations in terms of the updating of their existing processes 
related to provider directories, such as a template, related software, 
and the added data points for providers. However, we believe this 
burden does not need to be submitted to the Office of Management and 
Budget (OMB) based on the currently approved control number 0938-0753 
(CMS-R-267), which states: ``The additional burden of translating this 
network into a directory which is posted on the plan website as well as 
the update and maintenance of this directory is part of the usual and 
customary normal business activities and as such is exempt from PRA by 
5 CFR 1320.3(b)(2).'' Consequently, there is no need for review by OMB 
under the authority of the Paperwork Reduction Act (PRA) of 1995 (44 
U.S.C. 3501 et seq.). In addition, this provision is not expected to 
have any economic impact on the Medicare Trust Fund.
    In summary, CMS is proposing to add two new requirements to Sec.  
422.111(b)(3)(i) that organizations must include providers' cultural 
and linguistic capabilities and identify certain providers waived to 
treat patients with MOUD in their provider directories. We solicit 
comment on these proposed improvements to the content of MA provider 
directories. We also refer readers to section III.B.2. of this proposed 
rule for our proposal to add prescribers of MOUD as a new specialty 
type to be subject to MA network adequacy evaluation.
4. Digital Health Education for Medicare Advantage (MA) Enrollees Using 
Telehealth (Sec.  422.112)
    Telehealth has become increasingly popular and essential to 
providing access to health care, especially during the COVID-19 Public 
Health Emergency (PHE). For the purposes of this section of this 
proposed rule, we are using the term ``telehealth benefits'' very 
broadly to encompass covered services that are furnished to the 
enrollee (that is, the patient) in a different location than where the 
provider is located; there are multiple categories of covered benefits 
where this circumstance is present, with additional criteria or 
requirements applying to different categories of covered benefits when 
the enrollee and provider are not in the same place at the time the 
service is furnished. Under the MA program, there are various 
requirements and options for coverage of telehealth benefits. When 
original Medicare covers telehealth benefits, such as services 
described in section 1834(m) of the Act and Sec.  411.78, MA 
organizations must cover those telehealth benefits as basic benefits, 
as defined in Sec.  422.100(c). If an MA organization wishes to offer 
telehealth benefits that go beyond the scope of the original Medicare 
telehealth benefits

[[Page 79483]]

that must be covered by every MA plan, MA organizations have the option 
to offer ``Additional Telehealth Benefits'' (ATBs) and/or supplemental 
telehealth benefits. Section 1852(m) of the Act and Sec.  422.135 
outline the requirements for ATBs, which are generally services for 
which benefits are available under Medicare Part B but which are not 
payable under section 1834(m) of the Act, and the services are 
furnished when the patient and the physician or practitioner are not in 
the same location. If an MA organization wishes to offer telehealth 
benefits that are not covered by original Medicare and are not within 
the scope of Sec.  422.135, then the MA organization may choose to 
offer them as supplemental benefits. The requirements for MA 
supplemental benefits are set forth at section 1852(a)(3) of the Act 
and Sec. Sec.  422.100(c) and 422.102. An MA organization's bid must 
accurately reflect the covered telehealth service, whether it is 
covered as an ATB or a supplemental benefit. In addition, during the 
COVID-19 PHE, MA organizations have been required to take into account 
the various waivers, amendments to regulations, and other guidance 
published by CMS, with regard to telehealth benefits. In using the term 
``telehealth benefits'' here, we mean to include all of these various 
categories of covered benefits. In the regulation text we are proposing 
here, we use the phrase ``covered benefits that are furnished when the 
enrollee and the provider are not in the same location using electronic 
exchange, as defined in Sec.  422.135'' as a means to encompass all of 
the potential covered benefits included in our broad use of the term 
``telehealth benefits.'' As defined in Sec.  422.135, electronic 
exchange means electronic information and telecommunications 
technology, which we believe is broad enough to include 
telecommunications and technologies permitted for covered Part B 
services under section 1834(m) of the Act and implementing regulations 
as well as MA ATBs and other supplemental benefits.
    In recent years, CMS has seen a significant boost in the offering 
of telehealth benefits in the MA program. Almost 99 percent of MA plans 
offered some form of telehealth benefits in contract year 2022, either 
in the form of ATBs or supplemental telehealth benefits. This is a 16 
percent increase since contract year 2018 and a 9 percent increase 
since contract year 2020, which was the first year MA organizations 
were permitted to offer ATBs. ATB offerings alone have increased by 
approximately 39 percent since their inception 2 years ago. The total 
number of MA enrollees who have access to MA telehealth benefits of any 
kind has risen from approximately 89 percent in contract year 2018 to 
nearly 100 percent in contract year 2022.
    While the supply and demand of telehealth has clearly grown in 
recent years, there is evidence that barriers to accessing telehealth 
leave room to improve health equity in telehealth. The regulatory 
change we are proposing here is an attempt to improve health equity in 
telehealth and is consistent with both E.O. 13985 and CMS's first 
strategic pillar ``Advance Equity'' under the 2022 CMS Strategic 
Plan.17 18 For purposes of this provision, we are using 
CMS's definition of health equity, which is included in section 
III.A.1. of this proposed rule.\19\ In developing this proposal, we are 
also guided by HHS's definition of ``health equity in telehealth'' as 
meaning the ``opportunity for everyone to receive the health care they 
need and deserve, regardless of social or economic status. Providing 
health equity in telehealth means making changes in digital literacy, 
technology, and analytics, which will help telehealth providers reach 
the underserved communities that need it the most.'' \20\
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    \17\ https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/.
    \18\ https://www.cms.gov/cms-strategic-plan.
    \19\ https://www.cms.gov/pillar/health-equity.
    \20\ https://telehealth.hhs.gov/providers/health-equity-in-telehealth/.
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    Health equity in telehealth is difficult to attain due to barriers 
to telehealth access, which may include: lack of video sharing 
technology (for example, a smartphone, tablet, or computer), spotty or 
no internet access, lack of housing or private space to participate in 
virtual visits, few local providers who offer telehealth practices, 
language barriers (including oral, written, and signed language), the 
inability to incorporate third party auxiliary aids and services such 
as live captioners, telehealth software, apps, and websites that are 
accessible and usable by people with disabilities, and lack of adaptive 
equipment for people with disabilities along with incompatibility with 
external assistive technologies used by people with disabilities.\21\ 
These barriers are especially burdensome on populations that may 
already experience health disparities, such as those who are adversely 
affected by persistent poverty and inequality, those who live in rural 
areas, people from some racial and ethnic groups, immigrants, people 
who identify as LGBTQI+, people with disabilities, older people, 
limited English proficient individuals, people with limited digital 
literacy, and people who are underinsured or uninsured. Such 
underserved communities often lack equitable access to health care, 
leading to consequences such as: higher mortality and disease rates, 
more severe disease and illness, higher medical costs, lack of access 
to treatment, and lack of access to health insurance.\22\
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    \21\ Valdez R.S., Rogers C.C., Claypool H., Trieshmann L., Frye 
O., Wellbeloved-Stone C., Kushalnagar P. Ensuring full participation 
of people with disabilities in an era of telehealth. J Am Med Inform 
Assoc. 2021 Feb 15;28(2):389-392. doi: 10.1093/jamia/ocaa297. PMID: 
33325524; PMCID: PMC7717308.
    Annaswamy TM, Verduzco-Gutierrez M, Frieden L. Telemedicine 
barriers and challenges for persons with disabilities: COVID-19 and 
beyond. Disabil Health J. 2020;13(4):100973. doi:10.1016/
j.dhjo.2020.100973.
    \22\ https://telehealth.hhs.gov/providers/health-equity-in-telehealth/.
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    The existence of communities with low digital health literacy who 
in turn cannot access telehealth represents a significant obstacle in 
achieving health equity in telehealth. The World Health Organization 
defines digital health literacy as ``the ability to seek, find, 
understand, and appraise health information from electronic sources and 
apply the knowledge gained to addressing or solving a health problem. 
Examples of digital health literacy include accessing your electronic 
health record, communicating electronically with your health care team, 
ability to discern reliable online health information, and using health 
and wellness apps.'' \23\ Low digital health literacy can impact an 
individual's access to or quality of telehealth visits.\24\ Evidence 
shows that those with low digital health literacy tend to be older, 
lower income, less educated, and Black or Hispanic.\25\
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    \23\ https://nnlm.gov/guides/intro-health-literacy.
    \24\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8464820/.
    \25\ https://nces.ed.gov/pubs2018/2018161.pdf.
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    Many older adults with low digital health literacy experience gaps 
in access to the health care they need, and this is concerning for the 
MA program, whose enrollee population includes individuals age 65 and 
older (as well as individuals under age 65 with disabilities). For 
example, the American Association of Retired Persons (AARP) annual 
technology survey found that more than half of older adults (age 50 and 
older) in 2021 indicated they need more digital education, while more 
than one in three said they lacked confidence when using 
technology.\26\ Of the 32

[[Page 79484]]

million Americans who cannot use a computer, approximately one-third 
are seniors.\27\ Further, less than one-third of Medicare beneficiaries 
over 65 have at-home digital access, and those over age 75 and with 
less than high school-level education are less likely to use 
telehealth.\28\ For people with disabilities, 15 percent reported not 
using the internet as opposed to 5 percent in the general population in 
a Pew Foundation Survey, while 62 percent of people with disabilities 
as opposed to 81 percent of the general population own their own 
desktop or laptop computer.\29\ Other studies have confirmed a 
significant gap in digital literacy among people with disabilities.\30\ 
Another survey found that Black, Latino, and Filipino seniors and those 
75 years and older are significantly less likely to own devices like 
computers and smartphones compared to non-Hispanic whites, Chinese, and 
younger seniors (ages 65-69); this was also true in terms of these 
groups' respective use of the internet and email, as well as their 
ability and willingness to use technology for telehealth purposes.\31\
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    \26\ Kakulla, Brittne. 2021 Tech Trends and the 50-Plus: Top 10 
Biggest Trends. Washington, DC: AARP Research, April 2021. https://doi.org/10.26419/res.00420.001.
    \27\ https://www.telehealthequitycoalition.org/improving-digital-literacy-to-improve-telehealth-equity.html.
    \28\ Shah M.K., Gibbs A.C., Ali M.K., Narayan K.M.V., Islam N. 
Overcoming the Digital Divide in the Post-COVID-19 ``Reset'': 
Enhancing Group Virtual Visits with Community Health Workers J Med 
internet Res 2021;23(7):e27682 doi: 10.2196/27682.
    \29\ Andrew Perrin and Sara Atske, Americans with disabilities 
less likely than those without to own some digital devices, Pew 
Research, September 10, 2021, online at https://www.pewresearch.org/fact-tank/2021/09/10/americans-with-disabilities-less-likely-than-those-without-to-own-some-digital-devices/.
    \30\ Eun Ji Kim, MS, MD, Yiyang Yuan, MS, MPH, Jane Liebschutz, 
MPH, MD, Howard Cabral, MPH, Ph.D.,\4\ and Lewis Kazis, ScD, 
Understanding the Digital Gap Among US Adults With Disability: 
Cross-Sectional Analysis of the Health Information National Trends 
Survey 2013, JMIR Rehabil Assist Technol. 2018 Jan-Jun; 5(1): e3. 
Online at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4799429/.
    \31\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4799429/.
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    As outlined here, research indicates that older adults, people with 
disabilities, people from some racial and ethnic groups, rural 
communities, underserved populations, and those adversely affected by 
persistent poverty and inequality are all disadvantaged by limited 
access to modern information and communications technology (sometimes 
referred to as a digital divide).\32\ Individuals with a higher degree 
of digital health literacy receive more healthcare information, are 
better equipped to evaluate the quality of information regarding their 
healthcare, and report higher telehealth usage.\33\ Further, 
individuals with chronic diseases also benefit from digital health 
literacy; when such individuals possess digital health literacy, they 
tend to monitor and manage their diseases more competently, are more 
satisfied with the telemedicine services, and respond faster to changes 
that might adversely affect their situation, thereby improving their 
overall health.\34\ This is significant because individuals with two or 
more chronic diseases are more likely to be individuals 65 and 
over.\35\
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    \32\ https://academic.oup.com/jamia/article/27/12/1949/5899728.
    \33\ https://jamanetwork.com/journals/jama/article-abstract/2426088.
    \34\ https://www.sciencedirect.com/science/article/pii/S0738399114001876.
    \35\ https://www.cdc.gov/pcd/issues/2020/20_0130.htm.
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    CMS does not currently have requirements for MA organizations in 
the area of digital health literacy. Given the need to increase digital 
health literacy in many communities with MA enrollees and the goal to 
achieve health equity in telehealth, we believe it is necessary to 
implement regulations addressing digital health literacy in the MA 
program. CMS expects that these digital health literacy proposals, if 
finalized, would help underserved communities in need of assistance to 
improve their digital health literacy and help advance the goal of 
achieving health equity in telehealth.\36\
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    \36\ https://telehealth.hhs.gov/providers/health-equity-in-telehealth/.
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    We propose to add requirements for MA organizations to develop and 
maintain procedures to identify and offer digital health education to 
enrollees with low digital health literacy to assist them with 
accessing any medically necessary covered telehealth benefits. 
Specifically, we propose to amend current continuity of care 
requirements for MA organizations offering coordinated care plans to 
``ensure continuity of care and integration of services through 
arrangements with contracted providers'' at Sec.  422.112(b), by adding 
a new paragraph (9). The new proposed paragraph would require MA 
organizations to develop and maintain procedures to identify and offer 
digital health education to enrollees with low digital health literacy 
to assist with accessing any medically necessary covered benefits that 
are furnished when the enrollee and the provider are not in the same 
location using electronic exchange; we use the term ``electronic 
exchange'' as it is broadly defined in Sec.  422.135. This proposed new 
continuity of care requirement would apply to all MA organizations 
offering coordinated care plans (that is, HMOs, PPOs, HMO-POSs, and 
SNPs) and would be relevant for all types of covered telehealth 
benefits, including basic telehealth benefits, ATBs, and supplemental 
telehealth benefits offered by MA coordinated care plans. We solicit 
comment on whether to amend Sec.  422.100 instead of Sec.  422.112(b) 
in order to apply this new requirement to all MA plans and not just 
coordinated care plans. This proposed additional standard is intended 
to ensure that MA enrollees are able to access covered benefits and 
that MA organizations meet their obligations under section 1852(d) of 
the Act to make covered benefits available and accessible to enrollees 
in the plan. Section 1856(b) of the Act authorizes the adoption of 
standards that are consistent with and to carry out the Part C statute. 
As telehealth benefits become more prevalent in the MA program, taking 
steps to provide enrollees with digital health education will ensure 
that these telehealth benefits are truly accessible and available to 
enrollees.
    This proposal would be a first step for MA organizations to assess 
the landscape of health equity in telehealth in their plans and help 
enrollees navigate telehealth. Under this proposal, CMS would provide a 
degree of discretion for MA organizations in the procedures developed 
and used to identify enrollees with low digital health literacy and the 
digital health education services the MA organization provides for 
those enrollees. In order to comply with the proposed new regulation, 
MA organizations would necessarily have to introduce a digital health 
literacy screening program or other similar procedure to identify 
current enrollees with low digital health literacy, however, MA 
organizations would have flexibility to design their own screening 
program or procedure. Some experts recommend such an assessment should 
examine patient-level barriers such as telehealth readiness, broadband 
access, and inaccessible or unusable information and communication 
technologies by individuals with disabilities that limit patient use of 
telehealth.\37\ Others recommend considering certain digital foundation 
skills based on a specific framework.\38\ CMS encourages MA 
organizations to research current trends and successes in the field 
when developing their own methods to identify enrollees with low 
digital

[[Page 79485]]

health literacy. CMS anticipates that some MA organizations could ask 
enrollees, for example, if they have internet access and reliable 
connectivity, if they have a device that meets appropriate telehealth 
system requirements, if they use email, if they can download a mobile 
app, or if they can change applicable settings on a device (for 
example, browser or camera settings), as a means to identify which 
enrollees have low digital heath literacy.\39\
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    \37\ https://link.springer.com/content/pdf/10.1007/s00520-021-06629-4.pdf.
    \38\ https://www.digitalinclusion.org/definitions/.
    \39\ https://www.telehealthequitycoalition.org/improving-digital-literacy-to-improve-telehealth-equity.html.
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    Once the MA organization determines which enrollees experience low 
digital health literacy, the MA organization would then have to 
implement a digital health education program to offer to these 
enrollees. CMS is not proposing to identify explicit parameters for 
this digital health education requirement, rather, we have chosen to 
keep it flexible and allow for innovation in this area by MA 
organizations. Depending on the specific enrollment in an MA plan, the 
procedures to identify enrollees and the mechanisms and content of the 
digital health education could vary. However, some examples of digital 
health education designs include: distributing educational materials 
about how to access certain telehealth technologies in multiple 
languages, including sign language, and in alternative formats; holding 
digital health literacy workshops; integrating digital health coaching; 
offering enrollees in-person digital health navigators; and partnering 
with local libraries and/or community centers that offer digital health 
education services and supports.
    As a best practice, CMS encourages MA organizations to ensure that 
there are no system requirements (for example, online portal 
enrollment) that could act as barriers to accessing covered telehealth 
benefits, or the proposed digital health education for enrollees with 
low digital health literacy, so as to promote ease of access in the 
simplest way possible. In addition, if an MA organization offers 
enrollees assistance with any necessary telehealth technology--for 
instance, if they provide limited use smartphones/tablets or cellular 
data plans as supplemental benefits in order to aid in the use of 
telehealth services--then the MA organization must comply with 
applicable laws about those benefits and make enrollees aware of these 
available benefits per section 1852(c)(1)(F) of the Act and Sec.  
422.111(b)(6). This disclosure is especially important for enrollees 
identified as having low digital health literacy. Smartphones and 
tablets (or other similar equipment) must only be used for primarily 
health related purposes (and cellular data plans can only be provided 
if use of these plans is locked and limited to health-related 
activities), such as when the device is locked except for remote 
monitoring or to enable engagement with health care providers, in order 
for these items and services to be permissible supplemental benefits 
under Sec.  422.100(c)(2)(ii). However, furnishing or covering a 
cellular data plan without limitations might be permissible (under 
section 1852(a)(3)(D) of the Act and Sec.  422.102(f)) as a non-
primarily health related special supplemental benefit for the 
chronically ill (SSBCI) when the benefit is limited to a chronically 
ill enrollee and has a reasonable expectation of improving or 
maintaining the health or overall function of the chronically ill 
enrollee. For more information on SSBCI, please see the June 2020 final 
rule and the 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 
which appeared in the Federal Register on January 19, 2021 (86 FR 5864) 
(hereinafter referred to as the January 2021 final rule). CMS 
encourages MA organizations whose plans have a high number of enrollees 
with low digital health literacy to consider offering the 
aforementioned supplemental benefits and pairing an appropriate digital 
health education program with the provision of such devices to 
enrollees, where permitted by applicable law.
    To further emphasize the importance of health equity and health 
equity in telehealth specifically, CMS reminds MA organizations that 
Sec.  422.112(a)(8) as it currently reads requires MA organizations 
offering coordinated care plans to ensure that services are provided in 
a culturally competent manner to all enrollees, including limited 
English proficient individuals or those with limited reading skills, 
and those with diverse cultural and ethnic backgrounds. CMS is 
proposing, in section III.A.2. of this proposed rule, to amend Sec.  
422.112(a)(8) to better reflect the broad scope of potentially 
underserved populations and to emphasize how MA plans must ensure 
equitable access to services. As adopted and with our proposed 
revisions, Sec.  422.112(a)(8) requires MA organizations to ensure that 
services are provided in an equitable manner to all enrollees. MA 
organizations must take into account these additional obligations, as 
applicable, when developing and maintaining the digital health 
education programs they would be required to implement under this 
proposal. Furthermore, the HHS Office for Civil Rights and the U.S. 
Department of Justice (DOJ) Civil Rights Division recently published 
new guidance providing clarity on how Federal nondiscrimination laws 
require accessibility for people with disabilities and limited English 
proficient individuals in health care provided via telehealth.\40\ 
These Federal civil rights laws--including the Americans with 
Disabilities Act of 1990, section 504 of the Rehabilitation Act of 
1973, title VI of the Civil Rights Act of 1964, and section 1557 of the 
PPACA--require that telehealth be accessible to people with 
disabilities and limited English proficient individuals. CMS strongly 
encourages MA organizations and their contracted providers to review 
this new guidance issued by HHS and DOJ to ensure compliance with 
Federal civil rights laws pertaining to telehealth.
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    \40\ https://www.hhs.gov/sites/default/files/guidance-on-nondiscrimination-in-telehealth.pdf.
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    In order to monitor the impact of our new proposed requirement for 
digital health literacy screening and digital health education 
programs--on MA organizations, providers, enrollees, and the MA program 
as a whole--we are also proposing to require MA organizations to make 
information about these programs available to CMS upon request, per 
proposed Sec.  422.112(b)(9)(i). We propose that this requested 
information may include, but is not limited to, statistics on the 
number of enrollees identified with low digital health literacy and 
receiving digital health education, manner(s) or method of digital 
health literacy screening and digital health education, financial 
impact of the programs on the MA organization, evaluations of 
effectiveness of digital health literacy interventions, and 
demonstration of compliance with the requirements of Sec.  
422.112(b)(9). The purpose of requiring MA organizations to make such 
information available to CMS upon request would be to identify best 
practices for improving digital health literacy amongst MA enrollees 
and to determine whether CMS should make improvements to the regulation 
and/or guidance regarding this requirement. We note that the regulation 
text at proposed Sec.  422.112(b)(9)(i) includes the language ``upon 
request,'' which we intend here to communicate that CMS

[[Page 79486]]

does not intend to establish uniform data collection from all MA 
organizations at this time, but instead reserves the right to ask for 
this information from individual MA organizations. However, we note 
that our proposed Sec.  422.112(b)(9)(i) would not limit CMS's audit 
access when program audits review the performance of MA organizations. 
We solicit comment on this aspect of our proposal and whether we should 
require regular reporting of data of this type from all MA 
organizations alongside other Part C reporting requirements.
    This proposal to amend Sec.  422.112(b) would impact MA 
organizations in terms of the burden required to both identify 
enrollees with low digital health literacy and to develop digital 
health education programs for these enrollees. However, our estimated 
analysis of these impacts is qualitative in nature as we are proposing 
to provide MA organizations flexibility in determining how they wish to 
implement these proposed CMS requirements. CMS does not currently 
collect data regarding digital health literacy among MA enrollees and 
therefore, we have no way of knowing or estimating the extent of low 
digital health literacy specifically among MA organizations' enrollees, 
how MA organizations would approach digital health literacy screening 
and digital health education, how much spending they would engage in 
related to these efforts, how much savings they would encounter (due to 
improved enrollee health outcomes because of improved digital health 
literacy), for example, how much time they would spend on these 
efforts, or how the MA program would grow as we see the effects of the 
proposed regulation. We estimate the direct qualitative burden consists 
of MA organization staff hours spent, resources purchased, and any 
digital health education for enrollees performed. MA organizations may 
also differ in how their spending for the proposed requirements evolves 
over time as they test strategies and redevelop their approaches to 
complying with the regulation. Thus, the proposed provision would 
impose an unknown amount of information collection requirements (that 
is, reporting, recordkeeping, or third-party disclosure requirements) 
because burden cannot be quantified. We solicit comment from MA 
organizations on how much burden they expect this proposed provision 
might add. Regarding the impact of the proposed requirement for the MA 
organization to make information about its digital health literacy 
screening and digital health education programs available to CMS upon 
request, we do not anticipate requesting this information from more 
than nine MA organizations in a given year. However, we believe it is 
important to reserve the right to ask for this information if necessary 
and have structured the proposed regulation text accordingly. Since we 
estimate fewer than ten respondents, the information collection 
requirement is exempt (5 CFR 1320.3(c)) from the requirements of the 
PRA of 1995 (44 U.S.C. 3501 et seq.). Consequently, there is no need 
for review by OMB under the authority of the PRA.
    In terms of economic impact on the Medicare Trust Fund, we do 
expect that improved digital health literacy would increase telehealth 
visits, which in turn would increase prevention of MA enrollee illness, 
both of which affect Medicare Trust Fund spending. Yet we have no way 
of knowing or estimating how much of an increase in telehealth visits 
there would be, for what specific services they would increase, or the 
effects of prevented future illnesses among MA enrollees. Thus, this 
provision is expected to have an unknown economic impact on the 
Medicare Trust Fund.
    In summary, CMS is proposing to add a new requirement at Sec.  
422.112(b)(9) that MA organizations must have procedures to identify 
enrollees with low digital health literacy and offer them digital 
health education to assist with accessing any medically necessary 
covered benefits that are furnished when the enrollee and the provider 
are not in the same location using electronic exchange, as defined in 
Sec.  422.135. In addition, the proposal includes a requirement that MA 
organizations make information about these programs available to CMS 
upon request. We solicit comment on this proposal.
5. Quality Improvement Program (Sec.  422.152)
    In accordance with section 1852(e) of the Act, all MA organizations 
must have an ongoing Quality Improvement (QI) Program for the purpose 
of improving the quality of care provided to enrollees. Per Sec.  
422.152(a), MA organizations must develop a QI plan that sufficiently 
outlines the QI program elements; have a chronic care improvement 
program (CCIP) that meets the requirements at Sec.  422.152(c) and 
addresses populations identified by CMS based on a review of current 
quality performance; and, encourage its providers to participate in CMS 
and HHS quality improvement initiatives.
    Section 422.152(c) provides that CCIPs must include methods for 
identifying MA enrollees with multiple or sufficiently severe chronic 
conditions that would benefit from participating in a CCIP; mechanisms 
for monitoring MA enrollees that are participating in the CCIP and 
evaluating participant outcomes, such as changes in health status; 
performance assessments that use quality indicators that are objective, 
clearly and unambiguously defined, and based on current clinical 
knowledge or research, and systematic and ongoing follow-up on the 
effect of the CCIP. Organizations must report the status and results of 
each program to CMS as requested. The intent of the CCIPs is to promote 
effective chronic disease management and improve care and health 
outcomes for enrollees with chronic conditions. Furthermore, CCIPs 
should support the CMS Quality Strategy; include interventions that 
surpass MA organizations' inherent care coordination role and overall 
management of enrollees; engage enrollees as partners in their care; 
promote utilization of preventive services; facilitate development of 
targeted goals, specific interventions, and quantifiable, measurable 
outcomes; guard against potential health disparities; and produce best 
practices.\41\
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    \41\ https://www.cms.gov/Medicare/Health-Plans/Medicare-Advantage-Quality-Improvement-Program/5CCIP.
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    In accordance with 1852(e) of the Act, MA organizations are 
required to report quality performance data to CMS. MA organizations 
generally report such data through the Healthcare Effectiveness Data 
and Information Set (HEDIS), Health Outcomes Survey (HOS), Consumer 
Assessment of Healthcare Providers and Systems (CAHPS), and other 
related data collection tools. As codified at Sec.  422.152(b)(3) and 
(5), MA coordinated care plans are required to report on quality 
performance data which CMS can use to help beneficiaries compare plans; 
MA local and regional PPO plans must similarly report under Sec.  
422.152(e)(2)(i). The areas of measurement include outcomes, patient 
experience, access, and process measures. In addition, CMS uses this 
information to develop and publicly post a 5-star rating system for MA 
plans based on its authority to disseminate comparative information, 
including about quality, to beneficiaries under sections 1851(d) and 
1860D-1(c) of the Act.
    Lastly, to meet the needs of their enrolled special needs 
populations, MA special needs plans (SNPs) have

[[Page 79487]]

additional QI program requirements, including the implementation of an 
approved model of care (MOC), which serves as the framework for meeting 
the individual needs of SNP enrollees, and the infrastructure to 
promote care management and care coordination (see Sec.  422.152(g)). 
As part of the initial MA SNP application and renewal requirements and 
through MOC submissions, SNPs provide to CMS a detailed profile of the 
medical, social, cognitive, and environmental aspects, the living 
conditions, and the co-morbidities associated with the SNP population, 
including information about health conditions impacting SNP enrollees 
along with other characteristics that affect health, such as population 
demographics (for example, average age, sex, gender, ethnicity), and 
potential health disparities associated with specific groups (for 
example, language barriers, deficits in health literacy, poor 
socioeconomic status, cultural beliefs/barriers, caregiver 
considerations, or other). SNPs must also capture limitations and 
barriers that pose potential challenges for accessing care and/or 
maintaining and improving SNP enrollee health status.
    Additionally, through health risk assessments (HRAs), SNPs identify 
the medical, functional, cognitive, psychosocial, and mental health 
needs of their enrollees, who are all special needs individuals, and 
address those needs in an individualized care plan for each enrollee. 
In the final rule titled ``Medicare Program; Contract Year 2023 Policy 
and Technical Changes to the Medicare Advantage and Medicare 
Prescription Drug Benefit Programs; Policy and Regulatory Revisions in 
Response to the COVID-19 Public Health Emergency; Additional Policy and 
Regulatory Revisions in Response to the COVID-19 Public Health 
Emergency'' which appeared in the Federal Register May 9, 2022 (87 FR 
27704), CMS finalized a new requirement for SNPs at Sec.  
422.101(f)(1)(i), requiring the HRA tool to include one or more 
questions from a list of screening instruments specified by CMS in sub-
regulatory guidance on the domains of housing stability, food security, 
and access to transportation beginning in 2024. We expect that this 
data collection would also provide information to MA organizations 
about potential health disparities among their enrollees.
    Persistent inequities in health care outcomes exist in the United 
States, including among populations enrolled in MA organizations.\42\ 
Belonging to a racial or ethnic minority group, living with a 
disability, being a member of the LGBTQI+ community, having limited 
English proficiency, living in a rural area, or being near or below the 
poverty level, is often associated with worse health 
outcomes.43 44 45 46 47 48 49 Such disparities in health 
outcomes are the result of a number of factors and exist regardless of 
health insurance coverage type. Although not the sole determinant, poor 
health care access and provision of lower quality health care 
contribute to health disparities. Research has shown that the expansion 
of health insurance coverage, for example through Medicaid expansion 
under the ACA, and the resulting increased access to health care, is 
linked to reductions in disparities in health insurance coverage as 
well as reductions in disparities in health outcomes.\50\
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    \42\ Disparities in Health Care in Medicare Advantage by Race, 
Ethnicity and Sex, April 2022.
    \43\ Lindenauer, P.K., Lagu, T., Rothberg, M.B., Avrunin, J., 
Pekow, P.S., Wang, Y., Krumholz, H., & Hines, H. (2013). Income 
Inequality and 30-Day Outcomes After Acute Myocardial Infarction, 
Heart Failure, and Pneumonia: Retrospective Cohort Study. British 
Medical Journal.
    \44\ Trivedi, A.N., Nsa, W., Hausmann, L.R.M., Lee, J., Ma, A., 
Bratzler, D., Mor, M., Baus, K., Larbi, F., & Fine, M. (2014). 
Quality and Equity of Care in U.S. Hospitals. New England Journal of 
Medicine. 371(24):2298-2308.
    \45\ Polyakova, M., Udalova, V., Kocks, G., Genadek, K., Finlay, 
K., & Finkelstein, A.N. (2021). Racial Disparities In Excess All-
Cause Mortality During The Early COVID-19 Pandemic Varied 
Substantially Across States. Health affairs (Project Hope), 40 (2), 
307-316. https://doi.org/10.1377/hlthaff.2020.02142.
    \46\ Rural Communities: Age, Income, and Health Status. Rural 
Health Research Recap. (2018). Rural Health Research Gateway. 
https://www.ruralhealthresearch.org/recaps/5.
    \47\ 2020 Update on the Action Plan to Reduce Racial and Ethnic 
Health Disparities. (2020). HHS Office of Minority Health. https://www.minorityhealth.hhs.gov/assets/PDF/Update_HHS_Disparities_Dept-FY2020.pdf.
    \48\ Sexual Orientation Disparities in Risk Factors for Adverse 
COVID-19-Related Outcomes, by Race/Ethnicity. (2021, February 5). 
CDC. www.cdc.gov/mmwr/volumes/70/wr/mm7005a1.htm.
    \49\ Poteat, T.C., Reisner, S.L., Miller, M., & Wirtz, A.L. 
(2020). COVID-19 Vulnerability of Transgender Women With and Without 
HIV Infection in the Eastern and Southern U.S. medRxiv: The preprint 
server for health sciences, 2020.07.21.20159327. https://doi.org/10.1101/2020.07.21.20159327.
    \50\ Guth, M., Garfield, R., & Rudowitz, R. (2020). The Effects 
of Medicaid Expansion Under the ACA: Studies from January 2014 to 
January 2020. Kaiser Family Foundation. https://www.kff.org/medicaid/report/the-effects-of-medicaid-expansion-under-the-aca-updated-findings-from-a-literature-review/.
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    In the final rule titled ``Patient Protection and Affordable Care 
Act; HHS Notice of Benefit and Payment Parameters for 2023'', which 
appeared in the Federal Register May 6, 2022 (87 FR 27208), CMS 
finalized a proposal to update the quality improvement strategy (QIS) 
standards for qualified health plan (QHP) issuers, requiring them to 
address health and health care disparities as a specific topic area 
within their QIS beginning in 2023. Examples of QIS activities that 
fall under the health and health care disparities topic area for QHPs 
can include language services, community outreach, cultural competency 
trainings, social needs-sensitive self-management recommendations, and 
increased demographic and disparities-related data collection; see the 
QIS Technical Guidance and User Guide for the 2023 Plan Year for more 
information. CMS is committed to advancing health equity for MA 
enrollees. Based on CMS' definition of health equity and in alignment 
with similar CMS programs, we believe that MA organizations' QI 
programs are an optimal vehicle to develop and implement strategies and 
policies designed to reduce disparities in health and health care, and 
advance equity in the health and health care of MA enrollee 
populations, especially those that are underserved.
    MA organizations have long focused on addressing health disparities 
through QI program requirements. By assessing cultural, language, 
health literacy, financial, psychosocial & family support, community 
networks, and transportation needs, etc., and addressing those needs 
through a variety of QI program activities across their enrollee 
populations, MA organizations gain insight into their enrollee 
populations. Some of the specific QI activities include addressing 
barriers to health care, for example assisting enrollees with 
transportation to follow-up primary care visits post-hospitalization, 
linking enrollees to community resources, and improving care 
coordination and case management, especially for vulnerable and/or 
underserved enrollees. In addition to implementing QI activities for 
the broader enrollee populations, we are aware that some MA 
organizations have focused their QI activities on underserved groups. 
For example, to better serve these groups, several MA organizations 
have made efforts to improve their communication by providing cultural 
trainings for their staff, tailoring enrollee materials to ensure they 
are linguistically and culturally appropriate, and hiring plan staff 
and establishing contracts with providers who are bilingual. Some MA 
organizations have implemented specific interventions that target blood 
pressure control, or improved rates for various cancer screenings in 
targeted groups. These types of activities can

[[Page 79488]]

improve the health of and healthcare for MA enrollees.
    To improve the quality of care and health outcomes for MA enrollees 
and support the first pillar in the 2022 CMS strategic plan for 
advancing health equity, CMS proposes to amend the MA QI program 
regulations at Sec.  422.152(a). Specifically, we propose to amend 
Sec.  422.152 by adding a new paragraph (a)(5), to require MA 
organizations to incorporate one or more activities into their overall 
QI program that reduce disparities in health and health care among 
their enrollees. As previously described, we believe that many MA 
organizations are already addressing disparities and gaps in care for 
underserved populations through a variety of quality initiatives. 
Rather than limit these activities to specific QI program requirements 
such as the CCIPs, we are proposing that MA organizations would be 
required to incorporate one or more activities that reduce disparities 
in health and health care across the broad spectrum of QI program 
requirements. CMS expects that MA organizations may implement 
activities such as improving communication, developing and using 
linguistically and culturally appropriate materials (to distribute to 
enrollees or use in communicating with enrollees), hiring bilingual 
staff, community outreach, or similar activities. MA organizations 
should tailor these activities to meet the needs of their enrollees, 
and therefore CMS is generally not proposing to be prescriptive in the 
types of activities MA organizations must implement to meet this 
proposed new requirement. However, MA organizations must ensure that 
these activities are broadly accessible irrespective of race, 
ethnicity, national origin, religion, sex, or gender. These activities 
may be based upon health status and health needs, geography, or factors 
not listed in the previous sentence only as appropriate to address the 
relevant disparity in health or health care. Furthermore, we believe 
adopting this proposed requirement for MA organizations as part of 
their required QI programs will align with health equity efforts across 
CMS policies and programs. CMS believes that several organizations have 
already incorporated these activities into their QI programs, thereby 
meeting the proposed requirement.

B. Behavioral Health in Medicare Advantage (MA) (Sec. Sec.  422.112, 
422.113, and 422.116)

1. Introduction
    On March 1, 2022, President Biden announced a national strategy 
regarding behavioral health to strengthen system capacity and connect 
more individuals to care by ensuring that the nation's health and 
social services infrastructure addresses mental health holistically and 
equitably.\51\ Further, the 2022 CMS Strategic Framework describes CMS' 
broad goals to expand coverage and enhance access to equitable health 
care services for those covered under CMS programs.\52\ CMS is also 
prioritizing, as part of the agency's many cross-cutting initiatives, 
to improve access to behavioral health services and outcomes for people 
with behavioral health care needs.
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    \51\ https://www.whitehouse.gov/briefing-room/statements-releases/2022/05/31/fact-sheet-biden-harris-administration-highlights-strategy-to-address-the-national-mental-health-crisis/.
    \52\ https://www.cms.gov/files/document/2022-cms-strategic-framework.pdf.
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    According to the Health Resources and Services Administration 
(HRSA), more than one-third of Americans live in designated Mental 
Health Professional Shortage Areas,\53\ meaning these communities do 
not have enough providers to meet the needs of their population. 
Furthermore, according to the results from the 2020 National Survey on 
Drug Use and Health, published by SAMHSA, while overall 65 percent of 
people with serious mental illnesses (SMI) receive treatment,\54\ 
people of color with SMI receive care at significantly lower rates. 
More specifically, while approximately 69 percent of white people with 
SMI received mental health care, for Black, Hispanic, and Asian people 
with SMI the rates were 55 percent, 56 percent, and 44 percent 
respectively.\55\ The 2020 National Survey results also indicate that 
common reasons for not receiving treatment for SMI include: inability 
to afford the cost of treatment, not knowing where to go to receive 
services, and health insurance not covering services.\56\ CMS recently 
included a request for information (RFI) in the proposed rule titled 
``Medicare Program; Contract Year 2023 Policy and Technical Changes to 
the Medicare Advantage and Medicare Prescription Drug Benefit 
Programs'' published in the Federal Register January 12, 2022 (87 FR 
1842) (hereinafter referred to as the January 2022 proposed rule), to 
solicit public comment regarding the challenges that exist with 
accessing behavioral health providers within MA plans. We sought 
stakeholders' input concerning a range of topics, including the 
challenges related to building behavioral health networks for MA plans, 
accessing behavioral health providers for MA enrollees, and requesting 
suggestions on how to address issues with building adequate behavioral 
health networks within MA plans. We received a number of comments from 
stakeholders, some of which are discussed later in this preamble in 
connection with specific proposals.
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    \53\ https://data.hrsa.gov/topics/health-workforce/shortage-areas.
    \54\ https://www.samhsa.gov/data/sites/default/files/reports/rpt35325/NSDUHFFRPDFWHTMLFiles2020/2020NSDUHFFR1PDFW102121.pdf.
    \55\ https://www.samhsa.gov/data/sites/default/files/reports/rpt35324/2021NSDUHMHChartbook102221B.pdf.
    \56\ https://www.apa.org/monitor/2020/07/datapoint-care.
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    CMS continues to evaluate and seek ways to enhance our behavioral 
health policies to address the healthcare needs of those we serve. In 
order to support these goals, we are proposing regulatory changes that 
focus on ensuring access to behavioral health services for MA 
enrollees.
    We welcome comment on our proposals.
2. Behavioral Health Specialties in Medicare Advantage (MA) Networks 
(Sec. Sec.  422.112 and 422.116)
    Section 1852(d)(1) of the Act permits an MA organization to select 
the providers from which an enrollee may receive covered benefits, 
provided that the MA organization, in addition to meeting other 
requirements, makes such benefits available and accessible in the 
service area with promptness and in a manner which assures continuity 
in the provision of benefits. To implement and adopt related standards 
for this, CMS codified, with some modifications, network adequacy 
criteria and access standards that were previously outlined in sub-
regulatory guidance in the ``Medicare Program; Contract Year 2021 
Policy and Technical Changes to the Medicare Advantage Program, 
Medicare Prescription Drug Benefit Program, and Medicare Cost Plan 
Program'' final rule, which appeared in the Federal Register on June 2, 
2020 (85 FR 33796), hereinafter referred to as the June 2020 final 
rule. In that final rule, we codified, at Sec.  422.116(b), the list of 
27 provider specialty types and 13 facility specialty types subject to 
CMS network adequacy standards. Although Sec.  422.116(b)(3) authorizes 
removal of a specialty or facility type from the network evaluation 
criteria for a specific year without rulemaking, CMS did not adopt

[[Page 79489]]

in Sec.  422.116 a mechanism to add new provider types without 
rulemaking. We are proposing to add to the list of provider specialties 
here to address access to behavioral health services more broadly than 
the current regulation.
    Currently, MA organizations are required to demonstrate that they 
meet network adequacy for two behavioral health specialty types, 
psychiatry and inpatient psychiatric facility services, under Sec.  
422.116(b). Further, the regulation at Sec.  422.112 includes a number 
of requirements to ensure that MA enrollees have adequate access to 
covered services. Of note, Sec.  422.112(a)(1) requires MA 
organizations to maintain and monitor a network of appropriate 
providers that provides access to typically used services including, 
primary care providers, specialists, hospitals, skilled nursing 
facilities, home health agencies, ambulatory clinics and other 
providers.
    In response to the RFI in the January 2022 proposed rule, we 
received comments emphasizing the importance of network adequacy and 
ensuring adequate access to behavioral health providers in MA plans. 
Stakeholders suggested that CMS expand the network adequacy time and 
distance standards for MA plans beyond those that we currently review 
through our network adequacy evaluations. Commenters suggested that we 
expand the standards to add other outpatient behavioral health 
physicians and health professionals, including those that treat 
substance use disorders (SUDs), that can meet MA enrollees needs in 
accessing behavioral healthcare.
    Even though over one million Medicare beneficiaries had a diagnosis 
of Opioid Use Disorder (OUD) and more than fifty thousand experienced 
an overdose in 2021, fewer than 1 in 5 of these Medicare beneficiaries 
with a diagnosis of OUD receive treatment for their OUD.\57\ Current 
standards of care for OUD include treatment through three Food and Drug 
Administration (FDA) approved medications (buprenorphine, naltrexone 
and methadone), along with other services to provide the best approach 
to treating SUD. Enrollees can access Medications for Opioid Use 
Disorder (MOUD) in various settings including in Opioid Treatment 
Programs (OTPs) and through qualified practitioners (physicians, nurse 
practitioners, physician assistants, etc.) who have obtained a waiver 
through SAMHSA to dispense these medications in office settings.
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    \57\ https://oig.hhs.gov/oei/reports/OEI-02-22-00390.pdf.
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    CMS is committed to ensuring that MA enrollees have access to 
provider networks sufficient to provide covered services, including 
access to behavioral health service providers. Medicare fee-for-service 
claims data for 2020 shows that for certain outpatient behavioral 
health services, the top provider specialty types to provide services 
to beneficiaries included psychiatrists, clinical social workers, nurse 
practitioners, and clinical psychologists. OTPs had the largest number 
of claims for SUD in this same time period. Therefore, we propose to 
strengthen our network adequacy requirements for MA plans as it relates 
to behavioral health in three ways.
    First, we propose to add three new provider specialty types to the 
list at Sec.  422.116(b)(1), requiring these new specialty types to be 
subject to network adequacy evaluation. The three new specialty types 
we propose to add are: (1) clinical psychology, (2) clinical social 
work, and (3) one category called Prescribers of Medication for Opioid 
Use Disorder that includes two specialty types: providers with a waiver 
under section 303(g)(2) of the Controlled Substances Act (CSA) and 
OTPs. Most of these new specialty types are defined the same way as 
they are used for the original Medicare program in section 1861(hh) of 
the Act (defining ``clinical social worker''), Sec.  410.71(d) 
(defining ``clinical psychologist''), and section 1861(jjj)(2) of the 
Act (defining ``Opioid Treatment Program''). Section 303(g)(2)of the 
CSA (21 U.S.C. 823(g)(2)(G)(ii)) establishes which providers have a 
waiver and we do not believe a definition in the MA regulations at 42 
CFR part 422 is necessary.
    Our current regulations, at Sec.  422.116(a)(2) specify that an MA 
plan must meet maximum time and distance standards and contract with a 
specified minimum number of each provider and facility-specialty type. 
Therefore, as part of the proposed changes to our list of provider 
specialty types under Sec.  422.116(b)(1), we are proposing base time 
and distance standards and minimum number of in-person providers in 
each county type for each new specialty type as follows:
    Maximum Time and Distance Standards:
    [GRAPHIC] [TIFF OMITTED] TP27DE22.008
    
    Minimum Ratios:

[[Page 79490]]

[GRAPHIC] [TIFF OMITTED] TP27DE22.009

    In 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'' proposed rule which appeared in the 
Federal Register on February 18, 2020 (85 FR 9002) (hereinafter 
referred to as the February 2020 proposed rule), we explained how CMS 
developed the base time and distance standards and the minimum provider 
requirements used in Sec.  422.116 (85 FR 9094 through 9103). CMS 
established the current base time and distance standards for the 
provider and facility types listed in Sec.  422.116 by mapping the 
various specialty types' practice locations from the National Provider 
and Plan Enumeration System (NPPES) National Provider Identifier (NPI) 
file compared with Medicare beneficiary locations from CMS enrollment 
data. We further explained that we then tested different options for 
combinations of beneficiary coverage percentages and maximum travel 
distances to determine what was feasible and practical for the majority 
of counties given the trade-off between beneficiary coverage and travel 
distance. The travel time standards were calculated according to the 
average driving speeds in each of the ZIP code types (urban, suburban, 
rural) that beneficiaries would traverse between their homes and the 
provider locations (85 FR 9097). Other than the use of the different 
and more recent data sources that are identified in this preamble, we 
followed the same analysis and steps to develop the time and distance 
standards that we propose to apply to the new behavioral health 
specialty types.
    Further, we explained in the February 2020 proposed rule that CMS 
determines the minimum number requirement for all provider specialty 
types by multiplying the ``minimum ratio'' by the ``number of 
beneficiaries required to cover,'' dividing the resulting product by 
1,000, and rounding up to the next whole number. This is reflected in 
Sec.  422.116(e)(2)(i) and (e)(3); the current regulation text 
addresses how the number of beneficiaries required to cover is 
calculated and will apply to the proposed new provider specialty types. 
The minimum ratio is the number of providers required per 1,000 
beneficiaries. We developed the minimum ratios that currently appear in 
Sec.  422.116 using various data sources, including, Medicare fee for-
service claims data, American Medical Association (AMA) and American 
Osteopathic Association (AOA) physician workforce data, US Census 
population data, National Ambulatory Medical Care Survey data, and AMA 
data on physician productivity. In developing the proposal here to add 
new specialty types subject to network adequacy evaluation, we 
conducted additional research to inform appropriate minimum ratio 
requirements. We reviewed utilization data among FFS Medicare 
beneficiaries for the proposed specialty types for 2019 through 2021. 
We reviewed literature on the prevalence of behavioral health disorders 
among Medicare beneficiaries and existing models for projecting the 
needed behavioral health workforce such as the Health Resources and 
Services Administration's (HRSA) Health Workforce Simulation Model,\58\ 
to inform estimates of the potential demand for behavioral health 
services. We also reviewed data on the potential supply of behavioral 
health providers, that is, Medicare-enrolled providers in the Provider 
Enrollment, Chain, and Ownership System (PECOS),\59\ the list of 
practitioners waivered to provide buprenorphine for the treatment of 
OUD published by the Substance Abuse and Mental Health Services 
Administration (SAMHSA),\60\ and the list of OTP providers enrolled in 
Medicare published by CMS.\61\ We also sought clinical consultation 
regarding the types of behavioral health providers that treat Medicare 
beneficiaries, the service locations in which beneficiaries typically 
use behavioral health care, and typical patterns of care for accessing 
medication treatment for opioid use disorder, that is, the use of 
office-based and OTP-based care. Other than the use of different and 
more recent data sources as identified in this preamble, we followed 
the same analysis and steps to develop the proposed minimum provider 
ratios for these new specialty types.
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    \58\ https://bhw.hrsa.gov/data-research/projecting-health-workforce-supply-demand/behavioral-health.
    \59\ https://pecos.cms.hhs.gov/pecos/login.do#headingLv1.
    \60\ https://www.samhsa.gov/medication-assisted-treatment/find-treatment/treatment-practitioner-locator.
    \61\ https://data.cms.gov/provider-characteristics/medicare-provider-supplier-enrollment/opioid-treatment-program-providers.
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    Second, in order to reinforce regulatory requirements for MA plans 
on their responsibility to provide access to critical behavioral health 
care services, we propose to amend the list of health care providers in 
the existing access to services standards at Sec.  422.112(a)(1)(i) to 
include that the network must also include providers that specialize in 
behavioral health services.
    Finally, to encourage increased access to telehealth providers in 
contracted MA networks, Sec.  422.116(d)(5) provides that for certain 
specialties, MA plans may receive a 10-percentage point credit towards 
the percentage of beneficiaries that reside within published time and 
distance standards when the plan includes one or more telehealth 
providers of that specialty type that provide additional telehealth 
benefits, as defined in Sec.  422.135, in its contracted network. 
Medicare FFS claims data shows that telehealth was the second most 
common place of service for claims with a primary behavioral health 
diagnosis in 2020. As noted previously, the top provider specialty 
types to provide certain outpatient behavioral services to 
beneficiaries in that year included psychiatrists, clinical social 
workers, nurse practitioners, and clinical psychologists. Additionally, 
previous input from stakeholders discussed the importance of access to 
telehealth services specific to behavioral health in expanding access 
to care.

[[Page 79491]]

Based on these considerations, we also propose to add all the new 
behavioral health specialty types to the list at Sec.  422.116(d)(5) of 
the specialty types that that will receive the credit if the MA 
organization's contracted network of providers includes one or more 
telehealth providers of that specialty type that provide additional 
telehealth benefits, as defined in Sec.  422.135, for covered services.
    We welcome comment on this proposal.
3. Behavioral Health Services in Medicare Advantage (MA) (Sec. Sec.  
422.112 and 422.113)
    In addition to ensuring that there are specific types of providers 
in behavioral health specialties accessible within certain parameters 
in an MA organization's network of providers, it is important to ensure 
that access to these services is available for enrollees as part of 
overall delivery and coordination of services. CMS recognizes that 
knowing where to go to receive behavioral health care services is key 
to ensuring accessibility to those services. While CMS requires MA 
organizations to maintain publicly available resources, such as the 
provider directory, in order to help enrollees access care, we 
acknowledge that such resources may not always be sufficient to connect 
enrollees with the services to which they are entitled.
    CMS also acknowledges that situations may arise when a behavioral 
health services provider and an enrollee are not a good fit, and the 
enrollee needs assistance finding a different provider. Further, when a 
provider leaves the network, enrollees could experience an interruption 
in services. Timely provision of care is important with respect to 
behavioral health outcomes, and with the following proposals, we seek 
to ensure that enrollees who need behavioral health services are able 
to access them in a timely manner.
    Section 1852(d)(1)(A) of the Act requires MA organizations to make 
benefits under the plan available and accessible to each individual 
electing the plan within the plan service area with reasonable 
promptness and in a manner which assures continuity in the provision of 
benefits. To ensure MA enrollees have access to their services that is 
consistent with the requirements of the statute, CMS proposes to use 
our authority under section 1856(b)(1) of the Act to adopt standards to 
implement section 1852(d)(1)(A) of the Act to ensure that access to 
behavioral health services is prioritized appropriately in the Part C 
program. CMS proposes to advance this goal by adding behavioral health 
services to the types of services for which MA organizations must have 
programs in place to ensure continuity of care and integration of 
services at Sec.  422.112(b)(3). First, we propose to revise Sec.  
422.112(b)(3) to include behavioral health services by adding the 
phrase, ``and behavioral health services'' after the words ``community-
based services'' at the end of Sec.  422.112(b)(3). CMS believes that 
this proposed change to include behavioral health care services among 
the services for which MA organizations must have a care coordination 
program in place will help close the equity gap for enrollees in 
coordinated care plans. This proposed change would ensure that 
behavioral health care services are included as part of the enrollee's 
care coordination.
    Next, CMS proposes to codify the agency's interpretation of section 
1852(d)(3)(B) of the Act which is used to determine a condition that 
qualifies as an ``emergency medical condition'' for purposes of 
carrying out the requirements of section 1852(d)(1)(E) of the Act. 
Section 1852(d)(1)(E) of the Act requires MA organizations to reimburse 
a provider for emergency services without regard to prior authorization 
or the emergency care provider's contractual relationship with the MA 
organization.
    Currently, under Sec.  422.113(b)(1)(i), an ``emergency medical 
condition'' is defined as a medical condition manifesting itself by 
acute symptoms of sufficient severity (including severe pain) such that 
a prudent layperson, with an average knowledge of health and medicine, 
could reasonably expect the absence of immediate medical attention to 
result in serious jeopardy to the health of the individual or their 
unborn child, serious impairment to bodily function, or serious 
dysfunction of any bodily organ or part; this regulatory definition 
generally mirrors the statutory definition in section 1852(d)(3)(B) of 
the Act. However, the definition does not explicitly address that its 
criteria extends to conditions both physical and mental. CMS interprets 
the scope of the definition to pertain to both physical and behavioral 
health conditions when those conditions meet the prudent layperson 
standard discussed in Sec.  422.113(b)(1)(i), consistent with the 
statute.
    For example, one could reasonably be expected to cause serious 
injury (or death) to oneself if one's behavioral health condition 
results in a suicide plan, attempt, other suicidal behavior, or other 
forms of serious self-harm; CMS believes such cases are sufficient to 
satisfy the prudent layperson standard, therefore immediate emergency 
medical intervention must be provided without regard to prior 
authorization or the emergency care provider's contractual relationship 
with the organization, consistent with the requirements of section 
1852(d)(1)(E) of the Act.
    It is important to ensure that MA organizations and affected 
stakeholders interpret the definition of ``emergency medical 
condition'' found in Sec.  422.113(b)(1)(i) in the same manner as CMS. 
Therefore, in an effort to mitigate the possibility that an applicable 
emergency medical condition, such a qualifying mental health condition, 
could be inadvertently excluded from the requirements and enrollee 
protections in Sec.  422.113 due to misinterpretation by an MA 
organization or entities acting on its behalf, CMS proposes to add 
language to our regulations that will definitively clarify that an 
emergency medical condition can be physical or mental in nature. This 
interpretation and position on what Sec.  422.113 means and requires 
will guide our enforcement of the regulation. MA organizations, 
providers and enrollees must comply with this interpretation of the 
regulation and doing so will assure that MA enrollees receive medically 
necessary services in a medical emergency.
    At Sec.  422.113(b)(1)(i), CMS proposes to amend the regulation by 
inserting, ``mental or physical,'' after the word ``condition'' and 
before the word ``manifesting.'' This proposed revision would ensure 
that emergency medical conditions are easily interpreted as such, 
thereby prohibiting the use of prior authorization when required and 
guaranteeing that coverage is provided by the MA organization, 
consistent with the statute. This will ensure that enrollees have 
access to emergency behavioral health services in parity with access to 
other medical emergency services.
    We solicit comment on this proposal, and thank commenters in 
advance for their input on our proposed regulatory revisions.
4. Medicare Advantage (MA) Access to Services: Appointment Wait Time 
Standards (Sec.  422.112)
    CMS solicited public comment through the RFI that appeared in the 
January 2022 proposed rule regarding the challenges that exist with 
accessing behavioral health providers for MA enrollees and how to 
resolve issues with building adequate behavioral health networks within 
MA plans. The responses to this RFI included requests that CMS consider 
strengthening network adequacy standards and improving access to care 
and services

[[Page 79492]]

for enrollees by establishing requirements for appointment wait times 
for behavioral health services. We also heard that beneficiaries 
experience barriers to treatment for behavioral health conditions, 
including opioid use disorder.
    Section 1852(d) of the Act requires MA plans that use provider 
networks, make covered benefits available and accessible to enrollees 
in the plan service area with reasonable promptness and in a manner 
which assures continuity in the provision of benefits, and that 
medically necessary care must be available and accessible 24 hours a 
day and 7 days a week. The MA regulation at Sec.  422.112 includes 
requirements and standards to ensure that MA organizations that offer 
coordinated care plans, which generally use networks of providers, meet 
the statutory requirements. Under these rules, MA organizations must 
ensure that all covered services are made available and accessible to 
enrollees by the plan's designated provider network. Furthermore, MA 
organizations are required under Sec.  422.112(a)(6)(i) to maintain 
written standards that require timely access to care for enrollees 
which meet or exceed those established by CMS. Timely access to care 
and member services within a plan's provider network must be 
continuously monitored to ensure compliance with these standards, and 
the MA organization must take corrective action as necessary. CMS has 
provided guidelines for MA organizations in the Medicare Managed Care 
Manual (MMCM), Chapter 4, ``Benefits and Beneficiary Protections,'' 
section 110.1.1,\62\ regarding provider network standards. That 
guidance includes directions that MA organizations make their 
timeliness standards known to network providers (which is necessary in 
order to ensure that providers in the network comply with MA plan's 
written standards) and that the MA organization should consider an 
enrollee's need for the services and common waiting times in the 
community. In particular, the Manual provides examples of appointment 
wait times for certain primary care services, based on the type of 
services and level of need: (1) urgently needed services or emergency--
immediately; (2) services that are not emergency or urgently needed, 
but requires medical attention--within 1 week; and (3) routine and 
preventive care--within 30 days.
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    \62\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c04.pdf.
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    The 2022 CMS Behavioral Health Strategy \63\ describes CMS' goals 
to increase and enhance access to equitable behavioral health care 
services for people with behavioral health care needs. To support these 
goals, CMS is committed to strengthening our requirements for MA 
organizations to ensure beneficiaries can access needed behavioral 
health care services similar to how they access needed physical health 
services. Therefore, we propose to codify appointment wait times as 
standards for primary care services that are the same as the 
appointment wait times described in the Manual and to extend those 
standards to behavioral health services. These new minimum appointment 
wait time standards would be added to the existing requirement that MA 
organizations establish written policies for the timeliness of access 
to care and member services so that MA organizations must have 
appointment wait times that meet or exceed the standards we propose 
here.
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    \63\ https://www.cms.gov/cms-behavioral-health-strategy.
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    Behavioral health services include both mental health services and 
substance use disorder services. We remind MA organizations that 
substance use disorder services include medications for opioid use 
disorder (MOUD), which is particularly important as opioid-related 
overdose deaths have spiked during the pandemic,\64\ and we have heard 
from commenters that beneficiaries have experienced barriers to 
behavioral health treatment. Proposing to codify these wait time 
standards as discussed by commenters through our RFI, should reduce 
access barriers to behavioral health treatment for those who need it; 
and help ensure access to a robust array of practitioners furnishing 
behavioral health services, including Opioid Treatment Providers who 
prescribe medications for opioid use disorder.
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    \64\ https://www.cdc.gov/nchs/nvss/vsrr/drug-overdose-data.htm.
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    In addition, the proposal to codify wait time standards for primary 
care is consistent with the goal to increase access to primary care 
articulated in HHS' Initiative to Strengthen Primary Care.\65\ The 
National Academies for Science, Engineering, and Medicine (NASEM) 
Report outlined the importance of ensuring that high-quality primary 
care is available to every individual and family in every community, 
particularly those that are underserved. After all, access to primary 
care practitioners, as opposed to any other practitioner type, is 
associated with decreased mortality.\66\
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    \65\ https://www.hhs.gov/about/news/2022/06/27/fact-sheet-hhs-initiative-to-strengthen-primary-health-care-seeking-public-comment.html.
    \66\ https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2724393.
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    We are also seeking comment on alternative specific appointment 
wait times standards to apply to MA organizations. For example, we are 
considering, as suggested by a commenter on our RFI, establishing 
appointment wait time standards that align with those established for 
qualified health plans, (QHPs) as outlined by CMS in the ``2023 Final 
Letter to Issuers in the Federally-facilitated Exchanges.'' \67\ The 
appointment wait time standards for QHPs include: Behavioral health 
appointments must be available within 10 business days, Primary care 
(routine) must be available within 15 business days; and Specialty care 
(non-urgent) must be available within 30 business days. Under our 
proposal, the wait time requirements,, would be applicable to primary 
care and behavioral health specialty types. We solicit comment whether 
a more flexible approach would be appropriate, such as requiring MA 
organizations have these specific appointment wait time standards in 
their written internal policies but that CMS require MA plans to meet 
the specific appointment wait time limits for routine or non-emergency 
services only for a significant portion (for example, 95 percent) of 
appointments.
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    \67\ https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2023-Letter-to-Issuers.pdf.
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    This proposed additional requirement to specify maximum wait times 
for MA enrollees is intended to ensure that MA enrollees are able to 
access covered services and that MA organizations meet their 
obligations under section 1852(d) of the Act to make covered benefits 
available and accessible to enrollees in the plan. Section 1856(b) of 
the Act authorizes the adoption of standards that are consistent with 
and to carry out the Part C statute.
    We are also considering requiring new and expanding service area 
applicants to attest to their ability to provide timely access to care 
consistent with the CMS appointment wait time standards we would add to 
Sec.  422.112(a)(6)(i). We would implement a new application 
requirement by adding a new attestation to our ``Part C--Medicare 
Advantage and 1876 Cost Plan Expansion Application'' that specifically 
addresses requirements at Sec.  422.112(a)(6)(i). Such an attestation 
would not be reflected in a specific regulation, however, because

[[Page 79493]]

we believe that the requirement at Sec.  422.501(c)(2), that an 
applicant thoroughly describe how the entity and MA plan meet, or will 
meet, all the requirements described in this part, permits CMS to use 
an attestation to support the ability of an MA organization to comply 
with performance requirements. Adequate access to services for MA 
enrollees is a key consideration.
    We solicit comment on our proposal, including whether one or more 
of the previously described sets of wait time standards would more 
effectively address our goals of ensuring that MA organizations are 
meeting timely access standards for primary care and behavioral health 
services for enrollees, supporting parity between behavioral health and 
physical health services, and strengthening our requirements for MA 
organizations to ensure beneficiary protections in access to care. In 
addition, we solicit comment on whether a specific appointment wait 
time limit for emergency or urgently needed services is duplicative of 
the mandatory coverage and access requirements in Sec.  422.113.

C. Medicare Advantage (MA) Network Adequacy: Access to Services (Sec.  
422.112)

    Section 1852(d)(1)(A) of the Act establishes that an MA 
organization offering an MA plan may select the providers from whom the 
benefits under the plan are provided so long as the organization makes 
such benefits available and accessible to each individual electing the 
plan within the plan service area with reasonable promptness and in a 
manner which assures continuity in the provision of benefits. This is 
generally implemented at Sec.  422.112(a), which provides that an MA 
organization that offers an MA coordinated care plan may specify the 
networks of providers from whom enrollees may obtain services if the MA 
organization ensures that all covered services are available and 
accessible under the plan. The regulation also includes specific 
additional requirements for MA organizations offering coordinated care 
plans related to the availability and accessibility of coverage. In 
addition, the statute and regulation apply these requirements to all 
benefits covered by the plan, including both basic and supplemental 
benefits.
    More specifically, section 1852(d)(1)(D) of the Act requires an MA 
organization to provide access to appropriate providers, including 
credentialed specialists, for medically necessary treatment and 
services, as a condition of the MA organization limiting coverage to a 
specified network of providers. CMS implemented this statutory 
requirement at Sec.  422.112(a)(1)(i), which provides that the MA 
organization offering a coordinated care plan must maintain and monitor 
a network of appropriate providers that is supported by written 
agreements and is sufficient to provide adequate access to covered 
services to meet the needs of the population served. In addition, Sec.  
422.112(a)(3) requires that the MA organization provide or arrange for 
necessary specialty care and arrange for specialty care outside of the 
plan's provider network when network providers are unavailable or 
inadequate to meet an enrollee's medical needs.
    Historically, CMS has interpreted these statutory and regulatory 
requirements to mean that in the event an in-network provider or 
service is unavailable or inadequate to meet an enrollee's medical 
needs, the MA organization must arrange for any medically necessary 
covered benefit outside of the plan provider network at in-network cost 
sharing for the enrollee. For example, if an enrollee needs OTP 
services but there is no in-network OTP available, then the MA 
organization must arrange for the enrollee to go to an out-of-network 
OTP at in-network cost sharing. In our view, furnishing access out of 
network with higher cost sharing when the MA plan's network is 
inadequate or otherwise does not address the medically necessary 
benefit required by an enrollee is not consistent with section 
1852(d)(1) of the Act. Enrollees should not bear a financial burden 
because of the inadequacy of the MA plan's network. This interpretation 
is reflected in CMS guidance in section 110.1.1 of Chapter 4 of the 
MMCM,\68\ and CMS has routinely emphasized this interpretation to MA 
organizations about their obligations whenever the need arises, for 
example, when an MA organization is undergoing a network change due to 
a provider termination. Therefore, MA organizations are familiar with 
the policy and should be applying it in the routine course of 
operations within their MA plans. It is important that MA organizations 
ensure adequate access to medically necessary covered benefits for 
enrollees when the plan network is not sufficient by both arranging or 
covering the out-of-network benefits and only charging in-network cost 
sharing for those out-of-network benefits. To reflect this important 
and well-established enrollee protection in the MA program, we are 
proposing to amend Sec.  422.112(a)(1) and (a)(3) to more clearly state 
the scope of the MA organization's obligation to ensure adequate access 
to medically necessary covered benefits.
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    \68\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c04.pdf.
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    Currently, the regulation text at Sec.  422.112(a)(3) does not 
fully account for the scope of an MA organization's obligations when 
medically necessary benefits are only accessible out of network in two 
key ways. First, the regulation text refers to specialty care only, not 
all medically necessary covered benefits. This oversight does not align 
with the statutory requirement at section 1852(d)(1)(D) of the Act, 
which states broadly that the organization must provide access to 
``appropriate providers, including credentialed specialists,'' and does 
not limit the requirement to specialists only. Second, the aspect of 
maintaining in-network cost sharing when the MA organization arranges 
for the benefit outside of the network is not clearly stated in Sec.  
422.112(a)(3). Therefore, CMS proposes to amend Sec.  422.112 to align 
more closely with current subregulatory policy and our implementation 
of section 1852(d) of the Act.
    CMS proposes to codify this policy by revising Sec.  422.112(a)(3) 
and adding new regulatory text to Sec.  422.112(a)(1) to reflect the 
longstanding policy. Specifically, we propose to move the sentence 
requiring the MA organization to arrange for out-of-network care 
currently in paragraph (a)(3) to a new proposed paragraph (a)(1)(iii) 
and revise and supplement it with additional text to better state the 
full scope of the current policy. Proposed paragraph (a)(1)(iii) would 
require MA organizations offering coordinated care plans to arrange for 
any medically necessary covered benefit outside of the plan provider 
network, but at in-network cost sharing, when an in-network provider or 
benefit is unavailable or inadequate to meet an enrollee's medical 
needs.
    CMS currently monitors MA organization compliance with this 
existing policy through account management activities, complaint 
tracking and reporting, and auditing activities. These oversight 
operations alert CMS to any issues with access to care, and CMS may 
require MA organizations to address these matters if they arise. If 
finalized, CMS intends to continue these oversight operations to ensure 
MA organizations' compliance with the proposed regulation.
    This proposal to amend Sec.  422.112 codifies the agency's existing 
interpretation of applicable law and

[[Page 79494]]

longstanding guidance. CMS has not been made aware of any issues of MA 
organization non-compliance with this policy and, as such, believes 
that MA organizations have been complying with this longstanding 
guidance. Therefore, the proposed amendment to Sec.  422.112 would not 
impose new information collection requirements (that is, reporting, 
recordkeeping, or third-party disclosure requirements), and we have not 
provided burden estimates in the Collection of Information section of 
this proposed rule. In addition, this provision is not expected to have 
any economic impact on the Medicare Trust Fund.
    We solicit comment on this proposal, including on the accuracy of 
our assumptions regarding information collection requirements and 
regulatory impact.

D. Enrollee Notification Requirements for Medicare Advantage (MA) 
Provider Contract Terminations (Sec. Sec.  422.111 and 422.2267)

    As provided in section 1852(d) of the Act and discussed in section 
110.1.2.1 of Chapter 4 of the MMCM, MA organizations have considerable 
discretion to select the providers with whom to contract in order to 
build high-performing, cost effective provider networks.\69\ This 
flexibility is also apparent in how CMS is prohibited by section 
1854(a)(6)(B)(iii) of the Act from requiring MA organizations to 
contract with a particular provider. Under our current regulations, MA 
organizations are able to make changes to these networks at any time 
during the contract year, as long as they continue to furnish all 
Medicare-covered services in a non-discriminatory manner, meet 
established access and availability standards and timely notice 
requirements, and ensure continuity of care for enrollees. Thus, an MA 
organization may terminate providers from its network during the plan 
year, which could impact enrollees who are patients of those providers. 
CMS requires notification to MA enrollees when a provider network 
participation contract terminates. Most notably, CMS's disclosure 
regulations at Sec.  422.111(e) require MA organizations to make a good 
faith effort to provide written notice of a termination of a contracted 
provider at least 30 calendar days before the termination effective 
date to all enrollees who are patients seen on a regular basis by the 
provider whose contract is terminating, irrespective of whether the 
termination was for cause or without cause. Additionally, Sec.  
422.111(e) requires that when a contract termination involves a primary 
care professional, all enrollees who are patients of that primary care 
professional must be notified. CMS established these enrollee 
notification requirements at Sec.  422.111(e) over 22 years ago in the 
``Medicare Program; Medicare+Choice Program'' final rule with comment 
period, which appeared in the Federal Register on June 29, 2000 (65 FR 
40170) (hereinafter referred to as the June 2000 final rule). The MA 
program and its policies have evolved considerably since the inception 
of Sec.  422.111(e). Therefore, CMS is proposing to revise this 
particular disclosure requirement by establishing specific enrollee 
notification requirements for no-cause and for-cause provider contract 
terminations and adding specific and more stringent enrollee 
notification requirements when primary care and behavioral health 
provider contract terminations occur. CMS is also proposing to revise 
Sec.  422.2267(e)(12) to specify the requirements for the content of 
the notification to enrollees about a provider contract termination.
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    \69\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c04.pdf.
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    First, we propose to clarify the regulatory text at Sec.  
422.111(e) regarding whether the provider contract termination was for 
cause or without cause. The regulation currently requires that the MA 
organization must make a good faith effort to notify enrollees at least 
30 calendar days before the termination effective date, irrespective of 
whether the termination was for cause or without cause. This last 
clause does not consider Sec.  422.202(d)(4), which outlines the 
timeframe requirement for suspension or termination of an MA 
organization's contract with a provider. An MA organization and a 
contracted provider are required by Sec.  422.202(d)(4) to provide at 
least 60 days written notice to each other before terminating the 
contract without cause. Consequently, because MA organizations are 
provided at least a 60-day notice of any no-cause provider contract 
termination, MA organizations should be able to timely meet a CMS 
established enrollee notification requirement that provides the MA 
organization a period of time that is less than 60 days to notify 
enrollees of the no-cause provider contract termination. Provider 
contract terminations that are for-cause, however, do not have an 
equivalent notification requirement as exists at Sec.  422.202(d)(4) 
for MA organizations and contracted providers, which means that for-
cause provider contract terminations could potentially occur with 
little notice or without any notice at all. In this case, it may not 
always be possible for the MA organization to notify enrollees in a 
reasonable amount of time before the provider contract termination 
effective date. Thus, we will preserve the phrase ``good faith effort'' 
for enrollee notifications for for-cause provider contract terminations 
regarding the proposed timeframes. Under our proposal, the ``good faith 
effort'' standard would apply to the timing component for for-cause 
provider contract terminations. However, we propose to remove ``good 
faith effort'' for no-cause provider contract terminations. We believe 
that when an MA organization's contracted provider network changes, 
these enrollee notifications are essential for updating enrollees who 
are patients of the terminating providers. If an enrollee's provider is 
dropped from their network during the contract year, the enrollee must 
be notified so that they can decide how to proceed with the care they 
are receiving from that provider. By limiting the ``good faith effort'' 
standard to the timing of for-cause provider contract terminations, we 
make it clear that issuing the notification to enrollees is a 
requirement that all MA organizations must follow without exception, 
but in the case of for-cause provider contract terminations, MA 
organizations must make a good faith effort to notify enrollees of the 
termination within the proposed timeframes.
    Next, we propose to add new provisions to Sec.  422.111(e) to 
address provider contract terminations that involve behavioral health 
providers. For purposes of this proposal, CMS considers various 
specialty types (both providers and facilities) as fitting the category 
of behavioral health providers so long as the treatment they furnish to 
enrollees is about behavioral health; these include but are not limited 
to psychiatrists, clinical social workers, clinical psychologists, 
inpatient psychiatric facilities, outpatient behavioral health clinics, 
OTPs, and MOUD-waivered providers approved by SAMHSA/FDA. As noted in 
section III.B.1. of this proposed rule, behavioral health is a top 
priority of both CMS and the broader administration. Specifically, 
CMS's goal is to improve access to behavioral health services and 
improve outcomes for people with behavioral health care needs. The CMS 
Behavioral Health Strategy seeks to remove barriers to care and 
services.\70\ To support these

[[Page 79495]]

policy goals, using a behavioral health perspective, we have reexamined 
the MA enrollee notification requirements when a provider contract 
termination occurs at Sec.  422.111(e).
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    \70\ https://www.cms.gov/cms-behavioral-health-strategy.
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    According to a recent study, because of the ongoing nature of 
patient/provider relationships, when a provider leaves a plan's 
network, there is a potential disruption to the patient's treatment 
plan; this disruption could be especially problematic in the case of 
behavioral health treatment because this treatment may be longer in 
duration than that of physical health, and providers and patients are 
likely to need more time to develop mutual trust.\71\ Trusting 
relationships and continuity in the relationship between the patient 
and provider have shown to be central for behavioral health recovery, 
therefore, breaks in these relationships tend to cause patient stress, 
anxiety, and generally less opportunity to contribute to their 
treatment plan.\72\ Thus, ensuring continuity of care in these 
situations becomes even more critical. As a consequence, sufficient 
enrollee notification is needed when a behavioral health provider 
leaves an MA network. We believe that affected enrollees need ample 
time to make decisions that may determine the trajectory of their 
behavioral health treatment. They may wish to continue seeing the 
terminated provider with whom they have already established a secure, 
comfortable relationship (potentially with higher out-of-network cost 
sharing), they may switch to a new provider in the network (forcing 
them to start a new relationship), or they may choose to stop treatment 
altogether (which could be detrimental to their health or perhaps fatal 
in the case of patients with suicidal ideation). Regardless of what 
action the enrollee takes, however, the enrollee needs to know that 
their behavioral health provider is leaving their plan's network prior 
to the contract termination date.
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    \71\ https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2785383.
    \72\ https://bmchealthservres.biomedcentral.com/articles/10.1186/s12913-017-2719-9.
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    A similar case is made for terminating primary care providers both 
due to the fact that behavioral health services are often offered by 
primary care providers and the foundational role primary care providers 
play in an individual's overall health. According to the American 
Academy of Family Physicians, up to 75 percent of primary care visits 
include aspects of behavioral health.\73\ Primary care is foundational 
because it integrates services to meet the patient's health needs 
throughout a lifetime, including key elements such as health promotion, 
disease prevention, treatment, rehabilitation, and palliative care.\74\ 
Furthermore, CMS believes that the importance of a patient's 
relationship with their primary care provider is likely higher in 
managed care situations, such as MA, where referrals to specialists are 
often dependent on the primary care provider. Therefore, similar to 
behavioral health, continuity of care is essential, and sufficient 
enrollee notification is needed when a primary care provider leaves an 
MA network. For these reasons, we are proposing more stringent enrollee 
notification requirements when primary care and behavioral health 
provider contract terminations occur. We expect positive impacts 
associated with improving communication about provider terminations 
from MA networks, including providing more time to MA enrollees with 
behavioral health conditions to make informed decisions about the 
future of their behavioral health treatment after their provider leaves 
their network. Enrollee benefits would result from increased enrollee 
protections when unexpected primary care and behavioral health network 
changes occur, and we would also expect to see benefits for providers 
and facilities who keep their patients informed if they are leaving 
their MA plan's network.
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    \73\ https://www.aafp.org/pubs/fpm/issues/2021/0500/p3.html#fpm20210500p3-b1.
    \74\ https://www.who.int/health-topics/primary-health-care#tab=tab_1.
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    To address the aforementioned concerns surrounding unexpected 
changes in MA primary care and behavioral health provider networks, we 
are proposing to add specific enrollee notification requirements for 
these types of provider contract terminations. Our proposal has three 
key aspects. We first propose to add behavioral health providers to the 
current requirement at Sec.  422.111(e) that all enrollees who are 
patients of a terminating primary care provider must be notified (not 
just those enrollees who are patients seen on a regular basis by the 
terminating provider, which is the case for all other specialty types), 
and expand the scope of this requirement to refer to all enrollees who 
have ever been patients of these terminating primary care or behavioral 
health providers (not just current patients). This addition would be 
reflected at proposed new paragraph (e)(1)(iii). Next, at proposed new 
paragraph (e)(1)(ii), we propose to require MA organizations to provide 
notice to enrollees at least 45 calendar days before the termination 
effective date for contract terminations that involve a primary care or 
behavioral health provider, which is longer than the 30-day standard 
for all other specialty types. Finally, we propose to require both 
written and telephonic notice for contract terminations that involve a 
primary care or behavioral health provider at new proposed paragraph 
(e)(1)(i), while only written notice is required for all other 
specialty types. We are proposing that both types of notice need to be 
provided at least 45 calendar days before the termination effective 
date. For the telephonic notice, we propose that the first telephone 
call be made to the enrollee at least 45 calendar days in advance. 
Under our proposal here, the MA organization would be required to 
continue attempting to reach the enrollee by telephone to provide 
notice of the termination of the provider from the network. We are not 
proposing a specific number of attempts required by the MA organization 
when they reach out to the enrollee by telephone and the call goes 
unanswered, but we are soliciting comment from MA organizations on how 
many telephonic attempts they believe are reasonable in this 
circumstance (for example, 1-5, 6-10, 11-15). To help inform our 
proposal, we are requesting qualitative feedback based on any MA 
organization's actual experience providing enrollees telephonic notice 
of primary care and behavioral health provider contract terminations.
    These new proposed requirements for MA organizations providing 
enrollees notice of primary care and behavioral health provider 
contract terminations are intended to raise the standards for the 
stability of enrollees' primary care and behavioral health treatment. 
If finalized, these requirements would require MA organizations to 
notify all current enrollees who have ever been patients of the primary 
care or behavioral health provider or providers leaving their plan's 
network (regardless of whether these enrollees are patients currently 
seen on a regular basis, as that standard is established in proposed 
new paragraph (e)(2)(iii)), give enrollees more notice (and therefore 
more time) to decide how to proceed with their course of treatment, and 
provide enrollees with two different means by which they receive the 
notice from their MA organization. These strengthened enrollee 
notification requirements for primary care and behavioral health 
provider contract terminations would generally increase enrollee 
protections when MA network changes occur. As discussed earlier, 
continuity of care is essential for both primary care and

[[Page 79496]]

behavioral health, and consequently, adequate communication to 
enrollees is vital when network changes occur, so that patients of any 
terminating primary care or behavioral health providers can decide how 
to proceed with their course of treatment. By receiving adequate notice 
of the terminations, enrollees will be able to make an informed 
decision on how to proceed with their care and have more time to 
potentially locate and establish a relationship with a new provider. 
Thus, enrollees are protected from any undue harm that may result from 
an unexpected provider contract termination involving their primary 
care or behavioral health provider (for example, sudden lack of 
medication, psychotic episodes, suicide). The proposed enrollee 
notification requirements are a positive step in the context of our 
policy for MA provider contact terminations.
    Under our proposal, MA organizations will continue to be required 
to provide written notice at least 30 days before the termination 
effective date of a termination of a contracted provider that is not a 
primary care or behavioral health provider to all enrollees who are 
patients seen on a regular basis by the terminating provider. We also 
propose to codify at Sec.  422.111(e)(2)(iii) a definition of the 
phrase ``enrollees who are patients seen on a regular basis by the 
provider whose contract is terminating.'' CMS currently has sub-
regulatory guidance in section 110.1.2.3 of Chapter 4 of the MMCM that 
defines this term as enrollees who are assigned to, currently receiving 
care from, or have received care within the past three months from a 
provider or facility being terminated, also called ``affected 
enrollees.'' \75\ As this guidance has been in place since 2016, and 
based on various MA organization inquiries we have received asking how 
CMS defines ``regular basis,'' we believe the majority of MA 
organizations have come to adopt this CMS standard and use it routinely 
as they determine which enrollees to notify when provider contract 
terminations occur, in order to comply with Sec.  422.111(e). 
Therefore, we propose to codify this definition at proposed Sec.  
422.111(e)(2)(iii).
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    \75\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c04.pdf.
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    The requirements for contract terminations that involve specialty 
types other than primary care or behavioral health (written notice 
only, at least 30 calendar days before the termination effective date, 
and to all enrollees who are patients seen on a regular basis by the 
provider whose contract is terminating) would be set forth at new 
proposed Sec.  422.111(e)(2). This provides a clear distinction for MA 
organizations between CMS's enrollee notification requirements for 
contract terminations that involve a primary care or behavioral health 
provider (at new proposed paragraph (e)(1)) and all other provider 
contract terminations. We reiterate that the beginning proposed revised 
regulatory text at Sec.  422.111(e) also distinguishes between no-cause 
and for-cause provider contract terminations, with the former scenario 
prompting a requirement for MA organizations to provide the enrollee 
notifications and the latter requiring MA organizations to make a good 
faith effort to notify enrollees within the required timeframes. 
Regardless, whenever an MA organization notifies enrollees about a 
provider contract termination (whether it is with or without cause), 
CMS proposes that MA organizations must follow these new requirements 
outlined at proposed paragraphs (e)(1) and (2).
    Finally, regarding the content of the provider termination notice, 
CMS's regulation at Sec.  422.2267(e)(12) currently provides that the 
Provider Termination Notice is a required model communications material 
through which MA organizations must provide the information required 
under Sec.  422.111(e). CMS has provided additional guidance regarding 
the content of the provider termination notice in section 110.1.2.3 of 
Chapter 4 of the MMCM.\76\ Similar to the definition of ``affected 
enrollees,'' these best practices have been in our guidance since 2016, 
thus we believe the majority of MA organizations likely already follow 
them as they develop the content of their provider termination notices. 
Therefore, we propose to codify the best practices for provider 
termination notices at Sec.  422.2267(e)(12). Specifically, we propose 
to make these requirements for the content of MA organizations' 
provider termination notices and also require MA organizations to 
include additional pieces of information in the notice.
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    \76\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c04.pdf.
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    First, at proposed Sec.  422.2267(e)(12)(ii)(A), we are proposing 
that the provider termination notice must inform the enrollee that the 
provider will no longer be in the network and the date the provider 
will leave the network. We have modeled this proposed regulatory text 
after the established precedent for the equivalent notice requirement 
for the Non-renewal Notice model communications material as provided at 
Sec.  422.2267(e)(10)(ii)(A) (we refer readers to section III.P. of 
this proposed rule for our proposal to amend paragraph (e)(10) to make 
the Non-renewal Notice a standardized communications material). Next, 
we propose to codify a requirement to include the information currently 
described in the best practices guidance in Chapter 4 of the MMCM at 
proposed Sec.  422.2267(e)(12)(ii)(B), (C), and (E), specifically: 
names and phone numbers of in-network providers that the enrollee may 
access for continued care (this information may be supplemented with 
information for accessing a current provider directory, including both 
online and direct mail options) (at proposed paragraph (e)(12)(ii)(B)); 
how the enrollee may request a continuation of ongoing medical 
treatment or therapies with their current provider (at proposed 
paragraph (e)(12)(ii)(C)); and the MA organization's call center 
telephone number, TTY number, and hours and days of operation (at 
proposed paragraph (e)(12)(ii)(E)). For proposed paragraph 
(e)(12)(ii)(B) and (C), we are proposing to use the same description 
for the relevant content that is currently found in CMS's guidance in 
Chapter 4 of the MMCM. However, for proposed paragraph (e)(12)(ii)(E), 
instead of using the existing Chapter 4 language (``customer service 
number(s) where answers to questions about the network changes will be 
available''), we have chosen to model the proposed regulatory text 
after the established precedent of a requirement for the Non-renewal 
Notice at Sec.  422.2267(e)(10)(ii)(H). We believe that the proposed 
new language of ``call center telephone number, TTY number, and hours 
and days of operation'' is more inclusive as it encompasses not just 
the customer service number but also the TTY number and operation 
times.
    In addition, at proposed Sec.  422.2267(e)(12)(ii)(D), we are 
proposing that the provider termination notice must provide information 
about the Annual Coordinated Election Period (AEP) and the MA Open 
Enrollment Period (MA-OEP) and must explain that an enrollee who is 
impacted by the provider termination may contact 1-800-MEDICARE to 
request assistance in identifying and switching to other coverage, or 
to request consideration for a special election period (SEP), as 
specified in Sec.  422.62(b)(26), based on the individual's unique 
circumstances and consistent with existing parameters for this SEP. We 
solicit comment on our proposal to consider an enrollee who is

[[Page 79497]]

impacted by a provider contract termination to be someone who is 
experiencing an exceptional condition, as specified in Sec.  
422.62(b)(26), and therefore eligible for this SEP. We also solicit 
comment on alternative approaches; specifically, the adoption of a new 
SEP for this type of provider contract termination, with explicit 
standards for when termination of a provider from the network should 
serve as a basis for SEP eligibility.
    The last proposal we are making regarding the provider termination 
notice requirements at Sec.  422.2267(e)(12) concerns CMS's 
requirements for the telephonic notice that we are proposing MA 
organizations must provide to enrollees at least 45 days in advance of 
a primary care or behavioral health provider contract termination. 
Specifically, at proposed Sec.  422.2267(e)(12)(iii), we propose that 
the telephonic notice of provider termination specified in proposed 
Sec.  422.111(e)(1)(i) must relay the same information as the written 
provider termination notice as described in paragraph (e)(12)(ii) of 
Sec.  422.2267. We believe that requiring the MA organization to 
communicate the same information on the primary care or behavioral 
health provider contract termination through two different channels--a 
written letter and a telephone call--will ensure that affected 
enrollees receive the information they need to decide how to proceed 
with their current course of treatment. The telephonic communication 
will reiterate the change occurring in the plan's network and the 
options the enrollee has moving forward in the absence of their current 
provider.
    The provider termination notice is a model communications material 
which, per Sec.  422.2267(c), is created by CMS as an example of how to 
convey enrollee information. When drafting this required communications 
material, MA organizations must: (1) accurately convey the vital 
information in the required material to the enrollee, although the MA 
organization is not required to use the CMS model material verbatim; 
and (2) follow CMS's order of content, when specified (see Sec.  
422.2267(c)(1) and (2)). While the regulation currently identifies the 
provider termination notice as a model communications material, CMS has 
not yet developed the model document for MA organizations to use. 
Rather, MA organizations have been expected to follow the current 
guidance in section 110.1.2.3 of Chapter 4 of the MMCM.\77\ Given that 
we are now proposing new regulatory requirements for the content of 
these provider termination notices (including codifying existing best 
practices provided in CMS's guidance), CMS intends to create a model 
document for the provider termination notice that contains the 
requirements at proposed Sec.  422.2267(e)(12), if finalized. We 
believe that this model document would be welcomed by MA organizations 
as it will provide a useful template that MA organizations may follow 
when developing their own provider termination notices. Our proposal 
for Sec.  422.2267(e)(12) specifies the required information, and the 
model document that CMS intends to develop would reflect this 
information as well. In addition, when developing provider termination 
notices, all MA organizations must follow the general communications 
materials and activities requirements outlined at Sec.  422.2262 and 
the standards for required materials and content at Sec.  422.2267(a).
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    \77\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c04.pdf.
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    Regarding compliance monitoring for the regulatory amendments 
proposed here, CMS currently monitors MA organization compliance with 
the existing policies at Sec. Sec.  422.111(e) and 422.2267(e)(12) 
through account management activities, complaint tracking and 
reporting, and auditing activities. These oversight operations alert 
CMS to any issues with enrollees that did not receive adequate notice 
of a provider contract termination, and CMS may require MA 
organizations to address these matters if they arise. If finalized, CMS 
intends to continue these oversight operations to ensure MA 
organizations' compliance with the proposed regulation. In accordance 
with Sec.  422.2261(c)(2), CMS may require submission or submission and 
approval of communications materials prior to use if additional 
oversight is warranted as determined by CMS based on feedback such as 
complaints or data gathered through reviews. This is to ensure the 
information being received by enrollees is accurate. Furthermore, Sec.  
422.2261(d)(1) and (3) establish that CMS reviews materials to ensure 
compliance with all applicable requirements under Sec. Sec.  422.2260 
through 422.2267 and that CMS may determine, upon review of such 
materials (either prospective or retrospective), that the materials 
must be modified, or may no longer be used. Therefore, CMS reserves the 
right to review any MA organization's provider termination notice if we 
receive complaints or other information signifying that the notice 
warrants additional oversight to ensure compliance with CMS regulations 
for provider termination notices at Sec. Sec.  422.111(e) and 
422.2267(e)(12). If CMS does exercise its authority under Sec.  
422.2261(c) to review an MA organization's provider termination notice, 
per Sec.  422.2261(d)(1) and (3), CMS will review the notice to ensure 
compliance with the applicable regulations and, as a result, may 
require the MA organization to modify the notice or no longer use it.
    In summary, CMS is proposing to revise: (1) Sec.  422.111(e) by 
establishing specific enrollee notification requirements for no-cause 
and for-cause provider contract terminations and adding specific and 
more stringent enrollee notification requirements when primary care and 
behavioral health provider contract terminations occur; and (2) Sec.  
422.2267(e)(12) to specify the requirements for the content of the 
notification to enrollees about a provider contract termination. We 
solicit comment on these proposals.

E. Utilization Management Requirements: Clarifications of Coverage 
Criteria for Basic Benefits and Use of Prior Authorization, Additional 
Continuity of Care Requirements, and Annual Review of Utilization 
Management Tools (Sec. Sec.  422.101, 422.112, 422.137, and 422.138)

1. Introduction
    A majority of MA plans are coordinated care plans, which is defined 
at Sec.  422.4(a) as a plan that includes a network of providers that 
are under contract or arrangement with an MA organization to deliver 
the benefit package approved by CMS. CMS regulations at Sec.  
422.202(b) require that each MA organization consult with network 
providers on the organization's medical policy, quality improvement 
programs, medical management procedures, and ensure that certain 
standards are met. For example, coordinated care plans must ensure that 
practice guidelines and utilization management guidelines are based on 
reasonable medical evidence or a consensus of health care professionals 
in the particular field; consider the needs of the enrolled population; 
are developed in consultation with contracting physicians; and are 
reviewed and updated periodically. Further, these guidelines must be 
communicated to providers and, as appropriate, to enrollees.
    Coordinated care plans are designed to manage cost, service 
utilization, and

[[Page 79498]]

quality by ensuring that only medically necessary care is provided. 
This is done in part through the use of utilization management tools, 
including prior authorization, expressly referenced at section 
1852(c)(1)(G) and (c)(2)(B) of the Act. These tools are designed to 
help MA plans determine the medical necessity of services and minimize 
the furnishing of unnecessary services, thereby helping to contain 
costs and protect beneficiaries from receiving unnecessary care. 
Additionally, section 1852(g)(1)(A) of the Act states that MA plans 
shall have a procedure for making determinations regarding whether an 
enrollee is entitled to receive a health care service and that such 
determinations must be made on a timely basis; that provision applies 
to both prior authorization determinations and to post-service 
decisions about coverage and payment.
    In addition, CMS regulations at Sec.  422.101(a) and (b) require 
that MA plans provide coverage of all basic benefits (that is, services 
covered under Medicare Parts A and B, except hospice care and the cost 
of kidney acquisitions for transplant) and that MA plans must comply 
with Traditional Medicare national coverage determinations (NCDs) and 
local coverage determinations (LCDs) applicable in the MA plan's 
service area.\78\ In recent years, CMS has received feedback from 
various stakeholders, including patient groups, consumer advocates, 
providers and provider trade associations that utilization management 
in MA, especially prior authorization, can sometimes create a barrier 
to patients accessing medically necessary care. Stakeholder feedback 
has included concerns about the quality of MA plans' prior 
authorization decisions (for example, coverage denials being made by 
plan clinicians who do not have expertise in the field of medicine 
applicable to the requested service) and process challenges (for 
example, repetitive prior approvals for needed services for enrollees 
that have a previously-approved plan of care).
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    \78\ The terms ``Traditional Medicare'' and ``Original 
Medicare'' are used interchangeably throughout this section and both 
mean the Medicare Fee-For-Service program.
---------------------------------------------------------------------------

    In addition, in April 2022, the Office of the Inspector General 
(OIG) released a report \79\ titled, ``Some Medicare Advantage 
Organization Denials of Prior Authorization Requests Raise Concerns 
About Beneficiary Access to Medically Necessary Care,'' which 
summarized the results of a study by the OIG of MA plan denials of 
requests for prior authorization of services. The OIG found that some 
prior authorization requests were denied by MA plans, even though the 
requested services met Medicare coverage guidelines. In other cases, 
the OIG found that prior authorization requests were inappropriately 
denied due to errors that were likely preventable through process or 
system changes by MA organizations. Citing a concern that such 
inappropriate denials may prevent or delay beneficiaries from receiving 
medically necessary care, the OIG recommended that CMS: (1) issue new 
guidance on the appropriate use of MA organization clinical criteria in 
medical necessity reviews; (2) update its audit protocols to address 
the issues related to MA organizations' use of clinical criteria and/or 
examining particular service types; and (3) direct MA organizations to 
take steps to identify and address vulnerabilities that can lead to 
manual review errors and system errors.\80\
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    \79\ https://oig.hhs.gov/oei/reports/OEI-09-18-00260.pdf.
    \80\ https://oig.hhs.gov/oei/reports/OEI-09-18-00260.pdf, pg. 3.
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    CMS understands that utilization management tools are an important 
means to coordinate care, reduce inappropriate utilization, and promote 
cost-efficient care. In light of the feedback we have received from 
stakeholders and the findings in the OIG report, however, we have 
concluded that certain guardrails are needed to ensure that utilization 
management tools are used, and associated coverage decisions are made, 
in ways that ensure timely and appropriate access to medically 
necessary care for beneficiaries enrolled in MA plans. We propose to 
clarify requirements for the coverage criteria that MA plans use when 
making medical necessity determinations. We are also proposing 
additional beneficiary protection requirements in order to improve care 
continuity and integration of health care services and to increase plan 
compliance responsibilities with regards to utilization management 
policies. Our proposals here would interpret and implement the 
requirements in section 1852 regarding the provision and coverage of 
services by MA plans and are therefore proposed under our authority in 
section 1856 of the Act to adopt standards to carry out the Part C 
statute and MA program.
    As originally stated in the June 2000 final rule (65 FR 40207), MA 
organizations must cover all Part A and B benefits, excluding hospice 
services and the cost of kidney acquisitions for transplant, on the 
same conditions that items and services are furnished in Traditional 
Medicare. This means that MA organizations may not limit coverage 
through the adoption of policies and procedures--whether those policies 
and procedures are called utilization management and prior 
authorization or the standards and criteria that the MA organization 
uses to assess and evaluate medical necessity--when those policies and 
procedures result in denials of coverage or payment where the 
Traditional Medicare program would cover and pay for the item or 
service furnished to the beneficiary. In addition, this means that 
limits or conditions on payment and coverage in the Traditional 
Medicare program--such as who may deliver a service and in what setting 
a service may be provided, the criteria adopted in relevant NCDs and 
LCDs, and other substantive conditions--apply to set the scope of basic 
benefits as defined in Sec.  422.100(c).
    MA organizations have flexibility to furnish and cover services 
without meeting all substantive conditions of coverage in Traditional 
Medicare, but that flexibility is limited to and in the form of 
supplemental benefits. As stated in the June 2000 final rule, MA 
organizations' flexibility to deliver care using cost-effective 
approaches should not be construed to mean that Medicare coverage 
policies do not apply to the MA program. If Traditional Medicare covers 
a service only when certain conditions are met, these conditions must 
be met in order for the service to be considered part of the 
Traditional Medicare benefits (that is, basic benefits) component of an 
MA plan. MA organizations may cover the same service when the 
conditions are not met, but these benefits would then be defined as 
supplemental benefits within the scope of Sec. Sec.  422.100(c)(2) and 
422.102 and must be included in the supplemental benefits portion of 
the MA plan's bid. For example, when services are furnished by a type 
of provider other than the type of provider who may furnish the service 
in Traditional Medicare, those services are supplemental benefits. In 
this rule, we are proposing policies that would provide less 
flexibility for MA organizations to deny or limit coverage of basic 
benefits than provided in the 2000 final rule. However, as provided by 
section 1852(a)(3) of the Act and reflected in Sec. Sec.  422.100(c)(2) 
and 422.102, MA plans may cover benefits beyond what is covered (and 
when it is covered) under Traditional Medicare by offering supplemental 
benefits. Our proposal is primarily directed at ensuring that minimum 
coverage

[[Page 79499]]

requirements are met and that MA plans do not deny or limit coverage of 
basic benefits; we are not proposing to limit the scope of permissible 
supplemental benefits, but our proposal would apply certain 
requirements for the use of utilization management (UM) for all covered 
benefits as discussed in section III.E. of this proposed rule.
    In this proposed rule, we clarify acceptable cost-effective 
utilization management approaches for MA organizations to use in the 
context of the new proposed requirements. These clarifications aim to 
ensure access to medically necessary care while maintaining MA 
organizations' ability to apply utilization management that ensures 
clinically appropriate care. Additionally, our proposals address 
substantive rules regarding clinical coverage criteria for basic 
benefits and how they interact with utilization management policies, 
including revisions to existing regulations and adopting new 
regulations to ensure that MA enrollees receive the basic benefits 
coverage to which they are entitled and to ensure appropriate treatment 
of a benefit as a basic benefit or supplemental benefit for purposes of 
the bid under Sec.  422.254. We solicit comment on whether our proposed 
regulatory provisions sufficiently address the requirements and limits 
that we describe in the preamble.
2. Coverage Criteria for Basic Benefits
    In interpreting requirements involving coverage criteria, whether 
used for prior authorization or post-service payment, CMS has a 
longstanding policy, discussed in sub-regulatory guidance (section 
10.16 of Chapter 4 of the MMCM), that MA plans must make medical 
necessity determinations based on internal policies, which include 
coverage criteria that are no more restrictive than Traditional 
Medicare's national and local coverage policies and approved by a 
plan's medical director. In light of the previously discussed feedback 
and the OIG recommendation that we issue new guidance on the 
appropriate use of MA organization clinical criteria in medical 
necessity reviews, we propose to codify standards for coverage criteria 
to ensure that basic benefits coverage for MA enrollees is no more 
restrictive than Traditional Medicare. Section 1862 of the Act requires 
original Medicare benefits to be reasonable and necessary for the 
diagnosis or treatment of illness or injury or to improve the 
functioning of a malformed body member. Thus, in order to meet the 
statutory requirements at section 1852(a)(1) of the Act, which requires 
MA plans to cover A and B services, MA plan coverage criteria must do 
the same. We also are proposing to amend Sec.  422.101(b) and (c) to 
clarify the obligations and responsibilities for MA plans in covering 
basic benefits.
    Section 1852(a)(1) of the Act and CMS regulations at Sec.  
422.101(a) and (b) require all MA organizations to provide coverage of, 
by furnishing, arranging for, or making payment for, all items and 
services that are covered by Part A and Part B of Medicare and that are 
available to beneficiaries residing in the plan's service area. Section 
422.101 requires MA organizations to comply with all NCDs; LCDs written 
by Medicare Administrative Contractors (MACs) with jurisdiction for 
Medicare claims in the MA organization or plan's service area; and 
coverage instructions and guidance in Medicare manuals, instructions 
and other guidance documents unless those materials are superseded by 
regulations in part 422.
    We propose to amend Sec.  422.101(b)(2) by removing the reference 
to ``original Medicare manuals and instructions'' and clarify that MA 
organizations must comply with general coverage and benefit conditions 
included in Traditional Medicare laws, unless superseded by laws 
applicable to MA plans, when making coverage decisions. Our proposal is 
designed to prohibit MA organizations from limiting or denying coverage 
when the item or service would be covered under Traditional Medicare 
and continue the existing policies that permit MA organizations to 
cover items and services more broadly than original Medicare by using 
supplemental benefits. In proposing this change to Sec.  422.101(b)(2), 
we are reiterating that limits or conditions on payment and coverage in 
the Traditional Medicare program--such as who may deliver a service and 
in what setting a service may be provided, the criteria adopted in 
relevant NCDs and LCDs, and other substantive conditions--apply to 
define the scope of basic benefits. By removing the reference to 
``original Medicare manuals and instructions,'' we are not diminishing 
the content and value that these manuals and instructions provide in 
interpreting and defining the scope of Part A and Part B benefits. MA 
organizations should follow and comply with CMS's interpretation of 
Medicare laws and coverage requirements as reflected in the manuals, 
guidance and instructions issued by CMS, which is the agency with the 
applicable expertise and authority for Medicare. The proposed revision 
to Sec.  422.101(b)(2) clarifies that statutes and regulations that set 
the scope of coverage in the Traditional Medicare program are 
applicable to MA organizations in setting the scope of basic benefits 
that must be covered by MA plans. We also propose to refer in Sec.  
422.101(b)(2) to specific Medicare regulations that include coverage 
criteria for Part A inpatient admissions, Skilled Nursing Facility 
(SNF) care, Home Health Services and Inpatient Rehabilitation 
Facilities (IRF) as examples of general coverage and benefit conditions 
in Traditional Medicare that apply to basic benefits in the MA program. 
The list of Medicare regulations referred to is not exhaustive and 
provides examples of substantive coverage and benefit conditions that 
apply to MA. In addition, we are also proposing to revise the current 
provision that states that Traditional Medicare coverage rules apply 
unless superseded by regulations in this part. We propose to revise 
that aspect of Sec.  422.101(b)(2) to refer to laws applicable to MA 
plans in order to avoid implying that a Part 422 regulation could 
supersede an applicable statute.
    The existing rule at Sec.  422.101(c), which states that MA 
organizations may elect to furnish, as part of their Medicare covered 
benefits, coverage of post-hospital SNF care in the absence of the 
prior qualifying hospital stay is an example of a special rule in MA 
that deviates from coverage criteria articulated in Traditional 
Medicare. The regulation is based on section 1812(f) of the Act, which 
authorizes CMS to permit coverage of SNF care without the 3 day 
qualifying hospital stay in limited circumstances. (68 FR 50847-50848) 
This rule provides MA organizations the flexibility to cover SNF stays 
for MA enrollees that would not be otherwise coverable in Traditional 
Medicare, if the beneficiary had not met the prior qualifying hospital 
stay of 3 days prior to admission in the SNF. This special rule 
continues to apply in the MA program; however, we propose to 
redesignate this rule to paragraph (c)(2) of Sec.  422.101 as part of 
our proposal to add a heading to Sec.  422.101(c) and to expand the 
scope of the paragraph. We propose to add the heading ``Medical 
Necessity Determinations and Special Coverage Provisions'' to Sec.  
422.101(c). As such, we propose to reassign the special rule for 
coverage of posthospital SNF in the absence of the prior qualifying 
hospital stay as Sec.  422.101(c)(2).The proposed new heading for Sec.  
422.101(c), ``Medical Necessity Determinations and Special 
Provisions,'' signals that paragraph (c) will address medical necessity 
criteria and special rules that apply to MA basic benefits that do not 
necessarily conform to coverage rules in Traditional Medicare.

[[Page 79500]]

    We propose to codify at Sec.  422.101(c)(1)(A) that MA 
organizations must make medical necessity determinations based on 
coverage and benefit criteria as specified at Sec.  422.101(b) and (c) 
and may not deny coverage for basic benefits based on coverage criteria 
that are not specified in Sec.  422.101(b) or (c). This means that when 
an MA organization is making a coverage determination on a Medicare 
covered item or service, the MA organization cannot deny coverage of 
the item or service based on internal, proprietary, or external 
clinical criteria not found in Traditional Medicare coverage policies. 
It is our interpretation that certain utilization management processes, 
such as clinical treatment guidelines that require another item or 
service be furnished prior to receiving the requested item or service, 
would violate the proposed requirements at Sec.  422.101(b) and (c), 
and thus, would be prohibited under this proposal unless it is 
specified within the applicable NCD or LCD or Medicare statute or 
regulation. We note that we are not proposing to revise Sec.  422.136, 
which authorizes MA plans to use step therapy policies for Part B drugs 
under certain circumstances; in the next paragraph, we discuss the 
basis for authorizing step therapy for Part B drugs in Sec.  422.136 in 
more detail. Clinical criteria that restrict access to a Medicare 
covered item or service unless another item or service is furnished 
first, when not specifically required in NCD or LCD, would be 
considered additional internal coverage criteria that are prohibited 
under this proposal. When MA plans are allowed to create internal 
coverage criteria as specified at proposed Sec.  422.101(b)(6), the 
current evidence in widely used treatment guidelines or clinical 
literature relied upon to make the coverage determination may recommend 
clinical treatment guidelines that require another item or service 
first. As long as the supporting widely used treatment guidelines or 
clinical literature recommend another item or service first, this would 
be acceptable under our proposed policy. We discuss the proposal to add 
Sec.  422.101(b)(6) later in this section of the proposed rule.
    In a HPMS memo released August 7, 2018, CMS announced that under 
certain conditions beginning in contract year 2019, MA plans may use 
utilization management tools such as step therapy for Part B drugs. In 
a May 2019 final rule (84 FR 23832), we codified MA organizations' 
ability to use step therapy for Part B drugs under certain conditions 
that protect beneficiaries and acknowledged that utilization management 
tools, such as step therapy, can provide the means for MA plans to 
better manage and negotiate the costs of providing Part B drugs.
    We clarified that, with respect to clinical concerns and 
interference with provider care, step therapy or other utilization 
management policies may not be used as unreasonable means to deny 
coverage of medically necessary services or to eliminate access to 
medically necessary Part B covered drugs. (84 FR 23856) The 
requirements in the 2019 rule, in combination with current MA program 
regulations, ensure access to Part B drugs and limit the potential for 
step therapy policies to interfere with medically necessary care. 
Organizations have been and remain subject to the MA regulations and 
must comply with national and applicable local coverage determinations. 
Step therapy protocols cannot be stricter than an NCD or LCD with 
specified step therapy requirements. Thus, this proposal remains 
consistent with the 2019 rule in that plans must still comply with NCDs 
and LCDs when developing step therapy programs for Part B drugs.
    Finally, in the May 2019 final rule, we did not authorize step 
therapy practices for Part A or Part B (non-drug) items or services and 
our proposal here will limit the ability of MA organizations to use 
such UM policies in connection with non-drug covered items or services 
that are basic benefits. There are a number of differences with step 
therapy for Part B drugs and step therapy for non-drug items and 
services. From a clinical standpoint, there tends to be more than one 
drug that has demonstrated success in treating a certain disease or 
condition, and also there are generic alternatives, which is somewhat 
different than other Part A and B services. Often, there are not head-
to-head comparisons between drugs in a certain class of medications, 
because a non-inferiority study \81\ was conducted in order to bring 
the drug to market. This means that it is not always obvious what the 
clinically superior drug is for certain diseases or conditions, while 
there may be a significant difference in pricing. Furthermore, there 
are several studies \82\ demonstrating how increased cost sharing for 
medications can, in and of itself, reduce patient adherence to those 
medications.
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    \81\ https://www.fda.gov/media/78504/download.
    \82\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3278192/.
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    In addition, the manner in which Part B drugs are purchased and 
furnished is somewhat different from coverage of non-drug healthcare 
items and services. Generally, MA organizations pay the provider for 
both the service of administering a Part B drug and the cost of the 
drug, but do not directly pay drug manufacturers or suppliers for the 
cost of the drug. MA organizations may negotiate pricing discounts or 
rebates with the manufacturer, who is not the entity that directly 
furnishes the Part B drug to enrollees and who is not ordinarily paid 
directly by the MA organization for what is furnished to enrollees. As 
we explained in the May 2019 final rule (84 FR 23858, 23863, and 
23869), we believe that Sec.  422.136 can put MA organizations in a 
stronger position to negotiate lower pharmaceutical prices with drug 
manufacturers, reducing the cost sharing for the beneficiary. 
Furthermore, as mentioned previously, studies have demonstrated that 
increased cost sharing for medications can reduce patient adherence to 
those medications. Therefore, we are not proposing to revise our 
current regulations regarding Part B step therapy at this time.
    Similar to MACs in Traditional Medicare, we expect MA organizations 
to make medical necessity decisions by using NCDs, LCDs, and other 
applicable coverage criteria in Medicare statutes and regulations to 
determine if an item or service is reasonable, necessary and coverable 
under Medicare Part A or Part B. In some circumstances, NCDs or LCDs 
expressly include flexibility that allows coverage in circumstances 
beyond the specific coverage or non-coverage indications that are 
listed in the NCD or LCD. For example, an NCD or LCD may state that the 
item or service can be covered when reasonable and necessary for the 
individual patient. When deciding whether an item or service is 
reasonable and necessary for an individual patient, we expect MA 
organizations to make medically necessary decisions in a manner that 
most favorably provides access to services for beneficiaries and aligns 
with CMS's definition of reasonable and necessary in the Medicare 
Program Integrity Manual, Chapter 13, section 13.5.4. This expectation 
applies to coverage determinations made before the item or service is 
provided (pre-certification/prior authorization), during treatment 
(case management), or after the item or service has been provided 
(claim for payment). As recommended by the OIG, this proposal clarifies 
the limited clinical coverage criteria can be applied to basic benefits 
and reinforces our longstanding policy that MA organizations may only 
apply coverage criteria that are no more restrictive than

[[Page 79501]]

Traditional Medicare coverage criteria found in NCDs, LCDs, and 
Medicare laws. We reiterate that this proposal also applies to 
substantive coverage criteria and benefit conditions found in 
Traditional Medicare regulations, such as those governing inpatient 
admissions and transfers to post-acute care settings, which are not 
governed by NCD or LCD. Therefore, MAOs may only deny a request for 
Medicare-covered post-acute care services in a particular setting, if 
the MAO determines that the Traditional Medicare coverage criteria for 
the services cannot be satisfied in that particular setting. As we will 
discuss in section III.E.3 in this proposal, this does not restrict an 
MA organization's ability to use certain utilization management 
processes, like prior authorization or post claim review, to ensure 
items and services meet Medicare coverage rules; it simply limits the 
coverage criteria that an MA organization can apply to deny an item or 
service during those reviews. We solicit comment about the specificity 
of the coverage conditions in Traditional Medicare regulations and 
whether we should consider, and under what circumstances, allowing MA 
organizations to have internal coverage criteria in addition to 
requirements in current regulations.
    We recognize that there are some Part A or Part B benefits that do 
not have applicable Medicare NCDs, LCDs, or specific traditional 
Medicare coverage criteria in regulation for MA plans to follow when 
making medical necessity determinations. Therefore, we propose at Sec.  
422.101(b)(6) that when coverage criteria are not fully established in 
applicable Medicare statute, regulation, NCD or LCD, an MA plan may 
create internal coverage criteria that are based on current evidence in 
widely used treatment guidelines or clinical literature that is made 
publicly available. In creating these internal policies, we propose 
that MA organizations must follow similar rules that CMS and MACs must 
follow when creating NCDs or LCDs. Specifically, MA organizations must 
provide publicly available information that discusses the factors the 
MA organization considered in making coverage criteria for medical 
necessity determinations.
    Section 1862(l) of the Act requires the Secretary to issue publicly 
a discussion and explanation of the factors considered in making NCDs, 
after following a process that affords the public an opportunity to 
comment prior to implementation. We propose at Sec.  422.101(b)(6) that 
MA organizations must follow a somewhat similar process when creating 
internal plan coverage criteria by providing a publicly accessible 
summary of evidence that was considered during the development of the 
internal coverage criteria used to make medical necessity 
determinations, a list of the sources of such evidence, and include an 
explanation of the rationale that supports the adoption of the coverage 
criteria used to make a medical necessity determination. We are not 
proposing that MA organizations must provide a pre-determination 
explanation and opportunity for the public to comment on the MA 
organization's coverage criteria; however, providing a publicly 
accessible summary of the evidence, a list of the sources of evidence, 
and an explanation of the rationale for the internal coverage criteria 
will protect beneficiaries by ensuring that coverage criteria are 
rational and supportable by current, widely used treatment guidelines 
and clinical literature. This requirement provides further transparency 
into MA organizations' medical necessity decision making and is 
consistent with CMS's expectation that MA organizations develop and use 
coverage criteria in a way that aligns with Traditional Medicare.
    We are also proposing at Sec.  422.101(b)(6) a requirement that an 
MA organization's internal clinical criteria must be based on current 
evidence in widely used treatment guidelines or clinical literature. 
Current, widely-used treatment guidelines are those developed by 
organizations representing clinical medical specialties, and refers to 
guidelines for the treatment of specific diseases or conditions (such 
as referring to the Infectious Diseases Society of America for the 
Treatment of Clostridium Difficile \83\) or to determine appropriate 
level of care (such as the American Society of Addiction Medicine 
Criteria for placement,\84\ continued stay, and transfer or discharge 
of patients with addiction and co-occurring conditions). Clinical 
literature that CMS considers to be of high enough quality for the 
justification of internal coverage criteria include large, randomized 
controlled trials or cohort studies or all-or-none studies with clear 
results, published in a peer-reviewed journal, and specifically 
designed to answer the relevant clinical question, or large systematic 
reviews or meta-analyses summarizing the literature of the specific 
clinical question published in a peer-reviewed journal with clear and 
consistent results. Evidence that is unpublished, is a case series or 
report, or derived solely from internal analyses within the MA 
organization, or that does not comply with the standards, as previously 
described, would not represent proper justification for instituting 
internal coverage guidelines that would restrict access to care. This 
evidentiary standard is overall consistent with published frameworks 
\85\ that rank the reliability of different types of studies in the 
clinical literature. CMS solicits comment on the definition of widely 
used treatment guidelines and clinical literature that would justify 
internal coverage criteria used in the absence of NCDs, LCDs, or 
Traditional Medicare statutes or regulations along with the other 
requirements proposed in new Sec.  422.101(b)(6)
---------------------------------------------------------------------------

    \83\ Reference: https://www.idsociety.org/practice-guideline/clostridium-difficile/.
    \84\ https://www.asam.org/asam-criteria.
    \85\ (for example, Oxford Centre for Evidence-Based Medicine 
levels of evidence https://www.cebm.ox.ac.uk/resources/levels-of-evidence/oxford-centre-for-evidence-based-medicine-levels-of-evidence-march-2009andStrengthofRecommendationTaxonomyhttps://www.jabfm.org/content/17/1/59#F1).
---------------------------------------------------------------------------

Medical Necessity Determinations
    CMS has longstanding guidance interpreting the obligations of MA 
organizations when making medical necessity determinations. Per CMS 
regulations at Sec.  422.112(a)(6)(ii), MA plans must have policies and 
procedures that allow for individual medical necessity determinations. 
As a result, an MA organization's coverage rules, practice guidelines, 
payment policies, and utilization management policies should be applied 
to make individual medical necessity determinations based on the 
individual circumstances for the enrollee and item or benefit to be 
covered. Chapter 4 of the MMCM, section 10.16, provides that MA 
organizations make coverage determinations that are based on: (1) the 
medical necessity of plan-covered services based on coverage policies 
(this includes coverage criteria no more restrictive than traditional 
Medicare described previously and proposed at Sec.  422.101(b)(6)); (2) 
where appropriate, involvement of the plan's medical director per Sec.  
422.562(a)(4); and (3) the enrollee's medical history (for example, 
diagnoses, conditions, functional status)), physician recommendations, 
and clinical notes. We are proposing to codify these existing standards 
for medical necessity decision making at Sec.  422.101(c)(1)(i) and 
propose some new requirements to connect medical necessity 
determinations to our new requirements at Sec.  422.101(b). Therefore, 
as previously mentioned, we are proposing to codify at Sec.  
422.101(c)(1)(i)(A) that MA

[[Page 79502]]

organizations must make medical necessity determinations based on 
coverage and benefit criteria as defined at Sec.  422.101(b) and (c) 
and may not deny coverage for basic benefits based on coverage criteria 
not found in those sources. Second, we propose at Sec.  
422.101(c)(1)(i)(B) to require MA organizations to consider whether the 
item or service is reasonable and necessary under 1862(a)(1) of the 
Act. We note that this has been a longstanding policy in MA based on 
how section 1852 of the Act requires MA plans to cover items and 
services for which benefits are available under original Medicare, 
however we believe it is important to acknowledge this in the context 
of MA organization decisions involving medical necessity. Third, we 
propose to codify existing policy at Sec.  422.101(c)(1)(i)(C) that MA 
organizations consider the enrollee's medical history (for example, 
diagnoses, conditions, functional status), physician recommendations, 
and clinical notes. Finally, consistent with current requirements at 
Sec.  422.562(a)(4), we propose at Sec.  422.101(c)(1)(i)(D) that MA 
organizations' medical directors be involved in ensuring the clinical 
accuracy of medical necessity decisions where appropriate. We solicit 
comments on when it would be appropriate for the MA organization's 
medical director to be involved, in light of how Sec.  422.562(a)(4) 
requires the medical director to be responsible for ensuring the 
clinical accuracy of all organization determinations and 
reconsiderations involving medical necessity.
    Authority for MA organizations to use utilization management 
policies with regard to basic benefits is subject to the mandate in 
section 1852(a)(1) of the Act that MA plans cover Medicare Part A and 
Part B benefits (subject to specific, limited statutory exclusions) 
and, thus, to CMS's authority under section 1856(b) of the Act to adopt 
standards to carry out the MA provisions. We believe these proposals 
will further implement the requirements set forth in section 1852 of 
the Act and Sec. Sec.  422.100 and 422.101, which require MA 
organizations to furnish all reasonable and necessary Part A and B 
benefits. These proposed requirements for how MA organizations make 
coverage decisions will ensure that MA organizations provide equal 
access to Part A and Part B benefits as provided in the Traditional 
Medicare program; overall our proposals mean that MA organizations will 
not be able to deny coverage for basic benefits using coverage criteria 
that is not consistent with coverage criteria in Medicare statutes, 
regulations, NCDs and LCDs or that is not consistent with the 
limitations proposed in Sec.  422.101(b)(6).
    We affirm that coordinated care plans may continue to include 
mechanisms to control utilization, such as prior authorization, 
referrals from a gatekeeper for an enrollee to receive services within 
the plan, and, subject to the rules on physician incentive plans at 
Sec. Sec.  422.208 and 422.210, financial arrangements that offer 
incentives to providers to furnish high quality and cost-effective care 
in addition to the coverage criteria that comply with Sec.  422.101(b). 
We affirm that MA organizations may furnish a given service using a 
defined network of providers, some of whom may not see patients in 
Traditional Medicare. Further, we affirm that MA organizations may 
encourage patients to see more cost-effective provider types than would 
be the typical pattern in Traditional Medicare (as long as those 
providers are working within the scope of practice for which they are 
licensed to provide care and comply with the provider 
antidiscrimination rules set forth under Sec.  422.205). For instance, 
MA organizations may offer more favorable cost sharing for certain 
provider types within their network.
    We also stated in the June 2000 final rule that when a health care 
service can be Medicare-covered and delivered in more than one way, or 
by more than one type of practitioner, that an MA plan could choose how 
the covered services will be provided. We are proposing a narrower 
policy that permits MA organizations to continue to choose who provides 
Part A and Part B benefits through the creation of their contracted 
networks, but limits MA organizations' ability to limit when and how 
covered benefits are furnished when Traditional Medicare will cover 
different provider types or settings. As a result of the proposal at 
Sec.  422.101(c)(1)(i), when care can be delivered in more than one way 
or in more than one type of setting, and a contracted provider has 
ordered or requested Medicare covered items or services for an MA 
enrollee, the MA organization may only deny coverage of the services or 
setting on the basis of the ordered services failing to meet the 
criteria outlined in Sec.  422.101(c)(1)(i). (We are proposing to 
reserve paragraph (c)(1)(ii) to provide flexibility in modifying the 
limits on MA medical necessity policies in the future.) For example, if 
an MA patient is being discharged from an acute care hospital and the 
attending physician orders post-acute care at a SNF because the patient 
requires skilled nursing care on a daily basis in an institutional 
setting, the MA organization cannot deny coverage for the SNF care and 
redirect the patient to home health care services unless the patient 
does not meet the coverage criteria required for SNF care in Sec. Sec.  
409.30-409.36 and proposed Sec.  422.101(b) and (c).
    In order to demonstrate how these policies will apply to actual 
cases, we discuss these proposed requirements in the context of two 
case examples that were cited in the OIG report. In the first case, an 
MA patient was a smoker and had a history of lung nodules and the 
provider ordered a Computed Tomography (CT) scan of the chest. NCD 
220.1 \86\ identifies Medicare coverage and limitations for CT scans. 
In this specific case, the MA organization cited internal clinical 
criteria that limited CT scans based on the size of nodules and the 
receipt of chest X-rays. In our proposed policy, the internal criteria 
applied by the MA organization would be prohibited because there is no 
provision in the NCD that requires other diagnostic tests, such as a 
chest X-ray, to be tried before CT scanning is used. In order to 
appropriately deny this request for a CT scan under our proposed 
policy, the MA organization would need to identify why the CT scan, as 
the initial diagnostic test, was not reasonable and necessary based on 
the medical necessity determination requirements at the proposed 
422.101(1)(A) through (D).
---------------------------------------------------------------------------

    \86\ https://www.cms.gov/medicare-coverage-database/view/ncd.aspx?NCDId=176.
---------------------------------------------------------------------------

    In another case, an MA patient had a history of dementia, 
hypertension and was legally blind due to glaucoma. The patient was 
admitted to the acute-care hospital for worsening dementia and acute 
agitation. The acute-care hospital requested that the patient be 
discharged to a SNF, but the MA organization denied the request based 
on the MA organization's internal clinical criteria that determined 
that the patient did not have a need for skilled care. The specific 
conditions for meeting level of care requirements at a SNF, the 
criteria for skilled services, and the need for skilled services can be 
found at 42 CFR 409.30-409.36. The internal clinical criteria used by 
the MA organization in this case were not identified by the OIG. 
However, if the internal criteria were not consistent with the criteria 
listed in Sec. Sec.  409.30-409.36, it would be prohibited under our 
proposal. The OIG noted that because the patient required physician 
supervision and access to physical and occupational therapy, the MA 
organization should have covered the SNF care requested.

[[Page 79503]]

    In this proposed rule, we are unable to quantify the impact of 
these changes on MA organizations because many MA organizations may 
already be interpreting our current rules in a way that aligns with our 
proposal. MA organizations may have interpreted our longstanding policy 
that they cannot apply coverage criteria that are more restrictive than 
Traditional Medicare national and local coverage policies to mean 
exactly what we are proposing here: that they may only deny Medicare 
items or services based on criteria consistent with Traditional 
Medicare coverage rules. Other MA organizations may have interpreted 
our current rules to mean that they can use internal policies, like 
utilization management guidelines, to deny approval for a particular 
item or service while directing the MA enrollee to different, but 
clinically appropriate, Medicare-covered item or service. The OIG 
stated in their report that ``CMS guidance is not sufficiently detailed 
to determine whether MA organizations may deny authorization based on 
internal MA organization clinical criteria that go beyond Medicare 
coverage rules.'' As a result, in this proposal we are making it clear 
that MA organizations may not deny authorization based on internal MA 
organization clinical criteria that go beyond Medicare coverage rules 
or comply with proposed Sec.  422.101(b)(6) addressing standards for 
when MA internal coverage rules are permissible. However, we are unable 
to quantify or predict how many MA organizations are currently 
operating in a manner that conforms with our proposal. We solicit 
comment from stakeholders on the full scope of this burden.
3. Appropriate Use of Prior Authorization
    Except for emergency, urgently needed, and stabilization services 
(Sec.  422.113(a)), and out-of-network services covered by MA PPO 
plans, all services covered by MA coordinated care plans (including MSA 
network plans, which are coordinated care plans under 
422.4(a)(iii)(D)), may be subject to prior authorization. In addition, 
MA PFFS and MA MSA plans are not permitted to use prior authorization 
policies or ``prior notification'' policies that reduce cost sharing 
for enrollees based on whether the enrollee or provider notifies the 
PFFS or MSA plan in advance that services will be furnished. See Sec.  
422.4(a)(2)(i)(B) and (a)(3)(iv). Appropriate prior authorization 
should only be used to confirm the presence of diagnoses or other 
medical criteria and to ensure that the furnishing of a service or 
benefit is medically necessary or, for supplemental benefits, 
clinically appropriate and should not function to delay or discourage 
care. We propose to codify this at new Sec.  422.138(a). Specifically, 
we are proposing a new Sec.  422.138(a) to provide that a coordinated 
care plan may use prior authorization processes for basic benefits and 
supplemental benefits only when the prior authorization processes are 
consistent with new Sec.  422.138. We propose to use the term 
``processes'' to include prior authorization policies and procedures 
that address any and all aspects of how prior authorization is used by 
an MA organization in a coordinated care plan. We are also proposing a 
new Sec.  422.138(b)(1) through (3) to limit the use of prior 
authorization processes only to confirm the presence of diagnoses or 
other medical criteria that are the basis for coverage determinations 
for the specific item or service, to ensure basic benefits are 
medically necessary based on standards specified in Sec.  
422.101(c)(1), or to ensure that the furnishing of supplemental 
benefits is clinically appropriate. This is consistent with 
longstanding guidance in Chapter 4, section 30.2, of the MMCM (and also 
stated in the CY 2021 Final Rule [86 FR 5864]) that supplemental 
benefits must be medically necessary.
    We are aware that Special Supplemental Benefits for the Chronically 
Ill (SSBCI) may be non-primarily health related. Regular supplemental 
benefits must be medically necessary, but SSBCI need to have a 
reasonable expectation of improving or maintaining the health or 
overall function of the enrollee as required at Sec.  
422.102(f)(1)(ii)) and discussed in CY2020 Final Rule (85 FR 33796).
    To illustrate how these proposed prior authorization policies would 
work, we discuss an example regarding coverage of acupuncture. 
Traditional Medicare currently has an NCD for Acupuncture for Chronic 
Lower Back Pain (cLBP).\87\ This NCD authorizes acupuncture for 
Medicare patients with chronic Lower Back Pain (cLBP) for up to 12 
visits in 90 days under the following circumstance: lasting 12 weeks or 
longer; nonspecific, in that it has no identifiable systemic cause 
(that is, not associated with metastatic, inflammatory, infectious 
disease, etc.); not associated with surgery; and not associated with 
pregnancy. Here, an MA plan may require prior authorization, before 
authorizing treatment as a covered basic benefit, to verify the 
patient's pain is not the result of metastatic, inflammatory, 
infectious disease, as specified in the NCD. In this example, the plan 
is using the prior authorization to confirm a diagnosis specified in 
appropriate Medicare Part B coverage policy (in this case an NCD). 
Hence, prior authorization is used in this case to verify appropriate 
use of clinical standards and thus ensuring appropriate care, which is 
acceptable. Another example would be a beneficiary scheduled to undergo 
a non-emergency surgery. Here, an MA plan may use prior authorization 
before approving the surgery to review the beneficiary's medical 
history to verify that the surgery is medically necessary based on 
Sec.  422.101(c)(1). In this example, the plan is using prior 
authorization to ensure that the surgery is clinically appropriate. (It 
is worth noting that if the surgery is an emergency or urgent surgery, 
or for stabilization purposes, then prior authorization would not be 
allowed).
---------------------------------------------------------------------------

    \87\ https://www.cms.gov/medicare-coverage-database/view/ncd.aspx?NCDId=373.
---------------------------------------------------------------------------

    CMS guidance (section 10.16 of Chapter 4 of the MMCM) currently 
states that if the plan approved the furnishing of a service through an 
advance determination of coverage, it may not deny coverage later on 
the basis of a lack of medical necessity. This means that when an 
enrollee or provider requests a pre-service determination and the plan 
approves this pre-service determination of coverage, the plan cannot 
later deny coverage or payment of this approval based on medical 
necessity. The only exception here would be medical necessity 
determinations for which the plan has the authority to reopen the 
decision for good cause or fraud or similar fault per the reopening 
provisions at Sec.  422.616. This has been longstanding sub-regulatory 
guidance (section 10.16 of Chapter 4) that we are proposing to codify 
at Sec.  422.138(c) to ensure the reliability of an MA organization's 
pre-service medical necessity determination. Therefore, we do not 
believe there is any additional impact. We solicit stakeholder input on 
the reasonableness of this assumption. We also solicit comment whether 
combining all of our proposals on prior authorization (here and in 
section III.E.4 of this proposed rule) in proposed new Sec.  422.138 
would make applying and understanding these requirements clearer for 
the public and MA organizations.
    Finally, we also remind MA plans that section 1852(b) of the Act 
states that an MA plan may not deny, limit, or condition the coverage 
or provision of benefits under this part, for individuals permitted to 
be enrolled with the

[[Page 79504]]

organization under this part, based on any health status-related factor 
described in section 2702(a)(1) of the Public Health Service Act. 
Additionally, per CMS regulations at Sec.  422.100(f)(2), plan benefit 
designs may not discriminate against beneficiaries, promote 
discrimination, discourage enrollment or encourage disenrollment, steer 
subsets of Medicare beneficiaries to particular MA plans, or inhibit 
access to services. We consider prior authorization policies to be part 
of the plan benefit design, and therefore cannot be used to 
discriminate or direct enrollees away from certain types of services.
    A complete estimation of impact on this provision cannot be given 
because we require detailed knowledge of proprietary plan information 
on the frequency and specific services for which prior authorization is 
done in each plan. We solicit comment from stakeholders on the impact 
and any additional information that would assist CMS in making an 
estimation.
4. Continuity of Care
    In addition to the requirements of section 1852(d) of the Act, 
Sec.  422.112(b) requires MA organizations that offer coordinated care 
plans to ensure continuity of care and integration of services through 
arrangements with contracted providers. Requirements in Sec.  
422.112(b)(1) through (b)(7) detail specific arrangements with 
contracted providers by which MA coordinated care plans are to ensure 
effective continuity and integration of health care services for their 
enrollees. This includes requiring MA coordinated care plans to have 
policies and procedures that provide enrollees with an ongoing source 
of primary care, programs for coordination of plan services with 
community and social services, and procedures to ensure that the MA 
coordinated care plan and its provider network have the information 
required for effective and continuous patient care and quality review.
a. Stakeholder Feedback
    Stakeholders have communicated to CMS that MA coordinated care 
plans' prior authorization processes sometimes require enrollees to 
interrupt ongoing treatment. We also have received complaints that MA 
plans require repetitive prior approvals for needed services for 
enrollees that have a previously-approved plan of care or are receiving 
ongoing treatments for a chronic condition. When MA plans require 
repetitive prior approvals, enrollees may face delays in receiving 
medically necessary care or experience gaps in care delivery that 
threaten an enrollee's health.
b. Proposed Regulatory Changes
    We believe the inclusion of additional continuity of care 
requirements at Sec.  422.112 will help ensure coordinated care plans 
comply with and implement the statutory requirement (in section 1852 of 
the Act) that MA plans provide access to all medically necessary 
Medicare covered benefits. We propose to add a new paragraph (b)(8)(i) 
and (ii) at Sec.  422.112 to set two new requirements for the use of 
prior authorization by MA coordinated care plans for covered Part A and 
B services (that is, basic benefits as defined in Sec.  422.100(c)). 
Section 422.112(b) requires MA organizations offering coordinated care 
plans to ensure continuity of care and integration of services through 
arrangements with contracted providers that include the types of 
policies, procedures and systems that are specified in current 
paragraphs (b)(1) through (b)(7). First, we propose, at Sec.  
422.112(8)(i) that MA coordinated care plans must have, as part of 
their arrangements with contracted providers, policies for using prior 
authorization for basic benefits. These prior authorization policies 
must reflect that all approved prior authorizations must be valid for 
the duration of the entire approved prescribed or ordered course of 
treatment or service. To illustrate this, if an MA coordinated care 
plan has approved a prescribed or ordered course of treatment or 
service for which the duration is 90 days, then the MA coordinated care 
plan's prior authorization approval must apply to the full 90 days, and 
the MA coordinated care plan may not subject this treatment or service 
to additional prior authorization requirements prior to the completion 
of the approved 90-day treatment or service. To further illustrate, if 
the MA coordinated care plan approves a prescribed or ordered course of 
treatment for a series of five sessions with a physical therapist, the 
MA coordinated care plan may not subject this active course of 
treatment or service to additional prior authorization requirements. We 
solicit comment on whether the prior authorization should be required 
to be valid for the duration of the prescribed order or ordered course 
of treatment provided that the criteria in proposed Sec.  422.101(b) 
and (c) are met. Second, at Sec.  422.112(b)(8)(ii)(A), we define 
``course of treatment'' as a prescribed order or ordered course of 
treatment for a specific individual with a specific condition, as 
outlined and decided upon ahead of time, with the patient and provider. 
(A course of treatment may, but is not required to be part of a 
treatment plan). We also propose to define an ``active course of 
treatment'' at Sec.  422.112(b)(8)(ii)(B) as a course of treatment in 
which a patient is actively seeing a provider and following the 
prescribed or ordered course of treatment as outlined by the provider 
for a particular medical condition.
    Additionally, we propose at Sec.  422.112(b)(8)(i)(B) that MA 
organizations offering coordinated care plans must have, as part of 
their arrangements with contracted providers, policies for using prior 
authorization that provide for a minimum 90-day transition period for 
any ongoing course(s) of treatment when an enrollee has enrolled in an 
MA coordinated care plan after starting a course of treatment, even if 
the course of treatment was for a service that commenced with an out-
of-network provider. This includes enrollees who are new to an MA 
coordinated care plan having either been enrolled in a different MA 
plan with the same or different parent organization, or an enrollee in 
Traditional Medicare and joining an MA coordinated care plan, and 
beneficiaries new to Medicare and enrolling in an MA coordinated care 
plan. The MA organization must not disrupt or require reauthorization 
for an active course of treatment for new plan enrollees for a period 
of at least 90 days.
    This means that for a minimum of 90 days, when an enrollee switches 
to a new MA coordinated care plan, any active course of treatment must 
not be subject to any prior authorization requirements. During the 
initial 90 days of an enrollee's enrollment with an MA coordinated care 
plan, the MA coordinated care plan cannot subject any active course of 
treatment (as defined at the proposed Sec.  422.112(b)(8)(ii)(B)) to 
additional prior authorization requirements, even if the service is 
furnished by an out-of-network provider. We expect any active course of 
treatment to be documented in the enrollee's medical records so that 
the enrollee, provider, and MA plan can track an active course of 
treatment and avoid disputes over the scope of this proposed new 
requirement. We also intend that an active course of treatment can 
include scheduled procedures regardless whether there are specific 
visits or activities leading up to the procedure. To further 
illustrate, if an enrollee has a procedure or surgery planned for 
January 31st at the time of enrollment in a new MA coordinated care 
plan effective January 1, the new MA coordinated care plan must cover

[[Page 79505]]

this procedure without subjecting the procedure to prior authorization. 
The planned surgery is a part of an active course of treatment and thus 
cannot be subjected to prior authorization by the MA coordinated care 
plan in which the beneficiary has newly enrolled. In proposing to limit 
the way MA coordinated care plans use prior authorization for enrollees 
undergoing an active course of treatment, CMS seeks to ensure the 
availability and accessibility of basic benefits, which is consistent 
with section 1852 of the Act. CMS is proposing to use a 90 day 
transition policy here because it mirrors Part D transition 
requirements and using the same period will ensure consistency across 
the MA and Part D programs. In addition, use of one consistent 
transition period will likely make it easier for new enrollees to 
understand their transition coverage. We solicit public comment on 
alternative timeframes for transition periods of ongoing treatment, 
including the clinical and economic justification for alternative 
proposals.
    CMS has authority to adopt standards to carry out the applicable MA 
provisions in Title XVIII of the Act and to add new contract terms that 
we find necessary, appropriate, and not inconsistent with the statute 
in sections 1856(b) and 1857(e) of the Act. In addition, section 
1854(a)(5) and (6) of the Act provide that CMS is not obligated to 
accept every bid submitted and may negotiate with MA organizations 
regarding the bid, including benefits. To the extent that these new 
minimum standards for MA organizations and how they cover benefits 
would not implement section 1852 of the Act, establish standards to 
carry out the MA program under section 1856(b) of the Act (which CMS 
does not concede as these are important protections to ensure that MA 
enrollees receive Medicare covered services), or be contract terms that 
we are authorized to adopt under section 1857(e)(1) of the Act, we 
believe that our negotiation authority in section 1854 of the Act 
permits creation of minimum coverage requirements. While the rules 
proposed here do not limit our negotiation authority (which is 
addressed in Sec.  422.256), they provide minimum standards for an 
acceptable benefit design for CMS to apply in reviewing and evaluating 
bids, in addition to establishing important protections to ensure that 
enrollees have access to medically necessary items and services that 
are covered under Part A and Part B. We note that CMS has similar 
negotiation authority for the Part D program at section 1860D-11(d)(2) 
of the Act. CMS implemented a similar policy regarding coverage during 
a transition period using that authority and a similar explanation in 
the 2005 final rule (70 FR 4193). Our proposal is similar to Part D 
transitional requirements currently codified at Sec.  423.120(b), which 
require Part D sponsors to provide for an appropriate transition 
process for enrollees prescribed Part D drugs that are not on their 
Part D plan's formulary (including Part D drugs that are on a sponsor's 
formulary, but require prior authorization or step therapy under a 
plan's utilization management rules). Similar to Part D, as explained 
previously, we would establish a transition period for services 
provided as an active course of treatment to enrollees who switch from 
traditional Medicare to an MA plan and for when an enrollee switches 
from an MA a plan to another MA plan as described previously. Our 
experience with oversight and monitoring of the Part D program 
indicates that the transition policy has proved effective in ensuring 
continuity of care for Part D beneficiaries. Based on this experience, 
we believe it is appropriate to incorporate a similar beneficiary 
protection and coverage requirement in the MA program.
    Coordinated care plans are already required to ensure continuity of 
care and integration of services through arrangements with contracted 
providers at 422.112(b). Therefore, some MA organizations may already 
be exercising discretion to waive prior authorization for enrollees 
undergoing an active course of treatment. However, CMS has received 
anecdotal feedback from stakeholders that care transitions can be 
difficult due to MA plan processes that require new coverage decisions 
when a patient transitions from one MA plan to another. However, we are 
not aware of the extent to which current MA plans are already ensuring 
continuity of care in this way nor do we have a strong basis upon which 
to quantify how often this type of transition occurs. Therefore, we are 
not quantifying the impact in this proposed rule and we solicit 
stakeholder input on both of these assumptions: that some MA plans are 
providing continuity of care as defined in the proposed Sec.  
422.112(b)(8) today and the lack of available data by which to quantify 
it.
5. Mandate Annual Review of Utilization Management (UM) Policies by a 
UM Committee (Sec.  422.137)
    We are proposing procedural improvements to ensure that utilization 
management policies are reviewed on a timely basis and have the benefit 
of provider input. Any authority for MA organizations to use 
utilization management policies with regard to basic benefits is 
subject to the mandate in section 1852(a)(1) of the Act that MA plans 
cover Medicare Part A and Part B benefits (subject to specific, limited 
statutory exclusions) and, thus, to CMS's authority under section 
1856(b) of the Act to adopt standards for to carry out the MA 
provisions. In light of the feedback we have received and our concern 
that enrollees may be facing unreasonable barriers to needed care, we 
propose to require MA organizations to establish a Utilization 
Management (UM) committee to operate similar to a Pharmacy and 
Therapeutics, or P&T, committee. We propose to add requirements 
pertaining to this UM committee in a new regulation at Sec.  422.137.
a. Review and Approval of UM Policies
    At Sec.  422.137(a), we propose that an MA organization that uses 
utilization management (UM) policies, such as prior authorization, must 
establish a UM committee that is led by an MA plan's medical director 
(described in Sec.  422.562(a)(4)). Section 422.562(a)(4) requires 
every MA organization to employ a medical director who is responsible 
for ensuring the clinical accuracy of all organization determinations 
and reconsiderations involving medical necessity and establishes that 
the medical director must be a physician with a current and 
unrestricted license to practice medicine in a State, Territory, 
Commonwealth of the United States (that is, Puerto Rico), or the 
District of Columbia. We are also proposing, at Sec.  422.137(b), that 
an MA plan may not use any UM policies for basic or supplemental 
benefits on or after January 1, 2024, unless those policies and 
procedures have been reviewed and approved by the UM committee. This 
proposal would ensure that plan policies and procedures meet the 
standards set forth in this proposed rule beginning with the contract 
year after the finalization of this proposed rule. We anticipate that 
there will be sufficient time between our issuance of a final rule and 
January 1, 2024, for each MA organization to engage in the necessary 
administrative activity to establish the UM committee and have its 
existing UM policies reviewed and, if they meet the standards in this 
proposed regulation, approved for use.
    We propose the committee responsibilities at Sec.  422.137(d). The 
responsibilities would include that the

[[Page 79506]]

UM committee, at least annually, review the policies and procedures for 
all utilization management, including prior authorization, used by the 
MA plan. We propose at Sec.  422.137(d)(1)(i) through (iii) that such 
review must consider--
     The services to which the utilization management applies;
     Coverage decisions and guidelines for original Medicare, 
including NCDs, LCDs, and laws; and
     Relevant current clinical guidelines.We propose at Sec.  
422.137(d)(2)(i) though (iv) the committee approve only utilization 
management policies and procedures that:
     Use or impose coverage criteria that comply with the 
requirements and standards at Sec.  422.101(b);
     Comply with requirements and standards at Sec.  
422.138(a)-(c);
     Comply with requirements and standards at Sec.  
422.202(b)(1); and
     Apply and rely on medical necessity criteria that comply 
with Sec.  422.101(c)(1).
    Currently, Sec.  422.202(b) requires MA organizations to establish 
a formal mechanism to consult with the physicians who have agreed to 
provide services under the MA plan offered by the organization, 
regarding the organization's medical policy, quality improvement 
programs and medical management procedures; that formal mechanism for 
consultation must ensure that certain standards are met. Specifically, 
Sec.  422.202(b)(1)(i) through (iv) require that MA plan practice 
guidelines and UM guidelines must: (i) be based on reasonable medical 
evidence or a consensus of health care professionals in the particular 
field; (ii) consider the needs of the enrolled population; (iii) be 
developed in consultation with contracting physicians; and (iv) be 
reviewed and updated periodically. We are proposing to modify Sec.  
422.202(b)(1)(i) to align it with our standard for creating internal 
coverage criteria. We therefore propose to replace the requirement that 
practice and UM guidelines be based on reasonable medical evidence or a 
consensus of health care professionals in the particular filed with a 
requirement that UM guidelines be based on current widely used 
treatment guidelines or clinical literature. This is consistent with 
the proposed coverage criteria requirements at Sec.  422.101(b)(6), 
which are discussed in detail in section III.E.2. of this proposed 
rule.
    We solicit comment on whether we should also require the UM 
committee to ensure that the UM policies and procedures are developed 
in consultation with contracted providers; whether the UM committee 
should ensure, as required by Sec.  422.202(b)(2), that MA organization 
communicates information about practice guidelines and UM policies to 
providers and, when appropriate, to enrollees; and whether the UM 
committee should have an ongoing or active oversight role in ensuring 
that decisions made by an MA plan throughout the year are consistent 
with the final, approved practice guidelines and UM policies. We also 
propose at Sec.  422.137(d)(3) that the committee must revise UM 
policies and procedures as necessary, and at least annually, to comply 
with the standards in the regulation, including removing requirements 
for UM for services and items that no longer warrant UM so that UM 
policies and procedures remain in compliance with current clinical 
guidelines. Mandating annual review of utilization management policies 
using these standards will help ensure that medically necessary 
services are accessible to all enrollees. Because prior authorization 
and referral or gatekeeper policies are included in UM policies and 
procedures, these proposed requirements would apply as well to those 
polices used by MA organizations. CMS expects MA organizations to 
update their UM policies after the UM committee approves or revises 
them. We solicit comment as well on the extent to which the proposed 
regulation text sufficiently and clearly establishes the standards and 
requirements discussed here.
    We are considering whether the duties of this UM Committee should 
be expanded to include all internal coverage policies of an MA plan (or 
at least of all coordinated care plans). Whether a policy is explicitly 
called ``utilization management'' or a ``coverage criteria,'' the 
policy can limit enrollee access to plan-covered services. As this 
proposed rule as a whole makes clear, ensuring that enrollees have 
access to and are furnished covered benefits is a priority. We solicit 
comment on whether to require the UM Committee to review all internal 
coverage criteria used by the MA plan.
b. Utilization Management Committee Membership
    At Sec.  422.137(c)(1) through (4), we propose that the UM 
committee must include a majority of members who are practicing 
physicians; include at least one practicing physician who is 
independent and free of conflict relative to the MA organization and MA 
plan; include at least one practicing physician who is an expert 
regarding care of elderly or disabled individuals; and include members 
representing various clinical specialties (for example, primary care, 
behavioral health) to ensure that a wide range conditions are 
adequately considered in the development of the MA plan's utilization 
management policies. These composition requirements are in addition to 
the proposal that the medical director, required for each MA plan under 
Sec.  422.562(a)(4), lead the UM committee.
    We solicit comment on recommendations for other types of providers, 
practitioners, or other health care professionals that should also be 
included on the UM committee and whether additional standards for 
composition of the UM committee are necessary with regard to expertise, 
freedom of conflicts of interest, or representation by an enrollee 
representative. We have received feedback from the provider community 
that UM policies for specific services or items are often not reviewed 
by providers with the expertise appropriate for the service. Therefore, 
we also solicit comment on whether we should include a requirement, 
that when the proposed UM committee reviews UM policies applicable to 
an item or service, that the review must be conducted with the 
participation of at least one UM committee member who has expertise in 
the use or medical need for that specific item or service.
c. Documentation of Determination Process
    We propose at Sec.  422.137(d)(4) that the UM committee must 
clearly articulate and document processes to determine that the 
requirements under paragraphs (c)(1) through (4) of this section have 
been met, including the determination by an objective party of whether 
disclosed financial interests are conflicts of interest and the 
management of any recusals due to such conflicts. Finally, we propose 
at Sec.  422.137(d)(5) that the UM committee must document in writing 
the reason for its decisions regarding the development of UM policies 
and make this documentation available to CMS upon request. The 
documentation should provide CMS with an understanding of the UM 
committee's rationale for their decision, and may include, but is not 
limited to, information such as meeting minutes outlining issues 
discussed and any relevant supporting documentation.
d. Interchangeable Use of the P&T and Utilization Management Committees
    We believe it is appropriate that this proposal for the 
establishment of an MA plan UM committee largely mirror, with certain 
exceptions, the requirements in

[[Page 79507]]

Sec.  422.136 that MA organizations have a pharmacy and therapeutic 
committee that reviews and approves step therapy programs for Part B 
drugs and the requirements regarding membership, scope, and 
responsibilities of that P&T committee. We believe that similar 
requirements, which were modeled after the longstanding Part D P&T 
committee requirements at Sec.  423.120(b), are generally adequate for 
the purposes of the UM committee. Overall, this proposal is designed to 
require review and approval of utilization management policies, 
including utilization management policies that use or impose coverage 
criteria, to ensure that these policies and procedures are medically 
appropriate, consistent with Medicare coverage rules, and do not 
negatively impact access to medically necessary services.
    To meet the existing requirements at Sec.  422.136(b), MA-PDs are 
permitted to utilize an existing P&T committee established for purposes 
of administration of the Part D benefit under part 423 of this chapter. 
Thus, we anticipate that some of the requirements proposed for the UM 
committee may overlap or duplicate existing P&T committee requirements 
in connection with coverage of and utilization management policies for 
Part B drugs. Therefore, we solicit comment on whether an MA plan 
should be permitted to utilize the proposed UM committee at Sec.  
422.137 to also meet the existing P&T committee requirements of Sec.  
422.136(b), provided that elements and requirements of all applicable 
regulations governing the committees and their functions (that is, 
Sec. Sec.  422.136, proposed 422.137, and 423.120) are met. To the 
extent that LCD policies and localized or regional professional 
standards of practice are used by the proposed UM committee in 
performing its duties, it may not be advisable to permit use of one UM 
committee to serve multiple functions for diverse service areas. We 
also solicit comment on whether to explicitly permit an MA 
organization, or the parent organization of one or more MA 
organizations, to use one UM committee to serve multiple MA plans, 
including whether that should be limited to MA plans that are offered 
under the same contract.
6. Additional Areas for Consideration and Comment
a. Termination of Services in Post-Acute Care
    We have received complaints about potential quality of care issues 
regarding early termination of services in post-acute care settings by 
MA organizations. The complaints allege that MA organizations are 
increasingly terminating beneficiaries' coverage of post-acute care 
before the beneficiaries are healthy enough to return home. It is 
further alleged that, in some situations, even after a beneficiary has 
successfully appealed to the Quality Improvement Organization (QIO) and 
received a favorable decision to reauthorize coverage of services 
delivered by providers of services described in Sec. Sec.  422.624 and 
422.626, the MA organization sends another notice of termination of 
services a day or two after the coverage was reinstated. As described 
in section III.E.2. of this proposed rule, we are proposing to revoke 
the current policy, outlined in the June 2000 final rule, that when a 
health care service can be Medicare-covered and delivered in more than 
one way, or by more than one type of practitioner, an MA plan could 
choose how the covered services will be provided. Under the proposal at 
Sec.  422.101(c)(1)(i), when care can be delivered in more than one way 
or in more than one type of setting, and a contracted provider has 
ordered or requested Medicare covered items or services for an MA 
enrollee, the MA organization may only deny coverage of the services or 
setting on the basis of the ordered services failing to meet the 
criteria outlined in Sec.  422.101(c)(1)(i) While CMS believes this may 
address some of the issues regarding early termination of services, we 
are soliciting feedback from stakeholders that have information related 
to this situation, and investigating internally, in order to get a more 
thorough understanding on the issue.
    The rules at 42 Sec.  422.624 define what constitutes a termination 
of services from home health agencies, SNFs, and comprehensive 
outpatient rehabilitation facilities and how enrollees must be notified 
of upcoming terminations of services. We solicit comment on potential 
changes we could make to existing rules, including Sec.  422.624, or in 
adopting new rules to better manage incentives between MA organizations 
and post-acute care providers to deliver the best possible care for 
Medicare beneficiaries. Some topics for comment include:
     How MA organizations preauthorize treatment in discrete 
increments and the extent to which our proposals (at proposed 
Sec. Sec.  422.101(b) and (c) and 422.112(b)(8)) may address or limit 
these practices;
     Whether enrollees should have additional time to file 
appeals or be able to file late appeals to the QIO regarding 
terminations of services;
     Whether enrollees should receive information from the MA 
plan regarding the basis for termination of services (for example, the 
clinical rationale for termination of services) as part of the 
termination notice and without the enrollee having to request an appeal 
to the QIO (see Sec.  422.626(e)(1) and (2));
     When coverage is reinstated based on a QIO decision, 
whether the enrollee should have more than the 2 day period from the 
date of a new termination of services notice before coverage can be 
terminated again by the MA organization, taking into account any 
medical necessity determinations made by the QIO.
    We thank commenters in advance for carefully considering and 
providing information on this important issue.
b. Gold Carding
    In the 2020 proposed rule titled ``Medicaid Program; Patient 
Protection and Affordable Care Act; Reducing Provider and Patient 
Burden by Improving Prior Authorization Processes, and Promoting 
Patients' Electronic Access to Health Information for Medicaid Managed 
Care Plans, State Medicaid Agencies, CHIP Agencies and CHIP Managed 
Care Entities, and Issuers of Qualified Health Plans on the Federally-
Facilitated Exchanges; Health Information Technology Standards and 
Implementation Specifications,'' which appeared in the Federal Register 
on December 18, 2020 (85 FR 82586), (hereinafter the December 2020 
proposed rule), CMS requested comments on ``gold-carding,'' MA plan 
programs that relax or reduce prior authorization requirements for 
contracted providers that have demonstrated a consistent pattern of 
compliance with plan policies and procedures. At 85 FR 82619, CMS noted 
that some MA plans relieve certain contracted providers from prior 
authorizations requirements based on consistent adherence to plan 
requirements, appropriate utilization of items or services, and other 
evidence-driven criteria that the MA plan deems relevant. In the 
December 2020 proposed rule, CMS also discussed its own experience and 
success with a similar approach in the Medicare FFS Review Choice 
Demonstration for Home Health Services.\88\ It is appropriate to 
reiterate in this rule that we believe the use of gold-carding programs 
could help alleviate the burden associated with prior authorization and 
that such

[[Page 79508]]

programs could facilitate more efficient and timely delivery of health 
care services to enrollees. We encourage MA plans to adopt gold-carding 
programs that would allow providers to be exempt from prior 
authorization and provide more streamlined medical necessity review 
processes for providers who have demonstrated compliance with plan 
requirements.
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    \88\ https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Review-Choice-Demonstration/Review-Choice-Demonstration-for-Home-Health-Services.html.
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c. Address Vulnerabilities That Can Lead to Manual Review Errors and 
System Errors
    Finally, the April 2022 OIG report indicated that some denials were 
the result of MA plan errors. This included both human and system 
related errors. For example, the OIG found situations where a request 
was denied because the MA plan reviewer misidentified important 
information in a request. They also found situations where a request 
was denied because provider coverage details were incorrectly 
configurated in the MA plan's system. As a result of these findings, 
the OIG recommends that CMS should direct MA organizations to take 
additional steps to identify and address vulnerabilities that can lead 
to manual review errors and system errors. We concurred with this 
recommendation, and are directing MA plans to review PA procedures, 
protocols, and systems to identify and address vulnerabilities that can 
lead to errors. Currently, Sec.  422.503(b)(4) requires all MA 
organizations to have administrative and management arrangements that 
include 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; MA organizations are required to include in 
this compliance program the establishment and implementation of an 
effective system for routine monitoring and identification of 
compliance risks. Failure to furnish medically necessary covered 
services in a timely manner implicates compliance with Sec. Sec.  
422.100, 422.101 and 422.112 at a minimum, and we believe that the 
OIG's April 2022 report has sufficiently identified this area as a 
compliance risk that MA organizations must address in accordance with 
Sec.  422.503(b)(4)(vi)(F) and (G).
    We solicit comment on whether and how existing requirements at 
Sec.  422.503(b)(4)(vi) may be adjusted to better account for these 
medical review and system errors. In addition, we solicit comment 
whether proposed Sec.  422.137 should include a provision for the UM 
committee to develop, implement and oversee activities by MA 
organizations related to utilization policies and procedures.

F. Request for Comment on the Rewards and Incentives Program 
Regulations for Part C Enrollees (Sec.  422.134 and Subpart V)

    CMS is soliciting comment on a potential revision to the regulation 
governing MA Reward and Incentive (R&I) programs. CMS first authorized 
MA organizations to offer R&I programs in a regulation (Sec.  422.134) 
finalized in 2014 (79 FR 29956, published May 23, 2014) and 
subsequently updated that regulation in a January 2021 final rule 
titled ``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'' (85 FR 
5864, January 21, 2021).
    CMS's intent in adopting Sec.  422.134 to authorize MA R&I programs 
to be offered by MA organizations is to incentivize healthy behaviors 
among enrollees. Under Sec.  422.134, MA plans have the option to 
uniformly offer enrollees rewards in exchange for participating in 
health related activities which either promote improved health, prevent 
injury and illness, or promote efficient use of health care resources. 
Our experience has shown that these programs have been successful to 
date.
    In adopting the regulation governing MA R&I programs, we relied on 
our authority under sections 1856(b)(1) and 1857(e)(1) of the Act. In 
addition, several of the provisions of the regulation, such as 
compliance with relevant fraud and abuse laws including the Federal 
anti-kickback statute and compliance with MA program anti-
discrimination provisions, are consistent with laws governing the 
Medicare program and the MA program as whole.
    Sections 1851(h)(4) and 1854(d)(1) of the Act prohibit an MA 
organization from giving enrollees cash or monetary rebates as an 
inducement for enrollment or otherwise. Based on this statutory 
prohibition of cash or cash equivalents, CMS prohibits a reward item 
consisting of cash or cash equivalents at 42 CFR 422.134(d)(2)(i). In 
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 February 18, 2020 Federal 
Register (85 FR 9002), we explained that we were proposing at that time 
to adopt the Office of Inspector General (OIG)'s definition of cash 
equivalents (81 FR 88393), which defined ``cash equivalents'' as items 
convertible to cash (such as a check) or items that can be used like 
cash (such as a general purpose debit card) but not including a gift 
card that can be redeemed only at certain store chains or for a certain 
purpose, like a gasoline card. CMS finalized Sec.  422.134(d)(3)(ii) in 
a January 2021 final rule with a provision that it is permissible for 
an MA organization's R&I program to offer a gift card ``that can be 
redeemed only at specific retailers or retail chains or for a specific 
category of items or services.''
    However, we have been prompted by several considerations suggesting 
that CMS may need to further revise and clarify the definition of 
``cash equivalent'' in the framework of MA R&I programs. First, in a 
recent rule (85 FR 77684, December 2, 2020), OIG explained that cash 
equivalents include ``gift cards offered by large retailers or online 
vendors that sell a wide variety of items (for example, big-box stores) 
. . .''. Additionally, the January 2021 CMS final rule also finalized 
authority for a separate R&I program in connection with a Part D real 
time benefit tool requirement at Sec.  423.128(d)(4) and (5). In the 
preamble of that regulation, CMS was clear that a gift card would be 
considered a cash equivalent when it could be used for large retailers 
like Amazon.
    In addition, another CMS 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, 2018 (83 
FR 67816, 67980)) characterizes Amazon gift cards as cash equivalents 
because they could be used for a variety of diverse purchases, which 
makes the gift card usable like cash (86 FR 5954).
    Finally, in our January 2021 final rule adopting Sec.  422.134, we 
did not specifically address gift cards from big-box stores nor did we 
discuss them in relation to the prohibition on cash equivalents in 
Sec.  422.134(d)(2)(i). CMS has since received inquiries from various 
stakeholders requesting a definition of `big-box store' in the context 
of MA R&I program gift cards.
    Because of these considerations and to clarify the scope of 
prohibited cash equivalents for the purposes of MA Reward & Incentive 
programs, we are

[[Page 79509]]

soliciting comment on whether CMS should further clarify the definition 
of ``cash equivalent'' as that term is used in Sec.  422.134. CMS is 
particularly interested in stakeholder feedback on whether CMS should 
revise our MA R&I program regulation to include parameters for 
permissible gift cards being offered as MA reward items. We are 
interested in learning how MA plans interpret and implement our current 
guidance and whether stakeholders believe that more specific guidance 
on permissible gift card reward items is necessary. We welcome feedback 
on all aspects of this issue.

G. Section 1876 Cost Contract Plans and Cost-Sharing for the COVID-19 
Vaccine and its Administration (Sec.  417.454)

    Section 3713 of The Coronavirus Aid, Relief, and Economic Security 
(CARES) Act (2020) (Pub. L. 116-136) requires coverage of the COVID-19 
vaccine and its administration at zero cost-sharing for enrollees of 
Traditional Medicare and Medicare Advantage. The CARES Act revised 
section 1861(s)(10)(A) of the Act to include among services provided at 
zero cost-sharing in the Medicare FFS program, the COVID-19 vaccine and 
its administration. As amended by section 3713 of the CARES Act, 
section 1852(a)(1)(B)(iv)(VI) of the Act prohibits MA plans from using 
cost-sharing that exceeds the cost-sharing imposed under traditional 
Medicare for a COVID-19 vaccine and its administration when the MA plan 
covers this Traditional Medicare benefit.
    Cost plans are coordinated care plans and share many of the same 
features as Medicare Advantage plans but have a separate statutory 
authority (section 1876 of the Act) and are paid on a reasonable cost 
basis, In addition, unlike with MA plans, enrollees in cost plans may 
receive services from original Medicare in addition to services from 
the cost plan's network; when they receive benefits from healthcare 
providers that are not contracted with the cost plan, cost plan 
enrollees are covered by original Medicare, with the same cost sharing 
and coverage as the Traditional Medicare program. The CARES Act did not 
include the zero cost-sharing provision for section 1876 cost contract 
plans (cost plans), so using its authority under section 1876(i)(3)(D) 
of the Act, which authorizes CMS to impose ``other terms and conditions 
not inconsistent with [section 1876]'' that are deemed ``necessary and 
appropriate,'' CMS established a requirement for cost plans to use cost 
sharing that does not exceed the cost sharing in Traditional Medicare 
for a COVID-19 vaccine and its administration in an interim final rule, 
titled Additional Policy and Regulatory Revisions in Response to the 
COVID-19 Public Health Emergency, which appeared in the Federal 
Register on November 6, 2020.\89\ Because of the cost sharing used in 
Traditional Medicare per sections 1833(a)(1)(B) and 1861(s)(10)(A) of 
the Act, this is effectively a requirement to cover this benefit with 
zero cost sharing. In a newly adopted Sec.  417.454(e)(4), we specified 
the timeline for coverage of a COVID-19 vaccine and its administration 
with zero cost-sharing for cost plans coverage of cost-sharing for cost 
plans that may not exceed cost sharing under Traditional Medicare as 
the ``duration of the PHE for the COVID-19 pandemic, specifically the 
end of the emergency period defined in paragraph (1)(B) of section 
1135(g) of the Act, which is the PHE declared by the Secretary on 
January 31, 2020 and any renewals thereof.'' However, the CARES Act did 
not specify an end date for the zero cost-sharing requirement for MA 
plans and we believe that it is appropriate that enrollees in a section 
1876 cost plan have the cost sharing protection for a COVID vaccine and 
its administration enrollees in the Medicare FFS program and in MA 
plans have when these cost plan enrollees get this benefit from 
healthcare providers that are in-network with the cost plan. Therefore, 
we are proposing to replace the provision adopted at Sec.  
417.454(e)(4) in the November 2020 interim final rule with a new 
requirement that section 1876 cost plans cover without cost-sharing the 
COVID-19 vaccine and its administration described in section 
1861(s)(10)(A) of the Act. This proposal is based on authority in 
section 1876(i)(3)(D) of the Act to add requirements for cost plans.
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    \89\ See interim final rule with request for comments titled 
``Additional Policy and Regulatory Revisions in Response to the 
COVID-19 Public Health Emergency'' CMS 9912 IFC, 85 FR 71142.
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    CMS believes that it is necessary and appropriate to ensure that 
cost plan enrollees, like other Medicare beneficiaries, are provided 
access to the COVID-19 vaccine and its administration without cost-
sharing in-network. Requiring cost plans to comply with the same cost-
sharing protections available to Medicare beneficiaries in traditional 
Medicare and those enrolled in MA plans would ensure equitable access 
to care and that cost is not a barrier for beneficiaries to receive the 
COVID-19 vaccine. CMS has extended to cost plans other statutory 
requirements related to cost-sharing via regulation for those services 
that the Secretary determines require a level of predictability and 
transparency for beneficiaries. For example, in a final rule which 
appeared in the Federal Register on April 15, 2011, CMS, using its 
authority under section 1876(i)(3)(D) of the Act, extended to cost 
plans the statutory requirements specifying that in-network cost-
sharing for MA enrollees could not be higher than cost-sharing for 
traditional Medicare enrollees for chemotherapy administration 
services, renal dialysis services, and skilled nursing care in those 
cost sharing protections are Sec.  417.454(e)(1) through (e)(3). We 
welcome comment on this proposal.

H. Review of Medical Necessity Decisions by a Physician or Other Health 
Care Professional With Expertise in the Field of Medicine Appropriate 
to the Requested Service and Technical Correction to Effectuation 
Requirements for Standard Payment Reconsiderations (Sec. Sec.  422.566, 
422.590, and 422.629)

    Based on general feedback CMS has received from provider 
associations regarding the use of prior authorization (PA) by MA 
organizations and the submission and review of clinical documentation 
to support a request for coverage of a service subject to PA, we are 
proposing to modify the requirement in Sec. Sec.  422.566(d) and 
422.629(k)(3) with respect to the expertise of the physician or other 
appropriate health care professional who must review an organization 
determination if the MA organization or applicable integrated plan 
(AIP), defined at Sec.  422.561, expects to issue an adverse decision 
based on the initial review of the request. Pursuant to our authority 
under section 1856(b) of the Act to adopt standards to carry out the 
Part C program and in order to implement section 1852(g) of the Act 
regarding coverage decisions and appeals, CMS established procedures 
and minimum standards for MA plans to make organization determinations 
and reconsiderations regarding benefits. In addition, CMS adopted 
unified grievance and appeal procedures using authority in section 
1859(f)(8)(B) of the Act to establish such unified procedures for D-
SNPs; we limited the unified procedures to AIPs, a subset of D-SNPs, 
when adopting those procedures. These requirements are codified in our 
regulations at 42 CFR part 422, subpart M. In addition, because cost 
plans must comply with the beneficiary appeals and grievance rights, 
procedures, and requirements at Part 422, subpart M, per Sec. Sec.  
417.600(b) and 417.840, these proposals apply to cost plan and 
healthcare prepayment plan appeals as well.

[[Page 79510]]

    Specifically, section 1852(g)(1)(A) of the Act requires that a MA 
organization have a procedure for making determinations regarding 
whether an enrollee is entitled to receive a health service and the 
amount (if any) the individual is required to pay for such service and, 
further, that such procedures provide that determinations be made on a 
timely basis, subject to section 1852(g)(3) of the Act (which provides 
for expedited determinations and reconsiderations as part of the MA 
plan's appeal process). Section 1852(g)(2)(B) of the Act requires plan 
reconsiderations related to coverage denials that are based on medical 
necessity determinations to be made by a physician with appropriate 
expertise in the applicable field of medicine, and that the physician 
reviewer be different from the physician or other health care 
professional involved in the initial determination. While section 
1852(g)(1)(A) of the Act does not specify who must conduct the initial 
medical necessity determinations, we interpret the reference in section 
1852(g)(2)(B) of the Act to the physician involved in the initial 
determination to mean that MA plans must have appropriate health care 
professionals review initial determinations involving issues of medical 
necessity. This is an established interpretation of the statute and is 
reflected in existing regulations related to review of organization 
determinations. Specifically, the current regulation at Sec.  
422.566(d) states that if the MA organization expects to issue a 
partially or fully adverse medical necessity (or any substantively 
equivalent term used to describe the concept of medical necessity) 
decision based on the initial review of the request, the organization 
determination must be reviewed by a physician or other appropriate 
health care professional with sufficient medical and other expertise, 
including knowledge of Medicare coverage criteria, before the MA 
organization issues the organization determination decision. The 
physician or other health care professional must have a current and 
unrestricted license to practice within the scope of his or her 
profession in a State, Territory, Commonwealth of the United States 
(that is, Puerto Rico), or the District of Columbia. The current 
regulation at Sec.  422.629(k)(3) also applies the same requirement to 
AIPs with the additional requirement that the health care professional 
also have knowledge of Medicaid coverage criteria.
    We are proposing to revise Sec. Sec.  422.566(d) and 422.629(k)(3) 
to add to that existing requirement that the physician or other 
appropriate health care professional who conducts the review must have 
expertise in the field of medicine that is appropriate for the item or 
service being requested before the MA organization or AIP issues an 
adverse organization determination decision. In other words, we are 
proposing that the existing regulation text with the more general 
requirement that the physician or other appropriate health care 
professional have sufficient medical and other expertise be replaced by 
a requirement linking the requisite expertise of the reviewer to the 
specific service that is the subject of the organization determination 
request. Under this proposal, the physician or other appropriate health 
care professional reviewing the request need not, in all cases, be of 
the same specialty or subspecialty as the treating physician or other 
health care provider. This is the same standard set forth at Sec.  
422.590(h)(2) related to the appropriate expertise applicable to 
physician review of reconsiderations. The rule at Sec.  422.590(h)(2) 
interprets and implements the requirement in section 1852(g)(2)(B) of 
the Act that any reconsideration that relates to a determination to 
deny coverage based on a lack of medical necessity be made only by ``a 
physician with appropriate expertise in the field of medicine which 
necessitates treatment'' to mean a physician with an expertise in the 
field of medicine that is appropriate for the covered services at 
issue. The standard of requiring a reviewing physician's expertise to 
be appropriate for the specific service at issue is long-standing 
policy with respect to plan reconsiderations and we believe it is 
appropriate as well as practical to adopt this standard for the review 
of organization determinations by physicians and other appropriate 
health professionals in Sec. Sec.  422.566(d) and 422.629(k)(3). 
Specifically, this proposed approach would strengthen clinical review 
in the organization determination process, while continuing to afford 
plans maximum flexibility in leveraging reviewer resources.
    If this proposal is finalized, we expect MA organizations, 
including AIPs, to apply the standard of ``expertise appropriate for 
the specific service at issue'' at the organization determination level 
in the same manner as plans have applied this standard at the 
reconsideration level. As explained in the final rule establishing the 
Medicare+Choice program (65 FR 40170, 40288), published June 29, 2000, 
which later became the Medicare Advantage program, and in established 
sub-regulatory guidance, if the physician is not of the same specialty 
or subspecialty as the treating physician, the physician must have the 
appropriate level of training and expertise to evaluate the necessity 
of the requested drug, item, or service. This does not require the 
physician involved to be of the exact same specialty or sub-specialty 
as the treating physician. As an example, where there are few 
practitioners in a highly specialized field of medicine, a plan may not 
be able to retain the services of a physician of the same specialty or 
sub-specialty to review the organization determination. Plans will have 
discretion to determine on a case-by-case basis what constitutes 
appropriate expertise based on the services being requested and 
relevant aspects of the enrollee's health condition. For example, if an 
enrollee is referred by a primary care physician to a thyroid surgeon 
for a thyroid nodule removal, the health professional evaluating the 
request prior to the plan issuing a denial should be a doctor with 
thyroid expertise, but does not necessarily need to be a surgeon. As 
another example, if a plan intends to deny a request for a home 
nebulizer, the organization determination request should be reviewed by 
a health professional with respiratory expertise, such as a respiratory 
therapist.
    If finalized, we believe this proposal will enhance the existing 
requirement for who is permitted to review organization determinations 
that deny coverage in whole or in part, while retaining plan 
flexibility and operational efficiency in selecting appropriate 
reviewers. We reiterate that this requirement applies when the MA 
organization or AIP expects to issue a partially or fully adverse 
medical necessity decision based on the initial review of the request 
and does not limit the scope of reviewers where the plan approves 
coverage or determines that an item or service is medically necessary. 
From the perspective of enrollees and providers who request coverage on 
an enrollee's behalf or submit clinical documentation to support a 
coverage request, we believe this review standard will increase the 
likelihood of a thorough clinical review. Requiring expertise related 
to the requested service, as we are proposing, will enhance the overall 
decision-making process and the quality of the review conducted at the 
organization determination level, particularly when a prior 
authorization or other utilization management requirement on the 
requested item or service necessitates review of specific clinical

[[Page 79511]]

documentation to support coverage. Further, we believe this proposal 
may reduce coverage denials at the organization determination level 
that could then be subject to the administrative appeals process. As a 
whole, we believe that this proposal strikes the appropriate balance 
between the proper clinical review of organization determinations and 
minimizing overall burden in the administration of the Part C benefit 
for MA plans and AIPs.
    While the proposed requirement that the physician or other 
appropriate health care professional have expertise in the field 
appropriate to the requested service may result in AIPs and other MA 
organizations reallocating staff resources in certain cases to ensure 
that someone with appropriate expertise is reviewing the request, we 
believe that the burden will be negligible and that this proposal will 
not require changes to AIPs and other MA organizations overall 
staffing. While performing a review of an organization determination 
request involves review of clinical documentation, this proposal would 
not impose any new information collection or recordkeeping requirements 
on AIPs or other MA organizations.
    In the course of this rulemaking, we noticed the need for a 
technical correction in Sec.  422.590(b)(1), which cross references the 
effectuation requirements in Sec.  422.618. Section 422.590(b)(1) 
erroneously cites to Sec.  422.618(a)(1), but it should cite to the 
effectuation requirements at Sec.  422.618(a)(2) related to favorable 
decisions on payment requests. Thus, we propose to make the technical 
correction in this rule.
    We welcome comments on this proposal and the technical correction.

I. Effect of Change of Ownership Without Novation Agreement (Sec. Sec.  
422.550 and 423.551)

    In accordance with standards under sections 1857 and 1860 of the 
Act, each Medicare Advantage (MA) organization and Part D sponsor is 
required to have a contract with CMS in order to offer an MA or 
prescription drug plan. Further, section 1857(e)(1) and 1860D-
12(b)(3)(D) of the Act authorizes additional contract terms consistent 
with the statute and which the Secretary finds are necessary and 
appropriate. Pursuant to this authority and at the outset of the Part C 
and Part D programs, we implemented contracting regulations at 
Sec. Sec.  422.550 and 423.551, respectively, which provide for the 
novation of an MA or Part D contract in the event of a change of 
ownership involving an MA organization or Part D sponsor (63 FR 35106 
and 70 FR 4561).
    Our current regulations at Sec. Sec.  422.550 and 423.551, as well 
as our MA guidance under ``Chapter 12 of the Medicare Managed Care 
Manual--Effect of Change of Ownership'' \90\ require that when a change 
of ownership occurs, as defined in the regulation, advance notice must 
be provided to CMS and the parties to the transaction must enter into a 
written novation agreement that meets CMS' requirements. If a change of 
ownership occurs and a novation agreement is not completed and the 
entities fail to provide notification to CMS, the regulations at 
Sec. Sec.  422.550(d) and 423.551(e) indicate that the existing 
contract is invalid. Furthermore, Sec. Sec.  422.550(d) and 423.551(e) 
provide that if the contract is not transferred to the new owner 
through the novation process, the new owner must enter into a new 
contract with CMS after submission of an MA or Part D application, if 
needed.
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    \90\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c12.pdf.
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    The current regulation does not fully address what happens when the 
contract becomes ``invalid'' due to a change of ownership without a 
novation agreement and/or notice to CMS, or in other words, what 
happens to the existing CMS contract that was held by an entity that 
was sold. This presents an issue because CMS would still recognize the 
original entity as the owner, even if the contract is now held by a 
different entity. Therefore, we are proposing to revise Sec. Sec.  
422.550(d)(1) and 423.551(e)(1) to make it clear that in this case, the 
affected contract may be unilaterally terminated by CMS in accordance 
with Sec. Sec.  422.510(a)(4)(ix) and 423.509(a)(4)(ix), which 
establishes that failure to comply with the regulatory requirements 
contained in part 422 (or part 423 if applicable) is a basis for CMS to 
terminate an MA or Part D contract. In addition, we are strengthening 
our enforcement authority regarding this process, with the proposed 
amendments to Sec. Sec.  422.550(d) and 423.551(e). Pursuant to our 
authority under sections 1857 and 1860 of the Act, we propose to amend 
the regulations at Sec. Sec.  422.550(d) and 423.551(e) to outline the 
process CMS will follow, including imposing applicable sanctions before 
terminating a contract that has a change in ownership without a 
novation agreement, in accordance with CMS requirements.
    In the interest of protecting and effectively managing the MA and 
Part D programs, CMS, through the application process, must ensure that 
MAOs through their respective legal entities are deemed eligible to 
contract with CMS. Thus, any change in ownership from one legal entity 
to another requires CMS to determine whether the new organization 
continues to meet the regulatory requirements for operating a contract 
under the MA and Part D programs. If this does not happen and a change 
in ownership from one legal entity to another occurs without CMS 
approval, it compromises our ability to ensure the integrity of the MA 
and Part D programs and further puts at risk our ability to monitor a 
contract's activity under the new legal entity, thereby putting 
enrollees at risk. We propose to provide an opportunity for 
organizations to demonstrate that the legal entity that is assuming 
ownership by way of novation is able to meet the requirements set forth 
by our regulations.
    We propose to impose intermediate enrollment and marketing 
sanctions, as outlined in Sec.  422.750(a)(1) and (a)(3) and Sec.  
423.750(a)(1) and (a)(3) on the affected contract, that will remain in 
place until CMS approves the Change of Ownership, (including execution 
of an approved novation agreement) or the contract is terminated. This 
may be completed in the following ways:
     If the new owner does not participate in the same service 
area as the affected contract, at the next available opportunity, it 
must apply for and be conditionally approved for participation in the 
MA or Part D program and within 30 days of the conditional approval (if 
not sooner) submit the documentation required under Sec. Sec.  
422.550(c) or 423.551(d) for review and approval by CMS (note that 
organizations may submit both the application and the documentation for 
the change of ownership concurrently); or
     If the new owner currently participates in the Medicare 
program and operates in the same service area as the affected contract, 
it must, within 30 days of imposition of intermediate sanctions, submit 
the documentation required under Sec. Sec.  422.550(c) or 423.551(d) 
for review and approval by CMS.
    If the new owner is not operating in the same service area and 
fails to apply at the next opportunity, the existing contract will be 
subject to termination in accordance with Sec. Sec.  422.510(a)(4)(ix) 
or 423.509(a)(4)(x). Or if the new owner is operating in the same 
service area and fails to submit the required documentation within 30 
days of imposition of intermediate sanctions, the existing contract 
will be subject to

[[Page 79512]]

termination in accordance with Sec. Sec.  422.510(a)(4)(ix) or 
423.509(a)(4)(x).
    This action would be subject to the past performance rules 
applicable under Sec. Sec.  422.502(b)(1) or 423.503(b)(1).
    We solicit comments on these proposals.

J. Civil Money Penalty Methodology (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 Civil Money Penalties (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 covered 
under the organization's contract. 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 \91\ for each affected enrollee or per 
determination, however CMS does not necessarily apply the maximum 
penalty amount authorized by the regulation in all instances because 
the penalty amounts under the current CMP calculation methodology are 
generally sufficient to encourage compliance with CMS rules.
---------------------------------------------------------------------------

    \91\ 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 Sec. Sec.  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 of the Act 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).
---------------------------------------------------------------------------

    On December 15, 2016, CMS released on its website, the first public 
CMP calculation methodology for calculating CMPs for MA organizations 
and Part D sponsors starting with referrals received in 2017. On March 
15, 2019, CMS released for comment a proposed CMP calculation 
methodology on its website that revised some portions of the 
methodology released in December 2016. Subsequently, on June 21, 2019, 
CMS finalized the revised CMP calculation methodology document, made it 
available on its website, and applied it to CMPs issued starting with 
referrals received in contract year 2019 and beyond.\92\
---------------------------------------------------------------------------

    \92\ CMS Civil Money Penalty Calculation Methodology, Revised. 
June 21, 2019. https://www.cms.gov/Medicare/Compliance-and-Audits/Part-C-and-Part-D-Compliance-and-Audits/Downloads/2019CMPMethodology06212019.pdf.
---------------------------------------------------------------------------

    On January 19, 2021, CMS published a final rule in the Federal 
Register titled ``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'' 
(86 FR 5864). In that final rule, CMS finalized a policy, effective 
beginning in CY 2022, to update the minimum CMP penalty amounts no more 
often than every three years. Under this policy, CMS updates the CMP 
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) \93\ 
each year during the preceding three-year period. CMS also tracks the 
yearly accrual of the penalty amounts and announces them on an annual 
basis.
---------------------------------------------------------------------------

    \93\ 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.
---------------------------------------------------------------------------

    The intent of the minimum penalty increase policy was to establish 
the CMP calculation methodology document in regulation to ensure 
consistency and transparency with CMP penalty amounts. Although parts 
of the regulations at Sec. Sec.  422.760(b)(3) and 423.760(b)(3) have 
set standards for CMP penalties, in hindsight, CMS believes that other 
parts of the regulations unnecessarily complicated CMS's approach to 
calculating CMPs, which has the effect of limiting CMS's ability to 
protect beneficiaries when CMS determines that an organization's non-
compliance warrants a CMP amount that is higher than would be normally 
be applied under the CMP methodology. In addition, although CMS always 
has had the authority to impose up to the maximum authorized under 
sections 1857(g)(3)(A) and 1860D-12(b)(3)(E) of the Act, parts of the 
minimum penalty increase policy may have inadvertently given the 
impression that CMS was limiting its ability to take up to the maximum 
amount permitted in statute and regulation. This was not the intent of 
the rule. For example, there may be instances where an organization's 
non-compliance has so substantially adversely impacted one or more 
enrollees, that CMS would determine it necessary to impose the maximum 
CMP amount, or an amount higher than the amount set forth in the CMP 
methodology guidance to adequately address the non-compliance. In order 
to clarify its ability to adequately protect beneficiaries and 
encourage compliance, CMS proposes to modify its rules pertaining to 
minimum penalty amounts.
    Specifically, CMS proposes to remove Sec. Sec.  422.760(b)(3)(i)(E) 
and 423.760(b)(3)(i)(E), respectively, which is the cost-of-living 
multiplier. CMS also proposes to remove Sec. Sec.  
422.760(b)(3)(ii)(A)-(C) and 423.760(b)(3)(ii)(A)-(C), which describes 
how CMS calculates and applies the minimum penalty amount increase. 
Lastly, CMS proposes to revise and add new provisions Sec. Sec.  
422.760(b)(3) and 423.760(b)(3), which explains that CMS will set 
standard minimum penalty amounts and aggravating factor amounts for per 
determination and per enrollee penalties in accordance with paragraphs 
(b)(1) and (b)(2) of this paragraph on an annual basis, and restates 
that CMS has the discretion to issue penalties up to the maximum amount 
under paragraphs (b)(1) and (2) when CMS determines that an 
organization's non-compliance warrants a penalty that is higher than 
would be applied under the minimum penalty amounts set by CMS.
    If finalized, CMS would continue to follow our existing CMP 
methodology and would only impose up to the maximum CMP amount in 
instances where we determine non-compliance warrants a higher penalty. 
This update would also be incorporated in forthcoming revised CMP 
calculation methodology guidance.
    We solicit comment on these proposals.

K. Call Center Interpreter Standards (Sec. Sec.  422.111(h)(1)(iii)(A) 
and 423.128(d)(1)(iii)(A))

    CMS is proposing to amend Sec. Sec.  422.111(h)(1)(iii)(A) and 
423.128(d)(1)(iii)(A) to establish standards for interpreter services 
utilized by MA organizations and Part D sponsors in connection with 
their toll-free customer call centers. CMS relies on the Secretary's 
authority at sections 1857(e)(1) and 1860D-12(b)(3)(D) of the Act to 
adopt additional contract terms and conditions as the Secretary may 
find necessary and appropriate, and not inconsistent with the statute, 
to adopt these additional requirements for MA

[[Page 79513]]

organizations and Part D sponsors. CMS also relies on the authority in 
sections 1852(c)(1) and 1860D-4(a)(1)(B) of the Act, under which MA 
organizations and Part D sponsors must disclose detailed information 
about plans, to establish call center requirements. These proposed 
interpreter standards will ensure adequate and appropriate access to 
information for non-English speaking and Limited English Proficiency 
(LEP) Medicare beneficiaries, such that the information disclosure 
requirements for MA organizations and Part D sponsors are met and 
enrollment in MA and Part D plans is accessible for these groups.
    Specifically, we propose to require MA organizations and Part D 
sponsors to use interpreters that adhere to generally accepted 
interpreter ethics principles, including confidentiality; demonstrate 
proficiency in speaking and understanding at least spoken English and 
the spoken language in need of interpretation; and interpret 
effectively, accurately, and impartially, both receptively and 
expressively, to and from such language(s) and English, using any 
necessary specialized vocabulary, terminology, and phraseology.
    CMS has consistently stated that MA organizations and Part D 
sponsors should use appropriate interpreters to ensure that non-English 
speaking and LEP beneficiaries have access to assistance. On January 2, 
2008, CMS released an HPMS memo, ``Best Practices for Addressing the 
Needs of Non-English Speaking and Limited English Proficient (LEP) 
Beneficiaries,'' which suggested that Part D sponsors and MA 
organizations review additional HHS guidance on developing an effective 
plan for language assistance for LEP beneficiaries. This guidance, 
titled ``Guidance to Federal Financial Assistance Recipients Regarding 
Title VI Prohibition Against National Origin Discrimination Affecting 
Limited English Proficient Persons,'' appeared in the Federal Register 
on August 8, 2003 (68 FR 47311) and provided the following criteria to 
determine the competency of interpreters: demonstrate proficiency in 
and ability to communicate information accurately in both English and 
in the other language; have knowledge in both languages of any 
specialized terms or concepts peculiar to the recipient's program or 
activity and of any particularized vocabulary and phraseology used by 
the LEP person; and understand and follow confidentiality and 
impartiality rules. Additionally, since 2010, CMS has annually 
encouraged MA organizations and Part D sponsors to review and use the 
Office of Minority Health's (OMH) National Standards on Culturally and 
Linguistically Appropriate Services (CLAS), originally published in 
2001 and most recently updated in 2018.\94\ The CLAS standards include 
a requirement to provide competent language assistance services. Most 
recently, in our December 16, 2021 HPMS memo titled ``2022 Part C and 
Part D Call Center Monitoring--Timeliness and Accuracy & Accessibility 
Studies,'' we recommended that MA organizations and Part D sponsors use 
interpreters that adhere to generally accepted interpreter ethics 
principles, including confidentiality; demonstrate proficiency in 
speaking and understanding at least spoken English and the spoken 
language in need of interpretation; and interpret effectively, 
accurately, and impartially, both receptively and expressively, to and 
from such language(s) and English, using any necessary specialized 
vocabulary, terminology and phraseology. We selected these criteria in 
our guidance because they are similar to requirements for interpreters 
under 45 CFR 92.101(b)(3)(i)(A)-(C), when an interpreter is required as 
a reasonable step to ensure meaningful access to programs or activities 
by LEP individuals under 45 CFR 92.101(b)(3)(i), which implements 
section 1557 of the Patient Protection and Affordable Care Act, 42 
U.S.C. 18116, (Pub. L 111-148).\95\ We note that we did not adopt in 
our guidance, and do not intend to adopt in this proposed rule, the 
standard for requiring an interpreter under 45 CFR 92.101(b)(1). 
Rather, we intend to continue to require that Part D sponsors and MA 
organizations provide an interpreter for non-English speaking and LEP 
individuals whenever such an individual contacts the toll-free customer 
call center under 42 CFR 422.111(h)(1)(iii) and 423.128(d)(1)(iii).
---------------------------------------------------------------------------

    \94\ CMS includes this reminder regarding OMH's CLAS standards 
in our annual HPMS memo detailing the methodology of our call center 
monitoring studies. For example, see our December 9, 2010 HPMS memo 
titled ``2011 Part C and Part D Call Center Monitoring and Guidance 
for Providing Services to Limited English Proficient 
Beneficiaries;'' our December 16, 2013 HPMS memo titled ``2014 Part 
C and Part D Call Center Monitoring and Guidance for Timeliness and 
Accuracy and Accessibility Studies;'' our November 16, 2016 HPMS 
memo titled ''2017 Part C and Part D Call Center Monitoring and 
Guidance for Timeliness and Accuracy and Accessibility Studies;'' 
and our December 16, 2021 HPMS memo titled ``2022 Part C and Part D 
Call Center Monitoring--Timeliness and Accuracy & Accessibility 
Studies.''
    \95\ Recipients of Federal financial assistance are separately 
obligated to comply with Federal civil rights laws that require 
recipients to take reasonable steps to ensure meaningful access to 
their programs and activities by LEP individuals, including through 
provision of language assistance services that may require 
interpreters. These laws, enforced by the HHS Office for Civil 
Rights, include Section 1557 of the Affordable Care Act (42 U.S.C. 
18116 and implementing regulation at 45 CFR part 92) (Section 1557), 
which prohibits, inter alia, discrimination on the basis of race, 
color, national origin, sex, age, and disability in health programs 
and activities receiving Federal financial assistance; and Title VI 
of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq. and 
implementing regulation at 45 CFR part 80) (Title VI), which 
prohibits discrimination on the basis of race, color, and national 
origin in programs and activities receiving Federal financial 
assistance. Regulations implementing Section 1557 set forth specific 
requirements related to provision of language assistance services, 
including requirements for interpreter and translation services, 
when they are required as a reasonable step to ensure meaningful 
access to programs or activities by limited English proficient 
individuals. See 45 CFR part 92 for additional information.
---------------------------------------------------------------------------

    In the final rule titled, ``Medicare Program; Changes to the 
Medicare Advantage and the Medicare Prescription Drug Benefit Programs 
for Contract Year 2012 and Other Changes'' which appeared in the 
Federal Register on April 15, 2011 (76 FR 21431), CMS adopted 
provisions at Sec. Sec.  422.111(h)(1)(iii) and 423.128(d)(1)(iii) to 
require MA organizations and Part D sponsors to provide interpreters 
for non-English speaking and LEP individuals who call the plan's toll-
free customer call center. In the time since CMS created this 
requirement for MA organizations and Part D sponsors, there has been a 
significant increase in timely access to interpreters. For example, CMS 
data show that interpreters were being made available timely by MA and 
Part D plans during 66 percent and 60 percent, respectively, of the 
calls we monitored in 2011; 82 percent and 81 percent, respectively, in 
2015; and 88 percent and 86 percent, respectively, in 2021.
    In the final rule titled ``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,'' which appeared in the Federal Register on January 19, 2021 
(86 FR 5864) (the January 2021 final rule), CMS codified its standards 
for evaluating compliance by MA and Part D plans with the requirement 
to provide interpreters for calls to the plans' toll-free call centers 
by amending Sec. Sec.  422.111(h)(1)(iii) and 423.128(d)(1)(iii). The 
amendments added requirements that 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.

[[Page 79514]]

These requirements strengthened enrollees' and prospective enrollees' 
access to interpreters when they call a plan, and thus to information 
about how to access Medicare-covered benefits.
    Building on our previous regulatory proposals to establish and 
strengthen MA and Part D enrollee access to plan interpreter services, 
we propose to codify requirements for minimum qualifications for 
interpreters available to non-English speaking and LEP individuals at 
MA and Part D call centers. To accomplish this, we are proposing to 
modify Sec.  422.111(h)(1)(iii)(A) to require MA organizations' 
interpreters for LEP individuals to meet certain minimum 
qualifications. As proposed in new paragraphs (A)(1) through (3) these 
qualifications include, respectively:
     Adhering to generally accepted interpreter ethics 
principles, including confidentiality;
     Demonstrating proficiency in speaking and understanding at 
least spoken English and the spoken language in need of interpretation; 
and
     Interpreting effectively, accurately, and impartially, 
both receptively and expressively, to and from such language(s) and 
English, using any necessary specialized vocabulary, terminology, and 
phraseology.
    We propose to establish the same requirements for Part D sponsor 
interpreters by modifying Sec.  423.128(d)(1)(iii)(A) and adding 
proposed new paragraphs (A)(1) through (A)(3) that mirror the proposed 
changes to Sec.  422.111(h).
    We note that on August 4, 2022, HHS published a Notice of Proposed 
Rulemaking regarding Section 1557 of the Affordable Care Act, which 
would codify a definition of qualified interpreter similar to what we 
are proposing here.
    We solicit comments on this proposal.

L. Call Center Teletypewriter (TTY) Services (Sec. Sec.  
422.111(h)(1)(iv)(B) and 423.128(d)(1)(v)(B))

    We are proposing to make a technical change to Sec. Sec.  
422.111(h)(1)(iv)(B) and 423.128(d)(1)(v)(B), which require that MA 
organizations and Part D sponsors, respectively, connect 80 percent of 
incoming calls requiring TTY services to a TTY operator within 7 
minutes. Our proposed change is intended to remove any ambiguity that 
might result from our use of the term ``TTY operator.'' The specific 
standards found at Sec. Sec.  422.111(h)(1)(iv)(B) and 
423.128(d)(1)(v)(B) were intended to require that that the caller reach 
a live person and confirm that said person is able to assist with 
general Medicare questions or questions about the plan's Part C or Part 
D benefits within a specific period of time. When an MA organization or 
Part D sponsor operates their own TTY device and thereby creates a 
direct TTY to TTY communication, the plan customer representative is 
also the TTY operator. However, where MA organizations and Part D 
sponsors utilize telecommunications relay systems, a TTY operator 
serves as an intermediary between the caller and the plan's customer 
service representative and is not able to answer the caller's questions 
about plan benefits.
    To ensure that someone utilizing TTY services is connected to a 
plan customer representative within 7 minutes, we propose to modify 
Sec. Sec.  422.111(h)(1)(iv)(B) and 423.128(d)(1)(v)(B) to instead 
require the plan's call center establish contact with a customer 
service representative within 7 minutes on no fewer than 80 percent of 
incoming calls requiring TTY services.
    We solicit comment on this proposal.

M. Part C and Part D Midyear Benefit Changes and Part D Incorrect 
Collections of Premiums and Cost Sharing (Sec. Sec.  422.254, 423.265, 
423.293, 423.294)

1. Overview and Summary
    We propose to add into regulatory text our longstanding prohibition 
of midyear benefit changes, previously referred to as midyear benefit 
enhancements (MYBEs) for MA and Part D plans. Specifically, we propose 
to add regulatory text prohibiting changes to non-drug benefits, 
premiums, and cost sharing by an MA organization starting after plans 
are permitted to begin marketing prospective contract year offerings on 
October 1 (consistent with Sec.  422.2263(a)) of each year for the 
following contract year and until the end of the applicable contract 
year. Similarly, we also propose to codify into regulation our 
longstanding policy prohibiting Part D sponsors from making midyear 
changes to the benefit design or waiving or reducing premiums, bid-
level cost sharing (for example, the cost sharing for an entire 
formulary tier of Part D drugs), or cost sharing for some or all of a 
Part D plan's enrollees starting after plans are permitted to begin 
marketing prospective contract year offerings on October 1 (consistent 
with Sec.  423.2263(a)) of each year for the following contract year 
and until the end of the applicable contract year.
    Finally, we propose to require Part D sponsors to: (1) refund 
incorrect collections of premiums and cost sharing, and (2) recover 
underpayments of premiums and cost sharing. We also propose to 
establish both a lookback period and timeframe to complete overpayments 
and underpayment notices, as well as a de minimis threshold for such 
refunds and recoveries. We solicit comments regarding the addition of 
similar requirements in MA, specifically establishing a lookback period 
and de minimis threshold for refunding incorrect collections.
2. Medicare Advantage Prohibition on Midyear Benefit Changes (Sec.  
422.254)
    In our proposed rule titled, ``Medicare Program; Establishment of 
the Medicare Advantage Program'' (69 FR 46865), which appeared in the 
Federal Register on August 3, 2004, and is hereinafter referred to as 
the ``August 2004 MA proposed rule,'' we acknowledged that in the 
previous Medicare+Choice program, organizations were permitted to offer 
MYBEs to existing benefit packages. We proposed to discontinue this 
policy, noting how we believed that it would no longer be appropriate 
to allow MA organizations to offer new plans or change an existing 
plan's benefits midyear because such revised (or new) MA plans would 
not reflect the bids which were approved during the normal approval 
process (as set forth in 42 CFR part 422, subpart K). We explained how 
MYBEs are de facto adjustments to benefit packages for which bids were 
submitted by MA organizations based on their estimated revenue 
requirements. Specifically, we expressed concern that allowing MYBEs 
could render the bid meaningless (69 FR 46899).
    In our final rule titled, ``Medicare Program; Establishment of the 
Medicare Advantage Program'' (70 FR 4640), which appeared in the 
Federal Register on January 28, 2005, and is hereinafter referred to as 
the ``January 2005 MA final rule,'' we adopted the MYBE policy 
described in the August 2004 MA proposed rule with modifications in 
response to comments from MA organizations requesting flexibility 
regarding MYBEs in order to improve enrollee experiences or adjust for 
unforeseen errors, under certain circumstances. Specifically, we 
adopted a limited MYBE policy to (1) permit a MYBE to be effective no 
earlier than July 1 of the contract year, and no later than September 1 
of the contract year; (2) prohibit MA organizations from submitting 
MYBE applications later than July 31 of the contract year; and (3) 
require 25 percent of the value of the MYBE to be retained by the 
government.

[[Page 79515]]

The policy also required the MA organization to submit a revised bid 
and supporting documentation about how revenue requirements were 
overstated in the bid submitted for the contract year. (70 FR 4640) 
However, we noted that this was an interim policy for the initial years 
of the competitive bidding system and that we would review the 
continuing need for the policy.
    Subsequent to the January 2005 MA final rule, we issued the 
proposed rule titled, ``Medicare Program; Prohibition of Midyear 
Benefit Enhancements for Medicare Advantage Organizations Offering 
Plans in Calendar Year 2007 and Subsequent Calendar Years'' (71 FR 
52014), which appeared in the Federal Register on September 1, 2006, 
and is hereinafter referred to as the ``September 2006 MA proposed 
rule.'' There, we proposed that, beginning with CY 2007, MA 
organizations would not be permitted to make any midyear changes in 
benefits, premiums, or cost sharing, even under the circumstances in 
which these types of changes were permitted previously. We finalized 
this policy in the final rule titled, ``Medicare Program; Prohibition 
of Midyear Benefit Enhancements for Medicare Advantage Organizations'' 
(73 FR 43628), which appeared in the Federal Register on July 28, 2008, 
and is hereinafter referred to as the ``July 2008 final rule.''
    While previous rules referred to these changes as ``midyear benefit 
enhancements,'' or MYBEs, we are proposing to instead use the term 
``midyear benefit changes'' to better clarify that all changes 
(enhancements or reductions) to non-prescription drug benefits, 
premiums, and cost sharing are prohibited for MA plans, consistent with 
the scope of our prior rulemaking. However, we are not proposing to 
prohibit MA plans from revising plan rules, such as prior authorization 
or referral policies, or from making network changes; the rules in 
Sec.  422.111(d) regarding notice to enrollees about changes in plan 
rules are not proposed to be changed. Please see section III.D. of this 
proposed rule for our proposal to revise the rules in Sec.  422.111(e) 
concerning notice of a change in an MA plan's provider network. 
Additionally, this proposal, if finalized, would not prohibit MA plans 
from covering required changes or additions to basic benefits, that is 
Part A and Part B benefits that all MA plans must cover, when those 
changes or additions to basic benefits are the result of a change in 
the law, such as newly enacted legislation, or rulemaking or a National 
Coverage Determination; such changes are required to be made by MA 
plans, subject to section 1852(c)(5) of the Act and Sec.  422.109 which 
provide for the Medicare FFS program to cover certain changes in Part A 
and Part B benefits. Our proposal encompasses other changes in MA non-
drug, premiums and any cost sharing outside of required changes or 
exceptions we have noted here. Consequently, we hereinafter refer to 
these alterations as ``midyear benefit changes'' (MYBCs).
    Although we finalized the policy in the July 2008 final rule and 
have accordingly enforced it ever since, we now propose to add 
regulatory text explicitly prohibiting MYBCs and specifying when such 
changes will be prohibited. Specifically, we propose to clarify in 
regulatory text that any changes to non-prescription drug benefits, 
cost sharing, and premiums are prohibited starting after plans are 
permitted to begin marketing prospective contract year offerings on 
October 1 of each year for the following contract year (consistent with 
Sec.  422.2263(a)) and through the end of the applicable contract year. 
This means that after marketing is permitted to begin for the 2024 
contract year, MA organizations must offer the benefits described in 
approved bids through the end of the 2024 contract year. In other 
words, MA organizations are prohibited in this scenario from changing 
the benefits, cost sharing and premiums in their approved bids from 
October 1, 2023 until December 31, 2024, except for modifications in 
benefits required by law.
    Consistent with our current practice as described in the July 2008 
final rule, prohibiting changes after marketing is permitted to begin 
provides MA organizations the flexibility to make changes during the 
bidding process when permitted by CMS to remain in compliance with the 
requirements set forth at Sec.  422.254(b), while also maintaining the 
integrity of the bidding process.
    We note that per Sec.  422.2263 following the start of marketing on 
October 1 of each year, MA organizations may begin to market and 
publicize their plan offerings for the following contract year, such 
that organizations may compare their approved plans against competitors 
in order to make advantageous changes. As we noted the August 2004 and 
September 2006 MA proposed rules, allowing MYBCs undermines the 
integrity of the bidding process as it allows MA organizations to alter 
their benefit packages after the bidding process is complete. Further, 
MA organizations may use MYBCs to misrepresent their actual costs and 
noncompetitively revise their benefit packages later in the year (69 FR 
46899, 70 FR 4301, 71 FR 52016).
    Altering an approved plan to include new benefits after marketing 
has started may also give MA organizations an unfair advantage over 
competitors when beneficiaries are selecting their plans during the 
initial coverage elections period (ICEP). We articulated in the July 
2008 final rule that we believe newly age-eligible enrollees are 
attractive to MA organizations because of their relatively low 
utilization, as these individuals are new to the program and tend to be 
healthier (73 FR 43631). Therefore, to prevent MA organizations from 
inappropriately changing bids to appeal to low-utilization enrollees, 
an MA organization must provide the benefits described in the MA 
organization's final plan benefit package (PBP) (as defined in Sec.  
422.162(a)) until the end of the applicable contract year. The July 
2008 final rule reiterated these points. Despite the issuance of the 
July 2008 final rule, however, we have continued to receive inquiries 
from MA organizations requesting changes to PBPs after the contract 
year has begun.
    We note that MYBCs of this nature would also violate the uniformity 
requirements set forth at Sec.  422.100(d)(ii), which requires that an 
MAO must offer their plan to all beneficiaries in a service area ``at a 
uniform premium, with uniform benefits and level of cost sharing 
throughout the plan's service area, or segment of service area as 
provided in Sec.  422.262(c)(2).'' Altering the non-prescription drug 
benefits, premiums, or cost sharing midyear violates this requirement, 
even if the new benefit, premium, or cost sharing is offered to all of 
the plan's enrollees, as some enrollees would have paid for such 
benefits, premiums, or cost sharing already, and would not be eligible 
for reimbursement of these costs. In other words, some plan enrollees 
would have paid higher or lower amounts for the same benefits or 
services than other enrollees who paid depending on when the MYBC was 
put in effect.
    On May 22, 2020, we issued guidance in a Health Plan Management 
System (HPMS) memorandum titled ``Information Related to Coronavirus 
Disease 2019--COVID-19'' (hereinafter referred to as the ``2020 COVID-
19 guidance,'' and available at https://www.cms.gov/files/document/covid-19-updated-guidance-ma-and-part-d-plan-sponsors-may-22-2020.pdf) 
which specified changes in policy for MA Organizations following the 
declaration of the COVID-19 Public Health Emergency (PHE). Due to the 
extraordinary nature of the PHE and its

[[Page 79516]]

impact on Medicare eligible individuals and the disabled and elderly 
population generally, the 2020 COVID-19 guidance allowed for relaxed 
enforcement of the prohibition on MYBCs, with certain limitations. 
Specifically, MYBCs would be allowed when such MYBCs are: (1) provided 
in connection with the COVID-19 PHE; (2) beneficial to enrollees; and 
(3) provided uniformly to all similarly situated enrollees. 
Additionally, we permitted MA organizations to implement additional or 
expanded benefits that address issues or medical needs raised by the 
COVID-19 PHE, and provided examples like covering meal delivery or 
medical transportation services to accommodate the efforts to promote 
social distancing during the COVID-19 PHE. We further noted in our 
January 14, 2022 memo entitled ``Coronavirus Disease 2019 (COVID-19) 
Permissive Actions Extended in Contract Year 2022'' that we would 
exercise our enforcement discretion until the conclusion of the COVID-
19 PHE. Despite the current COVID-19 guidance, MA organizations have 
continued to request changes to approved plan bids which are not 
consistent with the parameters specified in such guidance.
    While our proposed addition to the regulation text is not intended 
to supersede the 2020 COVID-19 guidance (should it remain in effect 
through the 2024 calendar year), we propose to add regulatory text to 
solidify longstanding policy to prohibit MYBCs starting after the plan 
has begun marketing prospective contract year offerings on October 1 of 
each year for the following contract year and until the end of the 
applicable contract year as a means to provide clarification for MA 
organizations and maintain the integrity of the bidding process. As 
discussed previously, this prohibition includes exceptions for changes 
in benefits required by applicable law.
    Employer Group Waiver Plans (EGWPs) exclusively enroll the members 
of the group health plan sponsored by the employer, labor organization 
(that is, union) or trustees of funds established by one or more 
employers or labor organizations to furnish benefits to the entity's 
employees, former employees, or members or former members of the labor 
organizations; these plans generally have ``800 series'' MA contracts 
with CMS. These EGWPs are not currently subject to this prohibition on 
MYBCs under existing CMS waivers for EGWPs. However, an MA organization 
is subject to the prohibition on MYBCs if the MA organization offers an 
MA plan that that enrolls both individual beneficiaries and employer or 
union group health plan members, (that is, a plan open to general 
enrollment); for those types of plans, the employer or union sponsor 
may make mid-year changes to offer or change only non-MA benefits that 
are not part of the MA contract (that is, are not basic benefits or MA 
supplemental benefits). (See 73 FR 43630 and Chapter 9, section 20.3, 
of the Medicare Managed Care Manual, available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c09.pdf.)
    Because this proposal would add regulatory text regarding the MYBC 
policy which has already undergone notice and comment rulemaking, and 
does not change the scope of that prior non-codified rule, this 
provision is technical in nature, and there is no paperwork burden. 
Additionally, this provision will not impact the Medicare Trust Fund.
    We solicit comment on these proposals.
3. Part D Prohibition on Midyear Benefit Changes (Sec.  423.265)
    Section 1860D-11(d) of the Act grants CMS the authority to review 
information pertaining to Part D sponsors' proposed plans and negotiate 
terms and conditions of the proposed bid and proposed plan with Part D 
sponsors. Section 1860D-11(e) of the Act grants CMS the authority to 
approve Part D sponsors' proposed plans. To implement sections 1860D-
11(d) and (e) of the Act, we proposed regulations at Sec.  423.272 in 
our proposed rule titled ``Medicare Program; Medicare Prescription Drug 
Benefit'' (69 FR 46631), which appeared in the Federal Register on 
August 3, 2004 (hereinafter referred to as the ``August 2004 Part D 
proposed rule''). We finalized these regulations in our final rule 
titled ``Medicare Program; Medicare Prescription Drug Benefit'' (70 FR 
4193), which appeared in the January 28, 2005 issue of the Federal 
Register (hereinafter referred to as the ``January 2005 Part D final 
rule'').
    In response to comments to our August 2004 Part D proposed rule 
regarding the authority to enter into bid-level negotiation with Part D 
sponsors, and as was discussed in section III.M.2. of this proposed 
rule, we stated in our January 2005 Part D final rule that in order to 
maintain the integrity of the bidding process, we believed it was not 
appropriate to allow either MA organizations or Part D sponsors to 
waive premiums or offer midyear benefit enhancements, as they would be 
de facto adjustments to benefit packages for which bids were submitted 
earlier in the year. We also stated that these adjustments would be de 
facto acknowledgement that the revenue requirements submitted by the 
plan were overstated, and further, that allowing premium waivers or 
midyear benefit enhancements would render the bid meaningless (70 FR 
4301).
    As noted in section III.M.2. of this proposed rule, we previously 
referred to these changes as ``midyear benefit enhancements,'' or 
MYBEs, and it stands to reason that midyear benefit changes, whether 
enhancements or reductions, are equally problematic from the 
perspective of bid integrity. Therefore, we hereinafter refer to these 
alterations as ``midyear benefit changes,'' or MYBCs.
    Additionally, section 1860D-11(e)(2)(C) of the Act requires that 
the bid reasonably and equitably reflect the revenue requirements of 
the expected population for the benefits provided under the plan. 
Therefore, in addition to indicating that the plan bid was overstated 
and rendering the bid meaningless, waiving or reducing the premiums, 
cost sharing, or both, that are reflected in the approved bid would 
indicate that the amounts provided in the bid were not necessary for 
the provision of coverage.
    We draw a distinction here between changes in ``bid-level'' cost 
sharing (for example, the cost sharing associated with an entire tier 
of drugs) and changes in the cost sharing for an individual drug (for 
example, when such drug moves from one already approved tier of the 
benefit to another already approved tier of the benefit). As is 
discussed further in section III.Q. of this proposed rule, section 
1860D-4(b)(3)(E) of the Act, as codified at Sec.  423.120(b)(5),\96\ 
requires that Part D sponsors provide appropriate notice before any 
removal of a covered Part D drug from a formulary and ``any change in 
the preferred or tiered cost-sharing status'' of such a drug. Thus, the 
statute contemplates midyear changes in cost sharing of individual 
formulary drugs. Consequently, since the beginning of the Part D 
program, we have allowed formulary changes that result in changes to 
the cost sharing for individual drugs (for example, moving a single 
drug to a different cost-sharing tier), but have declined to permit 
Part D sponsors to change their benefit designs or waive or reduce 
premiums, ``bid-level'' cost sharing (for example, the cost sharing

[[Page 79517]]

associated with an entire tier of drugs), or cost sharing (for some or 
all enrollees) once plans are permitted to market for the following 
contract year (on October 1, consistent with Sec.  423.2263(a)) on the 
grounds that such activities would be inconsistent with the CMS-
approved bid.
---------------------------------------------------------------------------

    \96\ We propose organizational changes to the existing 
regulations to streamline them and improve their clarity, which 
would include two subparagraphs on approval of changes and provision 
of notice to appear, respectively, at Sec.  423.120(e) and (f).
---------------------------------------------------------------------------

    Additionally, section 1860D-2(a) of the Act defines qualified 
prescription drug coverage to mean standard (Defined Standard or 
Actuarially Equivalent Standard) prescription drug coverage or 
alternative prescription drug coverage (with at least actuarially 
equivalent benefits) and access to negotiated prices in accordance with 
section 1860D-2(d) of the Act. In our proposed rule titled, ``Medicare 
Program; Policy and Technical Changes to the Medicare Advantage and the 
Medicare Prescription Drug Benefit Programs'' (74 FR 54633), which 
appeared in the October 22, 2009 issue of the Federal Register 
(hereinafter referred to as the ``October 2009 proposed rule'') we 
further interpreted section 1860D-2(a) of the Act as requiring the 
provision of uniform premium and benefits. We codified these 
requirements in our regulations at Sec.  423.104(b) in our final rule 
titled, ``Medicare Program; Policy and Technical Changes to the 
Medicare Advantage and the Medicare Prescription Drug Benefit 
Programs'' (75 FR 19677), which appeared in the Federal Register on 
April 15, 2010.
    In addition to violating the bid requirements, as we noted in the 
preamble of the October 2009 proposed rule, a Part D sponsor's waiver 
of cost sharing midyear also violates the uniform benefit requirements, 
because doing so results in plans not providing the same coverage to 
all eligible beneficiaries within their service area (74 FR 54690). The 
CMS-approved benefit cannot be varied for some or all of the plan's 
enrollees midyear, as that would violate the uniform benefit provisions 
set forth in Sec.  423.104(b). Even if the plan changes the benefit 
midyear for all of the plan's enrollees, this still violates the 
uniform benefits provision because some of the plan's enrollees would 
still have paid for benefits prior to the change. We note that during 
the COVID-19 PHE, CMS provided for specific flexibilities by Part D 
sponsors to ensure adequate pharmacy access that would otherwise 
violate the uniform benefit provisions. CMS exercised its enforcement 
discretion to temporarily permit Part D sponsors to fully or partly 
waive cost sharing for covered Part D drugs with medically accepted 
indications for COVID-19.
    To clarify these points for all parties, we propose to codify in 
regulation our longstanding subregulatory policy at new paragraph Sec.  
423.265(b)(5) which would require that once a Part D sponsor is 
permitted to market prospective plan year offerings for the following 
contract year (consistent with Sec.  423.2263(a)), that is, as of 
October 1, it shall not change, and therefore, must provide, the 
benefits described in its CMS-approved plan benefit package (PBP) (as 
defined at Sec.  423.182(a)) for the contract year without 
modification, except where a modification in benefits is required by 
law.
    Additionally, we have been monitoring compliance with this policy 
via our Part D Bid review and approval process, consistent with Sec.  
423.272. Consequently, there is no additional paperwork burden 
associated with codifying this longstanding subregulatory policy.
    We solicit comment on this proposal.
4. Failure To Collect and Incorrect Collections of Part D Premiums and 
Cost Sharing Amounts (Sec. Sec.  423.293 and 423.294)
    As was described in section III.M.3. of this proposed rule, Part D 
sponsors' waiver of cost sharing or premiums would violate the uniform 
premium and benefit requirements of section 1860D-2(a) of the Act and 
Sec.  423.104(b). Similarly, Part D sponsors' incorrect collections of 
cost sharing and premiums also could have the effect of making the 
benefit non-uniform.
    The current regulatory language at Sec.  423.104(b) mirrors the 
language at Sec.  422.100(d)(1) and (2)(i) with regard to uniform 
premiums and cost sharing. However, although the MA program adopted 
language at Sec.  422.270 to address incorrect collections of premiums 
and cost sharing in the January 2005 MA final rule, the regulations in 
Part 423 do not address Part D sponsor requirements regarding incorrect 
collections of premiums and cost sharing. We intend to bring the Part D 
requirements into alignment with the existing MA requirements for 
incorrect collections, as well as establish new requirements regarding 
failure to collect premiums and cost sharing amounts. Therefore, for 
incorrect collections, we propose to codify requirements at a new Sec.  
423.294 that would be similar to the MA program requirements at Sec.  
422.270. We also propose to codify new requirements regarding failure 
to collect premiums and cost sharing amounts at Sec.  423.294. Finally, 
we solicit comment regarding adding a similar policy to add new 
requirements for MAOs regarding failure to collect premiums and cost 
sharing in Sec.  422.270.
    Our proposed Part D requirements would require a Part D sponsor to 
make a reasonable effort to collect monthly beneficiary premiums under 
the timing established in Sec.  422.262(e) (made applicable to Part D 
premiums in Sec.  423.293(a)(2)) and ensure collection of cost sharing 
at the time a drug is dispensed. If for some reason the Part D sponsor 
fails to collect or ensure collection in a timely manner, the Part D 
sponsor would be required to make a reasonable effort to bill for and 
recover the premium or cost sharing amount after the fact. Any 
adjustments to the premium or cost sharing amount that occur based on 
subsequently obtained information would be made within the timeframe 
for coordination of benefits as established at Sec.  423.466(b), which 
is 3 years from the date on which the monthly premium was due or on 
which the prescription for a covered Part D drug was filled. A Part D 
sponsor could decline to attempt to recover an amount if it is below a 
de minimis amount, as detailed below.
    Our proposed Part D requirements would also require a Part D 
sponsor to make a reasonable effort to identify any amounts incorrectly 
collected from its Medicare enrollees, or from others on behalf of 
affected enrollees. Sponsors would have to issue refunds during the 
same 3-year timeline applicable to recoveries, as described previously, 
and need not issue refunds if they are below a de minimis amount.
    Our proposed Part D requirements would differ from the existing 
requirements at Sec.  422.270 in the following ways. The first 
modification to our proposed requirements for Part D sponsors is that 
we propose to clarify that the 3-year lookback period established in 
Sec.  423.466(b) for coordination of benefits applies to retroactive 
claim or premium adjustments that result in refunds and recoveries at 
Sec.  423.294(b)(2) and (4) and Sec.  423.294(c)(2), respectively. 
Currently, a Part D sponsor is required to process retroactive claims 
adjustments within 45 days of receiving complete information, per Sec.  
423.466(a), and there is no requirement for the timing of retroactive 
premium adjustments. While Sec.  423.466(b) allows 3 years for 
coordination of benefits, there is currently no limit in the regulation 
for how far back retroactive premium adjustments or claims adjustments 
unrelated to coordination of benefits must be made. For example, if a 
Part D sponsor in 2022 identifies an error in their prior years' drug 
pricing files that resulted in beneficiaries being charged

[[Page 79518]]

incorrect cost sharing from 2015 to 2020, the current regulation might 
require them to refund and/or recover amounts for prescriptions 
beneficiaries received as long as seven years ago. This is not only 
inconsistent with our coordination of benefits requirements, which 
would only require adjustments for the past 3 years, but is potentially 
confusing to beneficiaries. By proposing to establish a 3-year lookback 
period in Sec.  423.294(b)(2) and (4) and Sec.  423.294(c)(2), we would 
align the timeframe established in Sec.  423.466(b) for coordination of 
benefits with the timeframe for premium adjustments and claims 
adjustments unrelated to coordination of benefits. Not only would this 
3-year period coincide with the timeframe established in Sec.  
423.466(b) for coordination of benefits with State Pharmaceutical 
Assistance Programs (SPAPs) and other entities, including beneficiaries 
and others paying on the beneficiaries' behalf, but it would also align 
with the timeframe for redeterminations in Sec.  423.1980(b) and (c). A 
Part D sponsor would not be required to make a premium or claims 
payment adjustment if more than 3 years has passed from the date of 
service, just as a Part D sponsor is required to coordinate benefits 
for a period of 3 years.
    In section IV.N. of this proposed rule, we are proposing to codify 
at Sec.  423.44(d)(1)(v) current policy that excepts certain 
prescription drug plan (PDP) members from being disenrolled for failure 
to pay plan premiums. Additionally, as also discussed at section IV.N. 
of this proposed rule, we propose at revised Sec.  423.44(d)(1)(v) a 
disenrollment exception if the Part D sponsor has been notified that an 
SPAP, or other payer, is paying the Part D portion of the premium, and 
the sponsor has not yet coordinated receipt of the premium payments 
with the SPAP or other payer. We also (1) expect Part D sponsors to 
issue collection notices and, (2) consistent with the requirements at 
Sec.  423.44, require Part D sponsors to make a reasonable attempt at 
collection, notwithstanding the requirements at Sec.  423.44 for 
involuntary disenrollment. Nonetheless, we would not expect a Part D 
sponsor to disenroll a Part D enrollee for such Part D sponsor's 
failure (when the plan made the error) to collect the proper payment 
and subsequent failure to collect an underpayment. Section 50.3.1 of 
Chapter 3 of the Medicare Prescription Drug Benefit Manual also 
provides that we expect a Part D sponsor to have billed the Part D 
enrollee prior to the start of the grace period for the actual premium 
amount due (emphasis added), with such notice/bill specifying the due 
date for that amount.
    Additionally, specific to cost sharing, under current regulations 
at Sec.  423.566(b)(5), a decision on the amount of cost sharing for a 
drug constitutes a coverage determination. If a claim adjudicates at an 
incorrectly low amount, or if other actions by a Part D sponsor result 
in the Part D enrollee being asked to pay an incorrectly low cost-
sharing amount, such adjudication or action is a coverage 
determination. If the Part D sponsor becomes aware of the error, the 
Part D sponsor would reopen the previously adjudicated coverage 
determination consistent with the reopening rules at Sec. Sec.  
423.1980 through 423.1986. If the Part D sponsor issues an adverse 
revised determination, the notice must state the rationale and basis 
for the reopening and revision and any right to appeal.
    Second, at Sec.  423.294(b)(2) and (4) and Sec.  423.294(c)(2), 
respectively, we propose to clarify that the 45-day timeframe in Sec.  
423.466(a) applies to the processing of refunds and recoveries for both 
claims and premium adjustments. This would make the timeframes for the 
refund or recovery of premium adjustments the same as for claims 
adjustments and for refunds and recoveries related to the low-income 
subsidy program, which under Sec.  423.800(e) are the same as the 
requirements of Sec.  423.466(a). In other words, whenever a Part D 
sponsor receives, within the 3-year lookback period, information that 
necessitates a refund of enrollee overpayment of premiums, cost 
sharing, or both, or recovery of underpayments of premiums, cost 
sharing, or both, the Part D sponsor would be required to issue refunds 
or recovery notices within 45 days of the Part D sponsor's receipt of 
such information. Nothing in this proposal would alter the requirements 
of Sec.  423.293(a)(4) with respect to the options a Part D sponsor 
must provide Part D enrollees for retroactive collection of premiums.
    We note we are not proposing any changes to the Medical Loss Ratio 
(MLR) requirements under Sec. Sec.  422.2420(c) and 423.2420(c), which 
provide that uncollected premiums that could have been collected still 
count as revenue.
    The final difference between our proposed requirements for Part D 
sponsors and existing Part C requirements is that we propose to apply a 
de minimis amount, calculated per Prescription Drug Event (PDE) 
transaction or, for premium adjustments, per month, for these refunds 
and recoveries. As proposed at Sec.  423.294(b) and (c)(1), if a refund 
or recovery amount falls below the de minimis amount set for purposes 
of Sec.  423.34(c)(2) for low income subsidies (currently at $2 for 
2022), the Part D sponsor would not be required to issue a refund or 
recovery notice. For instance, if a sponsor in 2024 discovered that it 
had charged incorrect premiums amounts to certain beneficiaries for a 
12-month period from January through December of 2022 and the de 
minimis amount for 2024 is $2, the sponsor would not have to issue 
recovery notices to any beneficiary who owed $24 or less total for the 
12-month period. This proposal clarifies that the existing coordination 
of benefits (COB) requirements in Sec.  423.466 encompass payment 
adjustments. As such, the proposed timeframe for the proposed 
requirements to refund or recover incorrectly collected cost sharing 
and premium amounts would not result in any additional costs to Part D 
sponsors, Part D enrollees, or the government. Conversely, because 
there was previously no historical limit or threshold for such refunds 
and recoveries, establishing both a 3-year lookback period and de 
minimis amount would remove significant administrative burden on plan 
sponsors and the government, particularly in circumstances where the 
amount to be refunded or recovered is less than the postage required to 
provide a refund or recovery notice. Consequently, this provision would 
not impact the Medicare Trust Fund, and there would be no additional 
paperwork burden, as recovery notices are already required under Sec.  
423.466, and Sec.  423.293 already provides a process for the 
retroactive collection of premiums.
    Current MA regulations set forth at Sec.  422.270 do not contain 
requirements for MA organizations to refund or recover incorrect 
collections of cost-sharing or premiums with regard to a de minimis 
amount or a lookback period. On the contrary, Sec.  422.270(b) states 
that an MA organization must agree to refund all amounts incorrectly 
collected from its Medicare enrollees, or from others on behalf of the 
enrollees, and to pay any other amounts due the enrollees or others on 
their behalf. With regard to timing of recovering underpayments when an 
enrollee is not at fault, Sec.  422.262(h) states an enrollee may make 
payments by equal monthly installment spread out over at least the same 
period for which the premiums were due, or through other arrangements 
mutually acceptable to the enrollee and the Medicare Advantage 
organization. We solicit comments on

[[Page 79519]]

adding requirements regarding a de minimis amount and lookback periods 
for recovering or refunding incorrect collections in MA to that mirror 
proposed requirements in Part D.
    We are also proposing a technical change to the regulation text 
related to the Part D retroactive collection of monthly beneficiary 
premiums. We propose to amend Sec.  423.293(a)(4) by replacing 
``Medicare Advantage organization'' with ``Part D sponsor'' to be 
consistent with the terminology used in the rest of Sec.  423.293.
    We solicit comment on these proposals.
5. Summary of Proposals and Comment Solicitation
    In summary, we are proposing to:
     Add Sec.  422.254(a)(5) to add regulatory text regarding 
the requirement that starting after an MA organization is permitted to 
begin marketing prospective plan year offerings for the following 
contract year (consistent with Sec.  422.2263(a)), it may not change, 
and therefore must provide, the benefits described in its CMS-approved 
plan benefit package (PBP) (as defined at Sec.  422.162(a)) for the 
contract year without modification, except where a modification in 
benefits is required by law. This proposed prohibition on changes would 
apply to cost sharing and premiums as well as benefits;
     Add Sec.  423.265(b)(5) to codify the requirement that 
starting after a Part D sponsor is permitted to begin marketing 
prospective plan year offerings for the following contract year 
(consistent with Sec.  423.2263(a)), it may not change, and therefore, 
must provide, the benefits described in its CMS-approved PBP (as 
defined at Sec.  423.182) for the contract year without modification, 
except where a modification in benefits is required by law;
     Make a technical correction at Sec.  423.293(a)(4) to 
replace ``Medicare Advantage organization'' with ``Part D sponsor''; 
and
     Add new Sec.  423.294 to codify requirements regarding 
failure to collect, and incorrect collections of, enrollee premiums and 
cost sharing for Part D sponsors, including:
    ++ Specifying in proposed Sec.  423.294(a) that failure to collect 
premiums and cost sharing, or incorrect collections of premiums or 
applicable cost sharing, violates the uniform benefit provisions at 
Sec.  423.104(b);
    ++ Applying a 3-year lookback period for the identification of 
applicable refunds and recoveries at the proposed Sec.  423.294(b)(2) 
and (4) and Sec.  423.294(c)(2), respectively;
    ++ Applying a 45-day period to issue applicable refunds and 
recovery notices at the proposed Sec.  423.294(b)(2) and (4) and Sec.  
423.294(c)(2), respectively;
    ++ Specifying at proposed Sec.  423.294(b)(3) the refund methods 
for amounts incorrectly collected and other amounts due; and
    ++ Specifying at proposed Sec.  423.294(b) and (c)(1) a de minimis 
amount for applicable refunds and recoveries.
    We solicit comment regarding adding new requirements (specifically 
adding a de minimis amount and lookback period) in the MA regulations 
regarding failure to collect premiums and cost sharing in Sec.  422.270 
to align with the proposed changes for Part D sponsors described in 
this section of the proposed rule.
    We solicit comment on these proposals and policy questions.

N. Clarify Language Related to Submission of a Valid Application 
(Sec. Sec.  422.502 and 423.503)

1. Overview and Summary
    We are proposing to amend the language in Sec.  422.502 and Sec.  
423.503 to codify CMS's authority to decline to consider a 
substantially incomplete application for a new or expanded Part C or D 
contract. We are also proposing to codify criteria for determining that 
an application is substantially incomplete.
    Since we began our contracting efforts under the Medicare 
Modernization Act of 2003 in 2005 in preparation for the statute's 2006 
effective date, we have established strict deadlines for the initial 
submission of applications for an entity to qualify as an MAO or Part D 
sponsor for a new contract, expansion of a service area of an existing 
contract, or to offer an MA SNP and the resubmission of materials 
needed to cure identified deficiencies. These deadlines are established 
annually in our Parts C and D applications, in accordance with 
Sec. Sec.  422.501 and 423.502. Consistent with that operational 
policy, we do not review applications that are submitted after the 
established deadline. Entities submitting applications after the 
deadline do not receive a new or expanded Part C (either a general MA 
contract or approval to offer a SNP) or D contract for the following 
benefit year. An entity missing the deadline also does not receive a 
notice of intent to deny under Sec. Sec.  422.502(c)(2) or 
423.503(c)(2) and is not entitled to a hearing under Sec. Sec.  422.660 
or 423.650.
    CMS noted in the final rule which appeared in the Federal Register 
on April 15, 2011 titled ``Medicare Program; Changes to the Medicare 
Advantage and the Medicare Prescription Drug Benefit Programs for 
Contract Year 2012 and Other Changes'' (76 FR 21431), hereafter 
referred to as the April 2011 final rule, that, in order to meet the 
submission deadline, some entities had submitted applications that were 
so lacking in required information as to fail to constitute a valid 
submission (76 FR 21527). If permitted to proceed with such an 
application, the entity would be able to complete their application by 
taking advantage of two later opportunities (including the period 
following the notice of intent to deny) to cure deficiencies. These 
``placeholder'' applications would allow entities more time to submit 
complete applications than applicants that submitted complete 
applications by the application deadline. We stated in the preamble to 
the April 2011 final rule that we considered this an abuse of the 
application review process and have therefore treated such 
substantially incomplete applications as invalid since the enactment of 
the April 2011 final rule.
    In the April 2011 final rule, we stated that we believed that 
substantially incomplete applications were submitted in part because of 
confusion about our authority to enforce the application deadline (76 
FR 21527). This confusion was likely a result of the then-effective 
provisions of Sec. Sec.  422.502(c)(2)(i) and 423.503(c)(2)(i), which 
stated that CMS would provide an applicant a notice of intent to deny 
when the entity ``has not provided enough information to evaluate the 
application.'' We stated that we had intended this language to afford 
an entity that had made a good faith effort to complete an application 
the opportunity to provide materials necessary to cure discrete 
application deficiencies, not to provide an unintended protection and 
additional time to entities that submitted ``placeholder'' 
applications. In order to correct this misunderstanding and to allow us 
to enforce our application submission deadline, CMS amended the 
regulation to remove the quoted language in Sec. Sec.  422.502(c)(2)(i) 
and 423.503(c)(2)(i). Since that time, we have treated substantially 
incomplete applications as invalid applications that are not entitled 
to a notice of intent to deny or a hearing under Sec. Sec.  
422.502(c)(2) or 423.503(c)(2) or entitled to a hearing under 
Sec. Sec.  422.660 or 423.650. While we notify organizations that 
submit substantially incomplete applications that we consider their 
application to be substantially incomplete and therefore invalid, that 
notification is for

[[Page 79520]]

informational purposes only and is not a notice of intent to deny under 
Sec. Sec.  422.502(c)(2) and 423.503(c)(2).
    CMS is proposing to codify its longstanding policy with respect to 
substantially incomplete applications.
2. Discussion (Sec. Sec.  422.502 and 423.503)
    We propose to modify Sec. Sec.  422.502 and 423.503 by adding new 
paragraphs (a)(3) and (a)(4), respectively, regarding substantially 
incomplete applications. At Sec. Sec.  422.502(a)(3)(i) and 
423.503(a)(4)(i), CMS proposes to codify that it does not evaluate or 
issue a notice of determination as described in Sec. Sec.  422.502(c) 
and 423.503(c), respectively, when an entity submits a substantially 
incomplete application. This proposed modification to the regulatory 
text is consistent with the longstanding policy to treat substantially 
incomplete applications as if they were not submitted by the 
application deadline and therefore the submitting entity is not 
entitled to review of its submitted material or an opportunity to cure 
deficiencies.
    We also propose at Sec. Sec.  422.502(a)(3)(ii) and 
423.503(a)(4)(ii) to codify our definition of a substantially 
incomplete application as one that does not include responsive 
materials to one or more sections of its MA or Part D application, 
respectively. Pursuant to Sec. Sec.  422.501(c) and 423.502(c), CMS 
requires entities seeking to qualify as an MAO (or to qualify to offer 
a SNP) and/or Part D sponsor to submit an application in the form and 
manner required by CMS. Applications for service area expansions are 
subject to the same rules and review processes as we treat the 
expansion of a plan service area as a new application for a new area. 
We prescribe the form and manner in an application published annually. 
This application is subject to the Paperwork Reduction Act review 
process. The form and manner vary somewhat from year to year, but 
generally include several sections that require an entity to 
demonstrate compliance with specific categories of program 
requirements. For instance, Part D applications for new Part D 
contracts include: (1) a series of attestations whereby the applicant 
agrees that it understands and complies with various program 
requirements; (2) a contracting section that requires entities to 
demonstrate compliance with Part D requirements by submitting certain 
first tier, downstream, and related entity contracts and network 
pharmacy templates; (3) a network section that requires entities to 
submit lists of contracted pharmacies that meet geographic and other 
access requirements; (4) a program integrity section that requires 
entities to submit documentation that they have documented and 
implemented an effective compliance program as required by Sec.  
423.504(b)(vi); and (5) a licensure and solvency section that requires 
entities to meet applicable licensure and fiscal solvency requirements. 
MA applications require substantially similar information related to 
the operation of an MA plan, and SNP applications include additional 
sections related specifically to SNP requirements for the type of SNP 
the applicant seeks to offer. Consistent with past practice, CMS 
proposes to treat an application that does not include required content 
or responsive materials for one or more of these sections as 
substantially incomplete. In our assessment, applications that fail to 
include significant amounts of responsive materials, including failing 
to include required content or responsive material for any section of 
the application, in materials submitted by the application submission 
deadline are merely submitting placeholder applications that do not 
merit additional opportunities to meet CMS requirements.
    An example of a Part D application that would be incomplete and 
therefore excluded from further consideration under the proposed rule 
is one that failed to upload a retail pharmacy list that would allow 
CMS to determine whether it met pharmacy access requirements. This 
would include failure to submit a list at all, submitting a list 
containing fictitious pharmacies, or submitting a list that contained 
so few pharmacies that CMS could only conclude that no good faith 
effort had been made to create a complete network. CMS would also deem 
as substantially incomplete any application that failed to submit any 
executed contracts with first tier, downstream, or related entities 
that the applicant had identified as providing Part D services on its 
behalf.
    An example of a MA application that would be incomplete and 
therefore excluded from further consideration is one that failed to 
upload either a State license or documentation that the State received 
a licensure application from the applicant before the CMS application 
due date. Another example of an incomplete MA application would be one 
that failed to upload network adequacy materials, including failing to 
submit network lists for designated provider types, submitting 
fictitious providers, or submitting a list that contained so few 
providers that CMS could only conclude that no good faith effort had 
been made to create a complete network.
    An example of a SNP application that would be incomplete and 
therefore excluded from further consideration is one that failed to 
upload a model of care (MOC) that would allow CMS to determine whether 
or not it met MOC element requirements. This would include failure to 
submit MOC documents at all or submitting incomplete documents that did 
not contain all of the required MOC elements.
    Finally, we propose at Sec. Sec.  422.502(a)(3)(iii) and 
423.503(a)(4)(iii) to explicitly state that determinations that an 
application is substantially incomplete are not contract determinations 
as defined at Sec. Sec.  422.641 and 423.641, respectively. Because 
they are not contract determinations, determinations that an 
application is substantially incomplete are not entitled to receipt of 
specific notices or appeal under Parts 422 and 423, subpart N. CMS has 
consistently taken this position when determining an application is 
substantially incomplete because a submission that is so incomplete as 
to not be deemed a valid application did not meet the application 
deadline and cannot be meaningfully reviewed. Nevertheless, a few 
entities have used the contract determination hearing process to appeal 
CMS's determination that they did not submit a substantially complete 
application by the application deadline. In such cases, the Hearing 
Officer has ruled that such determinations were not contract 
determinations entitled to hearings under Sec. Sec.  422.660 and 
423.650.
    CMS does not believe that our proposed regulatory provisions at 
Sec. Sec.  422.502(a)(3)(i) and 423.503(a)(4)(i) will have a 
significant impact on the Part C or D programs. Only a handful of 
entities have attempted to submit substantially incomplete applications 
in recent years. CMS believes that codifying our treatment of 
substantially incomplete applications will further discourage entities 
from submitting placeholder applications and ensure that materials 
submitted by the application deadline represent entities' good faith 
efforts to meet application requirements.
    We solicit comment on this proposal.
3. Summary of Proposals
    In summary, we are proposing to:
     Add Sec. Sec.  422.502(a)(3) and 423.503(a)(4) to codify 
CMS's policy of not evaluating or issuing a notice of determination as 
described in Sec. Sec.  422.502(c) or 423.503(c) when an

[[Page 79521]]

entity submits a substantially incomplete application;
     Specify at the proposed Sec. Sec.  422.502(a)(3)(ii) and 
423.503(a)(4)(ii) that a substantially incomplete application is one 
that does not include responsive materials to one or more sections of 
the application; and
     Specify at the proposed Sec. Sec.  422.502(a)(3)(iii) and 
423.503(a)(4)(iii) that a determination that an entity submitted a 
substantially incomplete application is not subject to the appeals 
provisions of Part 422 and 423, subpart N.
    We solicit comment on these proposals.

O. Updating Translation Standards for Required Materials and Content 
(Sec. Sec.  422.2267 and 423.2267)

1. Standing Request for Translated Materials and Materials in 
Accessible Formats Using Auxiliary Aids and Services
    In accordance with our authority under sections 1851(h), 1851(j), 
1852(c), 1860D-1(b)(1)(B)(vi), 1860D-4(a), and 1860D-4(l) of the Act, 
Sec. Sec.  422.2267(a)(2) and 423.2267(a)(2) of the regulations require 
MA organizations and Part D sponsors to translate materials into any 
non-English language that is the primary language of at least 5 percent 
of the individuals in a plan benefit package service area. This 
threshold is based on the Guidance to Federal Financial Assistance 
Recipients Regarding Title VI Prohibition Against National Origin 
Discrimination Affecting Limited English Proficient Persons (67 FR 
41455 through 41472, published in June 2002) that implemented Executive 
Order 13166 (signed in August 2000). In addition, per Sec.  417.428, 
cost plans with contracts under section 1876 of the Act must follow the 
same marketing and communication regulations; we apply the same 
standards to cost plans under this regulation based on our authority in 
section 1876(i)(3)(D) of the Act. Each fall, we release an HPMS 
memorandum announcing that plans can access in the HPMS marketing 
review module a list of all languages that are spoken by 5 percent or 
more of the population for every county in the U.S.\97\ In the Medicare 
Program; Contract Year 2023 Policy and Technical Changes to the 
Medicare Advantage and Medicare Prescription Drugs Benefit Program; 
Policy and Regulatory Provisions in Response to the COVID-19 Public 
Health Emergency; Additional Policy and Regulatory Provisions in 
Response to the COVID-19 Public Health Emergency final rule, which 
appeared in the May 9, 2022 Federal Register (87 CFR 27704) 
(hereinafter referred to as the May 2022 final rule), we also adopted a 
requirement that MA and Part D plans use a multi-language insert (MLI), 
which informs the reader, in the top fifteen languages used in the 
U.S., as well as any additional non-English language that is the 
primary language of at least 5 percent of the individuals in a plan 
benefit package service area, that interpreter services are available 
for free. In accordance with Sec. Sec.  422.2267(e)(31) and 
423.2267(e)(33), the MLI must be included with all CMS required 
materials provided to current or prospective enrollees. As discussed in 
the May 2022 final rule, CMS considers the materials required under 
Sec. Sec.  422.2267(e) and 423.2267(e) to be vital to the beneficiary 
decision making process; ensuring beneficiaries with limited English 
proficiency are aware of and are able to access interpreter services 
therefore provides a clear path for this portion of the population to 
properly understand and access their benefits (87 FR 27821).
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    \97\ CMS released the contract year 2023 version of this HPMS 
memorandum titled, ``Contract Year 2023 Translated Model Materials 
Requirements and Language Data Analysis'' on September 23, 2022. 
This memorandum can be retrieved at: https://www.cms.gov/httpseditcmsgovresearch-statistics-data-and-systemscomputer-data-and-systemshpmshpms-memos-archive/hpms-memos-wk-4-september-19-23.
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    In addition, MA organizations and Part D sponsors must comply with 
section 504 of the Rehabilitation Act of 1973, section 1557 of the 
Affordable Care Act, and implementing regulations at 45 CFR part 92. 
The regulations at 45 CFR 92.102(b) require plans to provide 
appropriate auxiliary aids and services, including interpreters and 
information in alternate formats, to individuals with impaired sensory, 
manual, or speaking skills, where necessary to afford such persons an 
equal opportunity to benefit from the service in question. Section 
92.102(b)(1) defines the auxiliary aids and services for plans to 
provide to enrollees. For written materials this includes but is not 
limited to braille, large print, data/audio files, relay services, and 
TTY communications. We further explained the obligation of plans to 
provide accessible communications for individuals with disabilities in 
an August 30, 2017, Health Plan Management System memorandum titled, 
``Frequently Asked Questions Regarding Accessible Communications for 
Individuals with Disabilities, Pursuant to Section 504 of the 
Rehabilitation Act of 1973 (Section 504) and Section 1557 of the 
Affordable Care Act (Section 1557).'' \98\
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    \98\ CMS Office of Hearings and Inquiries, ``Frequently Asked 
Questions Regarding Accessible Communications for Individuals with 
Disabilities, Pursuant to Section 504 of the Rehabilitation Act of 
1973 (Section 504) and Section 1557 of the Affordable Care Act 
(Section 1557), August 30, 2017. Retrieved from https://www.cms.gov/Research-Statistics-Data-and-Systems/Computer-Data-and-Systems/HPMS/HPMS-Memos-Archive-Annual-Items/SysHPMS-Memo-Archive-%3F-2017-Qtr3.
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    However, CMS has learned from oversight activities, enrollee 
complaints, and stakeholder feedback that enrollees often must make a 
separate request each time they would like a material in an alternate 
language or need auxiliary aids and services. In addition, during CMS 
program audits and oversight activities we have found that special 
needs plans (SNPs) do not always translate individualized care plans 
(ICPs) into enrollees' preferred languages, even when the enrollee has 
expressed a preference for translation as part of completing the health 
risk assessment. To address these issues, we are proposing here, based 
on our authority under the Medicare statute, to adopt regulations to 
impose additional Medicare marketing and communications standards on 
plans to ensure access to important information and materials for 
individuals who have limited English proficiency or need auxiliary aids 
or services.
    The materials required under Sec. Sec.  422.2267(e) and 423.2267(e) 
and ICPs are vital to how individuals access services and make 
decisions about their health care. These materials furnish important 
information about coverage and benefits under Medicare health and drug 
plans. We believe this proposal will make it easier for beneficiaries 
to understand the full scope of available Medicare benefits (as well as 
Medicaid benefits available through the D-SNPs, where applicable), 
increasing their ability to make informed health care decisions, and 
promote a more equitable health care system by increasing the 
likelihood that MA enrollees have access to information and necessary 
health care.
    The U.S. Census Bureau's 2019 American Community Survey (ACS) 1-
year estimates show that 12.2 percent of individuals 65 years of age 
and older speak a language other than English in the home.\99\ Nearly 8 
percent of Medicare beneficiaries are individuals with limited English 
proficiency, many of whom need an interpreter or other language 
assistance to communicate

[[Page 79522]]

effectively.\100\ The U.S. Census Bureau's 2019 American Community 
Survey 1 year estimate also finds that 2.3 percent of the population is 
blind or low vision and 3.6 percent are deaf or have hearing loss, with 
13.7 percent of adults over 65 reporting hearing loss or deafness, and 
6 percent of adults over age 65 reporting blindness or low-vision.\101\ 
Communication and language barriers are associated with decreased 
quality of care and poorer health outcomes. In addition, individuals 
with limited English proficiency are less likely to have routine health 
visits, more likely to defer needed health care, and more likely to 
leave the hospital against medical advice.\102\ Effective communication 
is critical to providing high-quality care. Reliance on unqualified 
individuals to interpret medical information can lead to 
misunderstandings, poor outcomes, or even death.\103\
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    \99\ Refer to https://data.census.gov/cedsci/table?q=language&tid=ACSST1Y2019.S1603.
    \100\ Refer to https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Language-Access-Plan.pdf.
    \101\ Refer to https://data.census.gov/cedsci/table?q=https%3A%2F%2Fdata.census.gov%2Fcedsci%2Ftable%3Fq%3DS1810%26tid%3DACSST1Y2019.S1810%26hidePreview%3Dfalse&tid=ACSST1Y2019.S1810.
    \102\ Refer to https://www.healthaffairs.org/doi/full/10.1377/hlthaff.24.2.435.
    \103\ Refer to https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Language-Access-Plan.pdf.
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    We believe that it is a substantial burden for enrollees to have to 
request each material in an alternate language or request auxiliary 
aids and services for each material and that requiring enrollees to do 
so could impede access to care. It is also possible that enrollees may 
require both auxiliary aids and services for materials and an alternate 
language (for example Spanish braille). In addition, to ensure the ICPs 
are developed in consultation with the enrollee as required at Sec.  
422.101(f)(1)(ii), it is important that ICP materials be provided in 
the enrollee's preferred language and, where appropriate, in an 
accessible format using auxiliary aids and services. Studies 
consistently show the negative health outcomes that patients with 
limited English proficiency experience due to the barriers they 
encounter when interacting with their doctors and care team members, 
accessing interpreters, and addressing insurance concerns. These 
outcomes are further exacerbated by vulnerable patients often not 
knowing their right to have qualified interpreters and other language 
access provisions at no extra cost.\104\ We have become attuned to this 
issue through our work with Medicare-Medicaid Plans (MMPs). In 2019, 
CMS conducted a review of MMPs to learn how they capture, record, and 
use enrollees' language preferences and any need for auxiliary aids and 
services. We found that MMPs use multiple enrollee touch points to 
capture this information, including welcome calls, health risk 
assessments, nurse advice lines, and other interactions associated with 
member services, enrollment, prescription services, appeals and 
grievances, and care management. To collect and store this information, 
MMPs have taken steps such as establishing centralized email accounts 
within their organizations to capture all translation and auxiliary aid 
and service requests they receive and to ensure greater consistency and 
completion of requests, developing database reports that list their 
enrollees and any identified language or auxiliary aid or service 
preferences, and storing the information in their eligibility system.
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    \104\ Refer to https://www.healthaffairs.org/do/10.1377/forefront.20200724.76821/full/.
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    As a result, we believe that there are many ways for MA 
organizations and Part D sponsors to learn of an enrollee's need for 
auxiliary aids and services and language preferences and maintain this 
information. The CMS Guide to Developing a Language Access Plan can 
provide MA organizations and Part D sponsors with helpful information 
to ensure that persons with limited English proficiency have meaningful 
access to services.\105\ In addition, the Improving Communication 
Access for Individuals Who are Blind or Have Low Vision brochure can 
similarly assist organizations in developing policies to better serve 
these individuals.\106\ We encourage plans to educate enrollees on the 
availability of translated materials and accessible formats using 
auxiliary aids and services through such avenues as enrollee 
newsletters, advertising, or other educational forums. MA plans may use 
a reward program, as permitted under Sec.  422.134, to provide rewards 
as a means to encourage enrollees to provide information regarding 
their need for an alternate language or auxiliary aids and services; in 
our view, providing this information to the MA plan promotes improved 
health and the efficient use of healthcare resources (as required by 
Sec.  422.134 for reward programs) as it ensures that materials and 
information are adequately furnished to be understood and used by the 
enrollee in understanding and accessing covered benefits.
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    \105\ Refer to https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Language-Access-Plan.pdf.
    \106\ Refer to https://www.cms.gov/files/document/omh-visual-sensory-disabilities-brochure-508c.pdf.
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    We would like to minimize barriers to enrollees receiving materials 
in alternate languages and accessible formats using auxiliary aids and 
services and remove any ambiguity associated with MA and Part D plan 
responsibilities for providing materials in alternate languages and 
accessible formats using auxiliary aids or services and for SNPs to 
provide ICPs in alternate languages and accessible formats using 
auxiliary aids and services. Therefore, we propose to re-designate the 
paragraphs at Sec. Sec.  422.2267(a)(3) and 423.2267(a)(3) as 
Sec. Sec.  422.2267(a)(5) and 423.2267(a)(5) and add new paragraphs at 
Sec. Sec.  422.2267(a)(3) and 423.2267(a)(3) to require MA 
organizations and Part D sponsors to provide materials to enrollees on 
a standing basis in any non-English languages that is the primary 
language of at least 5 percent of the individuals in a plan benefit 
package service area as defined under Sec. Sec.  422.2267(a)(2), 
423.2267(a)(2) and proposed Sec. Sec.  422.2267(a)(4) and 
423.2267(a)(4), which are is discussed later in this section, and in 
any accessible formats using auxiliary aids and services upon receiving 
a request for the materials in another language or using auxiliary aids 
and services or otherwise learning of the enrollee's preferred language 
or need for an accessible format using auxiliary aids and services. 
This means that once a plan learns of an enrollee's preferred language 
and/or need for auxiliary aids and services--whether through an 
enrollee requesting a material in a preferred language or using 
auxiliary aids and services, during a health risk assessment, or 
another touch point--the plan must provide required materials in that 
language and/or accessible format using auxiliary aids and services as 
long as the enrollee remains enrolled in the plan or until the enrollee 
requests that the plan provide required materials in a different 
manner. We have also proposed language at Sec. Sec.  422.2267(a)(3) and 
423.2267(a)(3) to extend this requirement to the individualized plans 
of care described in Sec.  422.101(f)(1)(ii) for SNP enrollees. The 
proposed requirement would allow enrollees to avoid having to submit a 
request to receive required materials in a preferred language and/or 
using auxiliary aids and services each time the MA or Part D plan 
distributes a required material. We note that plans are responsible for 
providing materials in both a preferred format and using auxiliary aids 
and services when needed (for example Spanish braille). These 
modifications at Sec. Sec.  422.2267 and 423.2267 and other

[[Page 79523]]

requirements at Parts 422 and 423 regarding translation obligations and 
auxiliary aids are in addition to plan obligations under 45 CFR part 92 
that govern meaningful access for individuals with limited English 
proficiency and effective communication for individuals with 
disabilities. MA and Part D plans must comply with both the rules at 
Sec.  422.2267 and Sec.  423.2267 and the non-discrimination 
requirements in 45 CFR part 92. Where one set of regulations imposes a 
higher or different standard but it is not impossible for the plan to 
comply with both, the plan must comply with both. Because cost plans, 
per Sec.  417.428, are subject to the regulations in part 422, subpart 
V, these requirements also apply to cost plans.
    There are no information collections related to creating a standing 
request for translated materials or materials using auxiliary aids and 
services. We believe the burden associated with these proposed 
requirements is exempt from the requirements of PRA as defined in 5 CFR 
1320.3(b)(2) because the time, effort, and financial resources 
necessary to comply with the requirement would be incurred by persons 
in the normal course of their activities. We believe most cost plans, 
MA organizations, and Part D sponsors have translators on staff or 
access them via contractors because of existing translation and 
auxiliary aid requirements.
2. Require FIDE SNPs, HIDE SNPs, and Applicable Integrated Plans To 
Translate Materials Into the Medicare Translation Standard Plus 
Additional Medicaid Languages
    Over 1.8 million individuals dually eligible for the Medicare and 
Medicaid programs speak a language other than English at home or do not 
speak English fluently.\107\ In addition, dual eligibility is a strong 
predictor of poorer outcomes in an array of Medicare programs,\108\ and 
dually eligible beneficiaries are far more likely than other Medicare 
beneficiaries to be from racial or ethnic minority groups (48 percent 
vs. 22 percent). Many dually eligible beneficiaries have low health 
literacy yet need to navigate a more complex system of coverage than 
non-dually eligible beneficiaries.
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    \107\ Refer to https://www.resourcesforintegratedcare.com/language_preferences/.
    \108\ Refer to https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
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    Per the definition of specialized MA plans for special needs 
individuals in Sec.  422.2, all SNPs must be MA-PDs that comply with 
both Part 422 and Part 423 requirements. Sections 422.2267(a)(2) and 
423.2267(a)(2) require dual eligible special needs plans (D-SNPs), like 
all other MA-PD plans, to translate materials into any non-English 
language that is the primary language of at least 5 percent of the 
individuals in a plan benefit package service area. We propose to amend 
Sec. Sec.  422.2267 and 423.2267 with a new paragraph (a)(4) that 
requires that FIDE SNPs and HIDE SNPs, as defined at Sec.  422.2, and 
applicable integrated plans (AIPs), as defined at Sec.  422.561, 
translate all Medicare materials listed in Sec. Sec.  422.2267(e) and 
423.2267(e) into any languages required by the Medicaid translation 
standard as specified through their capitated Medicaid managed care 
contract in addition to the language(s) required by the Medicare 
translation standard at Sec.  422.2267(a)(2). Generally, we expect that 
the Medicaid translation requirements would be the regulatory standard 
at Sec.  438.10; however, a State may impose a higher or more stringent 
translation requirement on its Medicaid managed care plans than is 
required by Sec.  438.10, so we believe referring to the capitated 
Medicaid managed care contract rather than Sec.  438.10 is appropriate 
for this proposed new requirement. Specifically, Sec.  438.10(d)(3) 
requires that entities make written materials that are critical to 
obtaining services available in the prevalent non-English languages in 
the service area. Section 438.10(a) defines prevalent as a non-English 
language determined to be spoken by a significant number or percentage 
of potential enrollees and enrollees that are limited English 
proficient. Section 438.10(d)(1) requires that the State establish a 
methodology for identifying the prevalent non-English languages spoken 
by enrollees and potential enrollees throughout the State. Under the 
definitions for FIDE SNP, HIDE SNP, and AIP, each of these types of 
plan has a companion or affiliated Medicaid managed care plan, which 
would itself be subject to Sec.  438.10 and the applicable State's 
translation requirements for Medicaid materials described in Sec.  
438.10. We propose to extend the translation standards applicable to 
the Medicaid materials used by FIDE SNPs, HIDE SNPs, and AIPs to the 
Medicare materials used by those plans to ensure that the dually 
eligible enrollees in all FIDE SNPs, HIDE SNPs, and AIPs receive all of 
the materials necessary for accessing and understanding all of their 
benefits (both Medicare and Medicaid) in a language that the enrollees 
understand.
    For example, if current Sec. Sec.  422.2267 and 423.2267 only 
require translation into Spanish for Medicare materials but the State 
Medicaid agency requires translation into Chinese as well as English 
and Spanish, then our proposed revisions to Sec. Sec.  422.2267 and 
423.2267 would also require that the affected FIDE SNP, HIDE SNP, or 
AIP translate the Medicare materials listed in Sec. Sec.  422.2267(e) 
and 423.2267(e) into Chinese as well as Spanish.
    These modifications at Sec. Sec.  422.2267 and 423.2267 do not 
create exceptions to other laws that govern translation of written 
materials provided to enrollees that we have previously described. 
Rather, our intent is to make it easier for dually eligible 
beneficiaries who are enrolled in FIDE SNPs, HIDE SNPs, or AIPs to 
understand the full scope of Medicare and Medicaid benefits available 
through such D-SNPs, which would increase their ability to make 
informed health care decisions. It would also reduce the likelihood of 
an enrollee receiving materials in different languages (for example, 
some in English and some in Spanish) depending on whether the materials 
are governed by Medicare or Medicaid requirements.
    We are considering applying the proposed new requirement to 
additional or different groups of D-SNPs, such as limiting the proposal 
to AIPs or to organizations with D-SNP-only contracts as described 
under Sec.  422.107(e), or expanding the requirement to all D-SNPs and 
D-SNP look-alikes (that is, the MA plans that meet the standards in 
Sec.  422.514(d)) during a period before the D-SNP look-alike plan is 
nonrenewed or terminated. We decided to focus our proposal on all FIDE 
SNPs and HIDE SNPs, as defined at Sec.  422.2, and AIPs, as defined at 
Sec.  422.561, because these plans have capitated contracts with State 
Medicaid agencies and must already translate Medicaid materials to 
comply with their Medicaid managed care contracts, and would likely 
either have staff that are capable of translating materials into these 
languages or contract with organizations to perform these translations. 
In addition, an increasing number of dual eligible individuals are in 
FIDE SNPs, HIDE SNPs, and AIPs where the same organization provides 
coverage of both the Medicare and Medicaid services for the enrollee.
    We understand that our proposal would require some FIDE SNPs, HIDE 
SNPs, and AIPs to translate the Medicare materials listed in Sec. Sec.  
422.2267(e) and 423.2267(e) into additional languages. We believe that 
the benefit gained by the ability for more enrollees to receive all 
materials in

[[Page 79524]]

their preferred language outweighs this burden. As described previously 
in this section, these enrollees are far more likely than other 
Medicare beneficiaries to be from racial or ethnic minority groups or 
have low health literacy yet need to navigate a more complex system of 
coverage than non-dually eligible beneficiaries. As a result, to ensure 
health equity for this population we have proposed including a broad 
range of D-SNP types but are excluding those D-SNPs that only 
coordinate with Medicaid services. We welcome comments on our proposal 
and these potential alternatives we are considering.
3. Exclude Member ID Cards From New Paragraphs Proposed at Sec. Sec.  
422.2267(a)(3) and (a)(4) and Sec. Sec.  423.2267(a)(3) and (a)(4)
    In addition to the proposals described earlier in this section, 
Sec. Sec.  422.2267(e)(30)(vi) and 423.2267(e)(30)(vi) currently 
exclude the member ID card from the translation requirement under 
Sec. Sec.  422.2267(a)(2) and 423.2267(a)(2). We propose to amend the 
member ID card provision at Sec. Sec.  422.2267(e)(30)(vi) and 
423.2267(e)(30)(vi) to expand the exclusion for member ID cards to 
include the new paragraphs proposed in this section, Sec. Sec.  
422.2267(a)(3) and (a)(4) and Sec. Sec.  423.2267(a)(3) and (a)(4), 
respectively.

P. Medicare Advantage (MA) and Part D Marketing (Subpart V of Parts 422 
and 423)

    We are proposing a number of changes to Subpart V of both 422 and 
423 regulations. These changes include requiring third parties to 
submit marketing materials, notifying enrollees annually that they can 
opt out of plan business calls; limiting the ability of plans and 
agents to contact prospective enrollees beyond six months from the time 
they submit a Scope of Appointment (SOA) or Business Reply Card (BRC); 
requiring website provider directories be searchable by all required 
elements (for example, name, phone number, address); adding ``effect on 
current coverage'' to the Pre-enrollment Checklist (PECL), as well as 
requiring agents to discuss the PECL during an enrollment call; 
requiring plans to list benefits at the beginning of the Summary of 
Benefits and in a specified order; labeling the non-renewal notice as 
standardized rather than a model, consistent with CMS's guidance 
instructions; limiting the requirement to record calls between third-
party marketing organizations (TPMOs) and beneficiaries to marketing 
(sales) and enrollment calls; clarifying that the prohibition on door-
to-door contact without a prior appointment still applies after 
collection of a BRC or SOA; prohibiting marketing of benefits in a 
service area where those benefits are not available; prohibiting the 
marketing based on information about savings available to potential 
enrollees that are based on a comparison of typical expenses borne by 
uninsured individuals, costs that dually eligible beneficiaries are not 
responsible to pay, or other unrealized costs of a Medicare 
beneficiary; requiring TPMOs to list or mention all of the MA 
organization or Part D sponsors that they sell; requiring MA 
organizations and Part D sponsors to have an oversight plan that 
monitors agent/broker activities and reports agent/broker non-
compliance to CMS; modifying the TPMO disclaimer to add State Health 
Insurance Programs (SHIPs) as an option for beneficiaries to obtain 
additional help; placing discrete limits on the use of the Medicare 
name, logo, and Medicare card; prohibiting the use of superlatives (for 
example, words like ``best'' or ``most'') in marketing unless the 
material provides documentation to support the statement, and the 
documentation is for the current or prior year; and clarifying the 
requirement to record calls between TPMOs and beneficiaries such that 
it is clear that the requirement includes virtual connections such as 
Zoom and Facetime.
    Sections 1851(h), 1851(j), and 1852(c) of the Act, which address 
Medicare Part C, provide CMS the authority to review marketing 
materials, develop marketing standards, and ensure that marketing 
materials are accurate and not misleading. These provisions also 
provide CMS with the authority to prohibit certain marketing 
activities. Section 1856(b)(1) of the Act provides CMS the authority to 
add additional standards to the MA program that the Secretary 
determines are necessary for CMS to carry out the program. In addition, 
sections 1876(i)(3)(D), 1857(e)(1) and 1860D-12(b)(3)(D) of the Act 
provide CMS the authority to adopt additional contract terms for cost 
plans, MA plans, and Part D plans when necessary and appropriate. 
Likewise, 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) of the Act for approval of marketing materials and 
application forms for Part D plan sponsors. Section 1860D-4(l) of the 
Act applies certain prohibitions under section 1851(h) of the Act to 
Part D sponsors in the same manner as such provisions apply to MA 
organizations. In addition, under section 1852(c) and 1860D-4(a) of the 
Act, CMS can require organizations to provide certain materials to 
Medicare beneficiaries concerning MA and Part D plan choices. These 
statutory provisions help ensure Medicare beneficiaries are informed 
and protected when making an election to enroll in an MA (including 
MAPD) or Part D plan. We believe the changes proposed in this 
regulation strengthen CMS' ability to ensure MA and Part D marketing to 
beneficiaries is not misleading, inaccurate, or confusing. 
Additionally, under 42 CFR 417.428, most marketing requirements in 
subpart V of part 422 apply to section 1876 cost plans as well. (87 FR 
1899).
    In accordance with regulations at Sec. Sec.  422.2261(a) and 
423.2261(a), MA organizations and Part D Sponsors (MA organizations/
Part D Sponsors) must submit all marketing materials, all election 
forms, and certain designated communications materials for CMS review. 
Sections 422.2261(a)(3) and 423.2261(a)(3) prohibit third-party and 
downstream entities from submitting materials directly to CMS, unless 
specified by CMS. Following an operational change in May 2021, CMS 
began permitting TPMOs to submit certain marketing materials. In cases 
where a TPMO document only markets one MA organization/Part D sponsor, 
there would be no change for the TPMO, meaning they would still send 
the document in through the MA organization/Part D sponsor who would 
submit it into HPMS. For TPMOs that develop materials for more than one 
MA organization/Part D sponsor, the TPMO would submit the material 
directly to CMS. Based on CMS' operational change we are proposing to 
require TPMOs, as defined at Sec. Sec.  422.2260 and 423.2260, to 
submit their marketing materials developed for multiple MA 
organizations and Part D sponsors (and their specific plans) to CMS 
through HPMS. Specifically, we are proposing to remove Sec. Sec.  
422.2261(a)(3) and 423.2261(a)(3), which as implemented prohibited 
TPMOs from submitting materials the TPMO alone developed, and modifying 
Sec. Sec.  422.2261(a)(2) and 423.2261(a)(2) to require that where 
marketing materials have been developed by a TPMO for multiple plans, 
the TPMO must submit those materials that the TPMO has designed and 
developed to CMS, and such submission may only occur after the TPMO 
receives the prior approval of each of the MA organizations or Part D 
sponsors on whose behalf the materials

[[Page 79525]]

were designed and developed by the TPMO.
    The HPMS is CMS' system of record for marketing materials. In the 
January 19, 2021 final rule, we modified Sec. Sec.  422.2261(a)(3) and 
423.2261(a)(3) to provide CMS the flexibility to allow third parties to 
submit materials directly to CMS in the future (86 FR 5998). CMS made 
this modification in anticipation of changes to HPMS. CMS released an 
updated marketing module in HPMS in May of 2021. Prior to this release, 
third-party materials were submitted into HPMS, but the TPMO was 
required to send materials to an MA organization or Part D sponsor and 
have the MA organization or Part D sponsor submit the materials on the 
TPMO's behalf. System changes in 2021 permitted third parties and 
downstream entities, such as TPMOs, to submit materials directly to CMS 
following the receipt of prior approval from at least one MA 
organization or Part D sponsor. The January 19, 2021 final rule enabled 
the agency to allow submission by third parties and downstream entities 
because of the timing and uncertainty of the revamped HPMS marketing 
module.
    Since issuing the January 19, 2021 final rule, we have modified 
HPMS so that TPMOs may submit materials that are being used for 
multiple MA organizations, Part D sponsors, or plans. We are now 
proposing to require, rather than permit, TPMOs submit to CMS any 
material that the TPMO develops for multiple MA organizations and Part 
D sponsors that meets the definition of marketing and that TPMOs 
receive prior approval, by each MA organization or Part D sponsor, of 
the material being submitted on behalf of each of the MA organization 
or Part D sponsor. Failing to require submission may result in these 
materials not being subject to CMS review. Thus, we are proposing to 
remove Sec. Sec.  422.2261(a)(3) and 423.2261(a)(3) and modify 
Sec. Sec.  422.2261(a)(2) and 423.2261(a)(2) to add that TPMOs must 
submit their materials designed on behalf of and with prior approval 
from the applicable MA organizations or Part D sponsors.
    CMS is proposing to add a new (xix) to Sec.  422.2262(a)(1) and a 
new (xviii) to Sec.  423.2262(a)(1) to address the use of the Medicare 
name, CMS logo, and products or information issued by the Federal 
Government, including the Medicare card. CMS is aware of concerns from 
external stakeholders about marketing activities and documents that 
appear to be from Medicare, CMS, or the Federal Government. Through 
beneficiary complaints and CMS surveillance activities, over the years, 
we have seen the word ``Medicare'' in names of store fronts (that is, 
The Medicare Store), on notices or postcards where ``Medicare'' is in 
large font while disclaimers are miniscule, and in television 
advertisements where a beneficiary could think that the advertising is 
coming from CMS. We have also seen logos, which are very similar to the 
Health and Human Services (HHS) logo on websites and print materials. 
These logos have featured circles with writing around the circle and a 
bird, wings or other images that appear to be the same image used by 
the Federal Government. In addition to the store front, postcards, and 
television advertisements, there are also numerous third-party internet 
sites with ``Medicare'' in the URL or a logo similar to the HHS logo, 
potentially causing a beneficiary to click on a private site when they 
intend to go to  Medicare.gov or are seeking official Medicare 
information or access. Often, it appears as if the materials urging the 
beneficiary to ``take action'' are from Medicare or that these third 
parties represent Medicare or the Federal Government. With the increase 
of third parties in the marketplace, based on CMS' surveillance and 
complaints received, especially through 1-800-MEDICARE, we are 
concerned that an increasing number of beneficiaries are being misled 
into believing the entity they are contacting is Medicare or the 
Federal Government. One specific example, provided by a Medicare 
beneficiary, is a postcard with the beneficiary-named address with 
``Medicare Notice'' in large, bold letters at the top along with 
``Personal & Confidential'' and ``Important Medicare Information.'' 
This postcard also had a ``Medicare Information'' box listing a 
``Customer ID'', formatted to look like an official Medicare 
beneficiary number. This misleading postcard appeared to be an official 
document disseminated by the Federal Government. In our review of 
complaints received through 1-800-MEDICARE, CMS discovered other 
examples of beneficiaries who mistakenly believed they were calling 
Medicare rather than a private MA or Part D plan or its agent or 
broker, likely based on the receipt of a flyer using the word 
``Medicare'' in a way that conveyed to the beneficiary that they must 
call the telephone number on the mailer. These complaints illustrate 
that the use of the Medicare name is at times confusing and misleading 
to Medicare beneficiaries.
    A top CMS priority, consistent with sections 1851(h)(2) and 1860D-
01(b)(1)(B)(vi) of the Act and CMS's implementing regulations at 
Sec. Sec.  422.2262 and 423.2262, is to ensure that MA organizations 
and Part D sponsors disseminate information to beneficiaries that is 
accurate and not misleading. We are therefore concerned that the use of 
the term ``Medicare'' in situations like those described above 
erroneously leads beneficiaries to believe that Medicare-related 
communications or advertising are disseminated or endorsed by Medicare 
or the Federal Government, when in actuality such communications are 
being disseminated by the MA organizations/Part D sponsors themselves, 
or by entities operating on behalf of the MA organizations or Part D 
sponsors. Although the types of plan communications described above 
that feature the word ``Medicare'' typically include disclaimers that 
state the information presented is not connected to or endorsed by the 
Federal Government or the Medicare program, these disclaimers are often 
tiny, difficult to read, and are mixed in with other CMS required 
disclaimers as well as plan-developed, non-required, disclaimers. While 
CMS already prohibits inaccurate or misleading information under 
Sec. Sec.  422.2262(a)(1)(i) and 423.2262(a)(1)(i), we believe it is 
important to specifically prohibit the misleading use of the Medicare 
name, CMS logo, and products or information issued by the Federal 
Government (including the Medicare card) in Sec. Sec.  422.2262(a)(1) 
and 423.2262(a)(1). We are not including the Medicare Part D mark, as 
CMS gives Part D sponsors contractual permission to use the mark. By 
adding a new (xix) and (xviii) we are firmly and clearly prohibiting 
the improper use of these terms and logos. Therefore, we propose adding 
a new paragraph (xix) to Sec.  422.2262(a)(1) and a new (xviii) to 
Sec.  423.2262(a)(1) which specifically prohibits the use of the 
Medicare name, CMS logo, or official products, including the Medicare 
card, in a misleading manner.
    Since CMS contracts with MA organizations and Part D sponsors, CMS 
holds these organizations accountable for the actions of their first 
tier, downstream and related entities, per Sec. Sec.  422.504(i) and 
423.505(i). If CMS determines that the Medicare name, CMS logo, or 
official products like the Medicare card, have been used in a 
misleading manner by a first tier, downstream or related entity (FDR), 
CMS would address the issue with the MA organization or Part D sponsor 
on whose behalf the FDR was operating and hold the sponsoring 
organization accountable for the misleading information.
    In our January 2021 final rule, we prohibited plan use of 
unsubstantiated statements except those used in taglines

[[Page 79526]]

and logos in 42 CFR 422.2262(a)(1)(ii) and 423.2262(a)(1)(ii). Prior to 
the January 2021 final rule, we had prohibited the use of 
unsubstantiated superlatives and pejoratives, except when used in logos 
and taglines, through our Medicare Communications and Marketing 
Guidance. We now propose to further restrict the use of superlatives by 
prohibiting all superlatives unless substantiating supporting data is 
also provided with the material and essentially adopt a regulation that 
builds upon our prior guidance. We are proposing this for all 
superlatives, including those used in logos and taglines. Previously, 
CMS generally required plans to provide substantiating data to support 
the use of a superlative. However, that substantiating information was 
only provided to CMS, resulting in the beneficiary seeing the 
superlative without no context. Currently, the beneficiary has no 
knowledge of how the superlative is determined, potentially misleading 
the beneficiary to believe a statement which may be partially or mostly 
true, but lacking context and important specificity. For example, an MA 
plan may advertise that it has the largest network, which on a national 
basis may be accurate. However, when looking at a particular service 
area, this MA plan may have the smallest network. Permitting the use of 
superlatives without specific information explaining the basis or 
context, is potentially misleading to beneficiaries so we have 
reconsidered the scope of Sec. Sec.  422.2262(a)(1)(ii) and 
423.2262(a)(1)(ii) as previously finalized.
    CMS believes it is critical to provide either actual data or 
information, such as reports or studies, that forms the basis for a 
superlative statement in order for beneficiaries to review and 
understand the context and reference point for the superlative. This 
documentation and/or data can be referenced through footnotes 
explaining the basis, noting the source, with enough information for a 
beneficiary to locate, or providing the actual comparison done to 
determine the superlative. For example, if a plan stated that they have 
the lowest premiums, the plan would need to state their premium and the 
premiums of other plans in the service area, or reference a study, 
review or other documentation that supports the superlative and with 
which the beneficiary can make accurate comparisons between plans.
    We are also proposing to add a requirement that the supportive 
documentation and/or data be based on current data. Our proposed 
regulation text requires that the supportive documentation or data must 
reflect data, reports, studies, or other documentation to have been 
published either in the existing contract year or the prior contract 
year. For example, a health plan could not make the statement in CY 
2022 that they have the largest provider network in an area using 2018 
data. Rather, in CY 2022, the statement that a health plan has the 
largest network in an area must be supported by documentation and/or 
data published as of January 1, 2021 or later. Data and the underlying 
situations can be dynamic and change over time, therefore, CMS is 
proposing that recent data, meaning the current or the prior contract 
year data, are the only data that may be used to substantiate 
superlatives. We believe any data older than the prior contract year 
may be misleading, given the age of the data and the potential of the 
data to have changed. Based on this, we propose to modify paragraphs 
Sec. Sec.  422.2262(a)(1)(ii) and 423.2262(a)(1)(ii) to prohibit the 
use of superlatives, unless sources of documentation and/or data 
supportive of the superlative is also referenced in the material and to 
provide that such supportive documentation and/or data must reflect 
data, reports, studies, or other documentation that has been published 
in either the current contract year or prior contract year.
    In Sec. Sec.  422.2263(b) and 423.2263(b) we propose adding a new 
(8) which prohibits organizations from advertising benefits not 
available in a service area, unless doing so is unavoidable in a local 
market. This prohibition is codifying our previous guidance, as 
previously outlined in section 30.1 of the 2016 Medicare Marketing 
Guidelines (MMG),\109\ providing that marketing activities should be 
limited to a plan's service area unless doing so was unavoidable, such 
as advertising in a local newspaper that may be distributed outside a 
service area. In cases where marketing outside a service area was 
unavoidable, CMS's guidance provided that the plan's service area be 
disclosed.
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    \109\ https://www.cms.gov/Medicare/Health-Plans/ManagedCareMarketing/Downloads/2016-Medicare-Marketing-Guidelines-Updated.pdf.
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    Over the past few years, CMS has seen a significant increase in 
national marketing which promotes benefits such as dental, vision, and 
money back on a beneficiary's Social Security check. While many of 
these benefits are available to a large number of beneficiaries, they 
are not available in all service areas or to all Medicare beneficiaries 
in the amounts often advertised. For example, in 2021 there were 
national advertisements that claimed a beneficiary ``could get up to 
$144 back'' on their Social Security check, which would be accomplished 
through a reduction in the beneficiary's Medicare Part B premium. A 
premium reduction of this magnitude would have covered most of the 
standard 2021 Part B premium of $148.50. However, the number of 
counties or states where one or more available plans offered the 
advertised Part B premium reduction of $144 was small. In fact, for CY 
2021, Florida and Puerto Rico were the only states or territories that 
had plans with a reduction of $140 or more, and in CY 2022 the only 
states or territories that had plans with a reduction of $140 or more 
were California, Florida and Puerto Rico. Further, although there were 
plans available in these states, the plans offering the $140 or more 
buy down were not available in all counties. Since beneficiaries in 
more than 60% of states only have access to plans that offer a Part B 
premium reduction of $99.00 or less (CY 2022), advertising on a 
national or even regional level that a beneficiary can get up to the 
full amount or even close to the full amount is potentially misleading. 
And although over 30% of states and territories offer Part B premium 
reduction of $100 or more, this reduction is not available in all 
counties in each State and territory. These national advertisements 
publicize that a beneficiary can get up to a certain dollar amount (for 
example, $144) even if there are no plans available in that state that 
offer $144 or any dollar amount close to $144. CMS believes that if a 
plan offering ``up to'' the top dollar amount is advertised as 
available for enrollment, then such a plan offering that top dollar 
amount should be available to beneficiaries who are receiving or 
exposed to the advertisement where they reside; otherwise we believe it 
is potentially misleading to potential enrollees. A beneficiary 
calling, based on an advertisement touting up to $144 back, would 
expect that plans would be available that would provide a reasonable 
Part B premium reduction. However, the actual reduction may be minimal, 
anywhere from $1 to $25, significantly far from the ``up to'' 
advertised amount; or in other cases, there may not even be a Part B 
premium reduction in that particular service area. We believe this 
practice--touting a reduction far greater than what is available has 
the effect of getting beneficiaries to contact the company, hoping for 
financial assistance, only to be told there is little to no Part B

[[Page 79527]]

premium reduction--is a misleading tactic that is more likely designed 
to attract a beneficiary's attention so that the beneficiary will call 
the number and then, be subject to additional marketing and potentially 
switched to a plan not that is not well suited to meet the 
beneficiary's health care needs.
    A similar issue exists for other MA benefits such as dental, 
vision, and hearing as well as Part D benefits, non-formulary 
medications and over-the-counter medications. There have been national 
advertisements that promote plans with high benefit amounts for certain 
benefits (for example, up to $2,500 in dental benefits). CMS believes 
advertising up to a $2,500 dental benefit on a national level is 
misleading when some markets may not even have access to a plan with 
dental or others only have access to a plan with limited dental (for 
example, $500). While many beneficiaries have access to MA plans with 
some level of additional dental, vision and hearing benefits, 
advertising benefits up to a large dollar amount (for example, $2,500) 
is misleading when the MA plan options available to a beneficiary 
provide a significantly lower value benefit (for example, $500).
    CMS has seen advertisements which market up to $144 dollars back on 
the beneficiaries' Social Security check, or thousands of dollars in 
hearing, dental and vision, to entice a beneficiary to call the 1-800 
number possibly believing they can receive the maximum amount of 
benefits advertised. CMS has listened to recorded calls between a 
beneficiary and an agent in which the beneficiary starts off by asking 
about how to get $144 back in their Social Security check. Based on its 
review of recorded calls,\110\ CMS has learned that once the 
beneficiary places a call to the advertised number, the agent may 
market a plan that does not provide a Part B premium reduction at all 
or that offers a premium reduction at a much lower level than the 
advertised dollar value, or a plan with more limited dental, hearing or 
vision than was advertised. Once the agent or broker has the 
beneficiary on the line, the beneficiary is either put in a position of 
trying to end the call or listening to an agent sell a plan in which 
the beneficiary was not interested, potentially leading the beneficiary 
into enrolling in a plan that does not offer the advertised benefits. 
Because of the initial call, which was based on unavailable benefits, 
the beneficiary may end up enrolling in a plan that does not best meet 
the health care needs of the beneficiary. In this situation, the 
beneficiary may have benefited by staying in their existing plan, and 
may even have stayed enrolled in their existing plan, if not for the 
advertisement urging the beneficiary to call to ``get the money they 
deserve.''
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    \110\ CMS has retained the recordings of these calls. The calls 
include sensitive information, and as such, we feel it would be 
inappropriate and illegal to include them as part of this public 
record.
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    As mentioned above, when a plan advertises benefits which are not 
available to beneficiaries in the service area where the advertisement 
airs, that type of marketing is misleading. We believe that 
beneficiaries should only receive marketing that advertises benefits 
actually available to the beneficiary where the beneficiary resides 
(that is, in a service area that covers where the advertisements air). 
Therefore, we are proposing a new (8) at Sec. Sec.  422.2263(b) and 
423.2263(b) that provides that MA organizations and Part D sponsors may 
not engage in marketing that advertises benefits that are not available 
to beneficiaries in the service area where the marketing appears unless 
unavoidable in a local market.
    We are also proposing a new (9) at Sec. Sec.  422.2263(b) and 
423.2263(b) that prohibits marketing unless the names of the MA 
organizations or Part D sponsors that offer the benefits are being 
advertised are clearly identified. In cases where the MA organization 
or Part D sponsor uses a specific marketing name, as identified in 
HPMS, that marketing name can be used in place of the MA organization 
or Part D sponsor name. CMS has seen an increase in the marketing of 
benefits, through television, websites, and mailers that mention 
additional benefits such as dental, vision, hearing, as well as low or 
zero-dollar premiums. These advertisements do not identify which 
product(s), plan(s), or specific plan(s) benefits are being advertised, 
but rather act as a lead generator to obtain beneficiary contact 
information. When a beneficiary calls, returns a flyer, or clicks on a 
link on a web page, the advertising entity (which may be either an MA 
organization, a Part D sponsor, or a TPMO) may be able to obtain a 
beneficiary's contact information, which is then used by that entity 
for unlimited future calls or for providing that information to other 
entities that then contact the beneficiary. One particular internet 
site \111\ requires an individual to enter their name, email address, 
and phone number prior to looking at any plan information. The 
disclaimer at the bottom of the ad (and often in much smaller font) 
states ``By entering my contact information and clicking ``Next'' 
above, I consent to receive emails, telephone calls, text messages and 
artificial or pre-recorded messages from. . .licensed insurance agents 
or their affiliates and third-party partners, regarding health 
insurance products and services including Medicare Advantage Plans and/
or Prescription Drug Plans, at the email address and telephone number 
provided above, including my wireless number (if provided), using an 
automated telephone dialing system.'' By ``automated telephone dialing 
system,'' the language seems to be referring to what are commonly 
referred to as robo-calls. In order for the beneficiary to get any 
information, they are forced to agree to be contacted not just once 
based on the initial inquiry, but for unlimited calls, texts, and 
emails from the internet site they visited, as well as any other 
company to whom the internet site gave or sold the beneficiary's 
information. We do not believe beneficiaries realize or want their 
contact information to be provided to other entities just because the 
beneficiary wanted to get information about available plans from one 
internet site. We believe that many of the unsolicited contact 
complaints that CMS has received (through 1-800-MEDICARE, online 
complaint system, anecdotally from stakeholders, etc.) are the result 
of a beneficiary inadvertently or unknowingly agreeing to having their 
personal information provided or sold to others entities, who then call 
the beneficiary and market MA products.
---------------------------------------------------------------------------

    \111\ HPMS is the system of record for storing marketing 
websites submitted to CMS for review and approval.
---------------------------------------------------------------------------

    CMS believes there are specific, important reasons for 
advertisements to contain MA organization and Part D sponsor names. 
First of all, we believe including the names in the advertisement will 
help the beneficiary understand that they are calling a plan or a plan 
representative and not Medicare, the government, or a non-partisan 
entity. Adding the names provides information to put the beneficiary in 
control of whether they even want to contact the agent because by 
having the name on an advertisement, the beneficiary can research the 
MA organization or Part D sponsor, including their Star Ratings and 
complaints, or discuss the plan with relatives or friends whom they 
trust to help make health care decisions. The beneficiary can then make 
a more informed decision on whether they want to contact the agent to 
learn about that particular plan. Without knowing the plan name, the 
beneficiary may find themselves in a position of listening to an agent 
(especially if that agent is in

[[Page 79528]]

the beneficiary's home) market a plan that the beneficiary is not 
interested in joining.
    Not only does this proposed policy assist beneficiaries, it will 
also assist CMS and MA organizations and Part D sponsors to ensure the 
marketing reflects the appropriate MA organizations and Part D 
sponsors. CMS is proposing to require TPMO-developed marketing to be 
submitted into HPMS and currently permits TPMOs to submit marketing 
materials into HPMS. Under our proposal, once submitted, each MA 
organization or Part D sponsor would decide whether they want the TPMO 
to use that marketing piece on their behalf. If an MA organization or 
Part D sponsor ``opts into'' the piece, the TPMO may then use it on 
their behalf and marketing those organizations. If the MA organization 
or Part D sponsor ``opts out'' of the marketing piece, then the TPMO 
would not have permission to market those specific organizations. By 
requiring MA organization and Part D sponsor names both CMS and the 
organization would then be able to ensure that only those MA 
organizations and Part D sponsors who opted into the TPMO using the 
piece are being advertised in that piece. And if CMS determines a piece 
is misleading, we will then be able to identify the organizations from 
the advertisement, compare them to the ones that opted in and address 
the issue with those organizations who opted into the TPMO piece. This 
will allow CMS to quickly notify the MA organization or Part D sponsor 
of the issues, have the organization resolve the issues, and get the 
misleading materials out of circulation quickly.
    Therefore, we are proposing a new (9) at Sec.  422.2263(b) to 
prohibit MA organizations from marketing any products or plans, 
benefits, or costs, unless the MA organization or marketing name(s) (as 
listed in HPMS of the entities offering the referenced products or 
plans) are identified in the marketing material. We are also proposing 
a new (9) at Sec.  423.2263(b) to prohibit Part D sponsors from 
marketing any products or plans, benefits, or costs, unless the Part D 
sponsor or marketing name(s) (as listed in HPMS of the entities 
offering the referenced products or plans) are identified in the 
marketing material.
    In addition, we propose to set requirements on how the names of the 
sponsoring organization are displayed or identified in marketing 
materials. In reviewing television, print, and online marketing, the 
disclaimers are often small, not displayed long enough, read too fast, 
or are difficult to find. We propose adding requirements in this new 
paragraph (9) to ensure the information is visible. We propose adding 
that print advertisements must have MA organization, Part D sponsor, or 
marketing names in 12-point font and may not be solely in the 
disclaimer or fine print. We use the phrase ``fine print'' as it is 
generally defined to mean printed matter in small type or in an 
inconspicuous manner. For television, online, or social media-based 
advertisements, we propose that these names must either be displayed 
during the entire advertisement in the same font size as displayed 
benefits and phone numbers, or be read within the advertisement at the 
same pace as advertised benefits or phone numbers. For radio or other 
advertisements that are voice-based only, we propose that these names 
must be read at the same speed as the phone number. To implement these 
new requirements, we are proposing new paragraphs (b)(9)(A), (B), and 
(C), respectively.
    We are proposing to add a new (10) to Sec. Sec.  422.2263(b) and 
423.2263(b) to address the marketing of ``savings'' for beneficiaries. 
As part of our marketing surveillance and reviews, CMS has seen 
advertisements touting that a beneficiary can save $9,000 or more on 
their prescription drugs, or over $7,000 in health care expenses if 
they join a particular MA plan or Part D plan. In the example referring 
to savings for prescription drugs, this advertisement included a small 
disclaimer stating that the ``savings'' figure is based on the usual 
and customary price someone without prescription drug insurance would 
pay. In other examples, MA organizations, Part D sponsors, or TPMOs are 
marketing dual eligible Special Needs Plans (D-SNPs) that provide 
``savings'' of over $7,000. In this situation, the ``savings'' 
described in the advertisement refers to the Part B Medicare premium 
and copay amounts that are covered by Medicaid for fully dual-eligible 
beneficiaries or are the costs saved through the Prescription Drug 
savings program, which is based on income. However, with both of these 
examples, most beneficiaries are not saving the advertised amount of 
money because they would never have incurred many of those out-of-
pocket expenses. Specifically, a beneficiary that already has 
prescription drug coverage (such as a current Part D plan or other 
creditable prescription coverage from before the individual became 
eligible for Medicare) would not save $9,000 in out-of-pocket costs by 
switching to the advertised plan because they already had coverage for 
their drugs through a different plan. This advertised ``savings'' is 
only applicable if the beneficiary currently had no drug coverage, 
meaning they had to pay for all of their drugs out of pocket. Likewise, 
the above example of advertisements marketing D-SNPs, the 
advertisements generally have very small, fine print that says the 
individual may need to be income eligible or Medicare and Medicaid 
eligible in order to receive the advertised savings. However, since 
dual eligible beneficiaries already have Medicaid coverage or are 
already in a dual plan they are not saving the full $7,000 because they 
never paid the full $7,000 in their old or existing plan. Further, if 
the beneficiary is eligible to have Medicaid pay certain costs on the 
beneficiary's behalf (such as payment of Part B premiums) or is 
protected from paying cost sharing by Sec.  422.504(g)(1)(iii), the 
advertised savings are not unique to the advertised plan in any way.
    We believe that these commercials and other types of advertising 
(for example, direct mailers) are techniques that TPMOs, MA 
organizations, and Part D sponsors use to entice a beneficiary into 
calling a 1-800 number for plan X, mistakenly believing that she or he 
will save thousands of dollars by switching plans, as identified in the 
examples above. To address our concerns about beneficiaries being 
misled, we propose to add a new paragraph (b)(10) at Sec. Sec.  
422.2263 and 423.2263 to prohibit MA organizations and Part D sponsors 
from including information about savings available to potential 
enrollees that are based on a comparison of typical expenses borne by 
uninsured individuals, unpaid costs of dually eligible beneficiaries, 
or other unrealized costs of a Medicare beneficiary.
    Next, we propose adding a new paragraph (A) to Sec. Sec.  
422.2264(a)(2)(i) and 423.2264(a)(2)(i) to add to the current 
prohibition of door-to-door solicitation. Business Reply Cards (BRC) 
and other types of documents where the beneficiary requests additional 
information are intended to allow the agent to reach out to the 
beneficiary via telephone, email, or direct mail. One particular agent 
asked CMS if the BRC gives them the legal right to visit a 
beneficiary's home unannounced. We do not believe a beneficiary filling 
out a BRC necessarily indicates a beneficiary's intention give 
permission for an agent to show up unannounced, at their home, 
requesting to market MA or Part D plans to that beneficiary. CMS 
considers this activity to be door-to-door solicitation. Therefore, we 
propose adding a new (A) to Sec. Sec.  422.2264(a)(2)(i)

[[Page 79529]]

and 423.2264(a)(2)(i) which provides that contacting a beneficiary at 
his or her home is considered to be door-to-door solicitation unless an 
appointment at the beneficiary's home at the applicable date and time 
was previously scheduled.
    Currently, regulations at Sec. Sec.  422.2264(b) and 423.2264(b) 
permit MA organizations and Part D sponsors to contact existing 
members, and to a limited extent, former members, as plan business. In 
Sec. Sec.  422.2264(b) and 423.2264(b) we define plan business 
activities to include calling current members to discuss Medicare 
products. In addition, in Sec. Sec.  422.2264(b)(2) and 423.2264(b)(2), 
we currently require that MA organization and Part D sponsors provide 
beneficiaries an opportunity to opt out of being contacted concerning 
plan business. However, we have interpreted and implemented this 
regulation as requiring MA organizations and Part D sponsors to present 
the opt-out opportunity one time, regardless of how many subsequent 
contacts an enrollee receives. We are proposing, in Sec. Sec.  
422.2264(b)(2) and 423.2264(b)(2), a change that would require each MA 
organization and Part D sponsor to provide the opt-out information to 
all its enrollees, regardless of plan intention to contact, at least 
annually in writing, instead of just one time. Over time, beneficiaries 
may realize that having plans contact them regarding marketing is not 
necessary. Beneficiaries, by only receiving the opt-out option once 
under current regulations, may fail to realize that they have the 
option to opt out at any time. By requiring a written annual 
notification from plans, our proposed new requirement will ensure 
beneficiaries are reminded that they may decide at any time to opt out 
of being contacted by their MA organization/Part D Sponsor about plan 
business.
    Therefore, we are proposing MA organizations/Part D Sponsors 
provide beneficiaries with additional notice, in an annual written 
communication, about their ability to opt out of being contacted about 
plan business. We are deferring to plans on how best to communicate 
this, as we believe that they are in the best position to develop 
appropriate language based on the plan business they conduct. In 
addition, we are not proposing the specific written format that plans 
must utilize when communicating this information during the year, nor 
specifying when the plan must provide this information during each 
contract year. MA organizations/Part D sponsors may provide this opt-
out notification as a single letter, in a welcome packet, or another 
method of written communication. The enrollee's decision to opt out of 
contacts for purposes of plan business will remain in effect until an 
enrollee chooses to opt in. We solicit comment on whether CMS should 
expand the existing and proposed notice requirements in some fashion as 
a way to ensure that Medicare beneficiaries are not marketed MA/Part D 
plans in a way that is similar enough to cold calling that it should be 
prohibited.
    Our regulations at Sec. Sec.  422.2264(c) and 423.2264(c) regulate 
what is permitted at sales and educational events as well as conduct 
that is prohibited at these events. Currently, MA organizations and 
Part D sponsors, including agents and brokers, may not market specific 
MA/Part D plans or benefits at educational events. However, CMS 
currently permits MA organizations and Part D sponsors participating in 
educational events to set up future personal marketing appointments and 
to collect beneficiary contact information including Scope of 
Appointment forms (SOAs) at educational events. Our regulations also 
permit marketing events to immediately follow an educational event, 
provided the beneficiary is made aware of the change and is given an 
opportunity to leave prior to the beginning of the marketing event.
    In 2018, prior to the implementation of Sec. Sec.  422.2264(c) and 
423.2264(c), the MCMG prohibited many of these activities, such as 
holding marketing events following an educational event, distributing 
SOA cards, and setting up future individual marketing appointments. 
Since the January 2021 final rule, CMS' review of marketing to 
beneficiaries has expanded. We have reviewed complaints about confusing 
and misleading marketing tactics received through 1-800-MEDICARE and 
have heard from industry groups concerned about the changes in our 
policy regarding educational events. Since the 2021 final rule, 
complaints to CMS have increased alleging unsolicited contact. We 
believe that some of these complaints may be attributed to the 
collection (and later use) of contact information or SOA cards at 
educational events.
    We are proposing, in Sec. Sec.  422.2264(c) and 423.2264(c), to 
reinstate the prohibition on accepting SOA cards or the collection of 
beneficiary contact information at educational events. Section 
1851(j)(1) of the Act prohibits sales and marketing to take place at 
educational events. Such events are meant to provide information on how 
Medicare works including the options of Original Medicare, Medigap 
plans, Part C, and Part D. These events are aimed at informing 
beneficiaries on what Medicare covers and the different options a 
beneficiary has when they are Medicare-eligible or are looking at the 
options they have to switch the way they receive their Medicare 
benefits. In other words, these events are meant to provide generic 
information about the different options, rather than to persuade 
beneficiaries to enroll in any type of plan (for example, MA-PD or 
Medigap) or in a plan offered by any specific sponsoring organization.
    Although the collection of beneficiary information through SOAs or 
BRCs was previously permitted, we now believe that collection of 
contact information at educational events should not be permitted. As 
mentioned in our May 2022 final rule, the number of marketing 
complaints has increased significantly over the past few years. 
Specifically, a significant portion of these complaints involve 
unsolicited contact. A likely contributor to these contacts is a 
beneficiary not realizing the contact form provides permission to be 
called by an agent at some time in the future. CMS has also heard from 
beneficiary groups requesting that CMS reinstitute the beneficiary 
protections from the MCMG that were not included in the January 2021 
final rule regarding educational events.
    The beneficiary attends an educational event to learn about 
Medicare, unlike a sales event where a beneficiary has decided that 
they want to look further into a plan to enroll. Collecting contact 
information at educational events potentially unduly pressures a 
beneficiary into providing their personal information. Agents passing 
out SOA cards, possibly watching beneficiaries fill them out, and then 
collecting these cards can put a beneficiary in an uncomfortable 
position of having to decide whether they want to oblige or draw 
attention by declining. This especially may be the case if the 
beneficiary feels like they should provide this information in exchange 
for attending the educational event, which could include the provision 
of a meal and helpful question and answer opportunities in addition to 
general information. We believe the beneficiary needs to be in charge 
of and control whether they want to be contacted, by whom, and in what 
form. Therefore, to ensure such decisions remain with the beneficiary, 
we propose to amending the regulations that list the activities that 
are permissible to include in educational events (Sec. Sec.  
422.2264(c)(1)(ii) and 423.2264(c)(1)(ii)) by removing the paragraphs 
that authorizes obtaining

[[Page 79530]]

beneficiary contact information, including Scope of Appointment forms.
    The current regulations at Sec. Sec.  422.2264(c)(1)(ii)(C) and 
423.2264(c)(1)(ii)(C) also permit agents to set up future personal 
marketing appointments at educational events. Similar to SOAs and 
contact information, we believe that beneficiaries should be in charge 
of with whom they speak, when they meet with an agent, and what 
products they want to discuss with that agent. In the case of 
educational events, the beneficiary generally attends the event to 
learn about Medicare, not to facilitate a sales meeting where the 
beneficiary is urged to enroll in a plan. Once an agent speaks with a 
beneficiary at an educational event, the beneficiary may feel pressured 
into setting up a marketing appointment. The ``on the spot'' request at 
an educational event does not provide the beneficiary enough time to 
consider whether they want an someone to come to their home and market 
a plan to them for the purpose of enrollment. We believe that an 
educational event should be solely for education; not lead generation 
or future marketing opportunities for agents. Therefore, we also 
propose removing Sec. Sec.  422.2264(c)(1)(ii)(C) and 
423.2264(c)(1)(ii)(C), which currently permit organizations and agents 
to set up future marketing appointments at educational events.
    CMS is also concerned about marketing events directly following an 
educational event. As stated above, educational events are meant to 
provide information on how Medicare works, including the options of 
Original Medicare, Medigap plans, Part C, and Part D, not meant to 
persuade beneficiaries to enroll in a plan. Beneficiaries attending an 
educational event directly followed by a marketing event may feel 
pressured into staying for the marketing event at the conclusion of the 
educational event. For example, an agent may hold an educational event 
providing free meals and desserts, which is directly followed by a 
marketing event. Beneficiaries may feel pressured into staying for the 
marketing event because of the offer of a free meal at the event that 
follows the educational event. Although our current regulations require 
there be an opportunity to leave prior to the sales event, we do not 
regulate how long that needs to be, nor do we prescribe what the agent 
can or cannot say regarding the sales event. Beneficiaries may feel 
obligated to stay for a variety of reasons, including not having enough 
time to gather their belongings or feeling awkward leaving when others 
are staying, adding additional pressure to stay and possibly enroll in 
an MA or Part D plan, especially when they only came to the event to 
learn about Medicare and the options available to them. Furthermore, 
attending a marketing event right after an educational event may raise 
the risk of beneficiaries being confused that the benefits of an MA or 
Part D plan in general are actually unique to the specific plan options 
that are being marketed. For example, a factual and impartial statement 
like, ``It is important to consider your out-of-pocket costs and which 
drugs you take when deciding on your enrollment options'' in the 
educational event could be followed up in the marketing event that uses 
the same phrasing and terms in describing a specific plan's benefits. 
The beneficiary might conflate these issues if the educational and 
marketing meetings are held so close in time.
    When CMS permitted marketing events to immediately follow 
educational events, we were concerned about beneficiaries having to go 
to two separate events at different times, potentially in two different 
places. Over the past few years, there has been a significant increase 
in the use of technology. The COVID-19 pandemic resulted in fewer face-
to-face communications and more technology-based marketing, such as 
Zoom calls and live events on the internet. If a beneficiary attends an 
educational event and wants further information about a specific MA or 
Part D product, the beneficiary can go to a marketing event or ask for 
a one-on-one appointment either in person or through communications 
technology. Although there are still many beneficiaries that may not 
have significant knowledge about digital technology, we believe the 
number of beneficiaries that understand the technological options will 
increase. The use of technology has provided more options for 
beneficiaries, and with the increase in technology education CMS is 
proposing, the need for sales events to follow educational events 
because of travel considerations will become less important.
    By separating educational events from the marketing events, 
beneficiaries are afforded the time to consider all their questions and 
options. The beneficiary can reach out to the agent if and when they 
want to hear more about the particular plan the agent is selling. CMS 
believes this proposal to separate marketing from educational events 
will alleviate the pressure a beneficiary may feel to stay for a 
marketing event and will protect beneficiaries from undue pressures to 
enroll in a plan for which they may not be interested or a plan that 
does not best meet their health care needs. Based on this, we are 
proposing to prohibit marketing events from taking place within 12 
hours of the educational event in the same location. We are proposing 
changes to Sec. Sec.  422.2264(c)(2)(i) and 423.2264(c)(2)(i) to read, 
``Marketing events are prohibited from taking place within 12 (twelve) 
hours of an educational event, in the same location. The same location 
is defined as the entire building or adjacent buildings.'' We believe a 
12-hour window is important to ensure beneficiaries are not pressured 
into attending a sales event. This will usually give beneficiaries 
until the next calendar day, providing sufficient time to think about 
the impartial and factual information provided at the educational 
event. We are concerned that a short window, such as 10-15 minutes, 
will not provide beneficiaries with enough time to finish 
conversations, pack their belongings, and leave the facility prior to 
the sales event starting. If a beneficiary is unable to leave during 
the break, we are concerned that the beneficiary may be ``guided'' to 
the sales event or pressured into attending by being told the event 
won't last long or that there will be no pressure to join, or will be 
made to feel obligated to go to the sales event. CMS believes the best 
way to protect beneficiaries by being pressured into attendance would 
be for the sales event to be at a different time, with a sufficient 
amount of time between the two events. We also believe it is necessary 
to limit this new requirement to when the sales event is in the same 
location as the educational event. This ensures that an agent or broker 
can hold a sales event the same day as an educational event, provided 
the sales event is in a different location. If an agent wishes to have 
a sales event three miles from an educational event, we do not want to 
limit the ability of the agent or broker to do so. Therefore, we are 
proposing to revise paragraph (c)(2)(1)(1) of Sec. Sec.  422.2264 and 
423.2264 to prohibit marketing events from taking place within 12 hours 
of an educational event, at the same location.
    Sections 1851(j)(2)(A) and 1860D-4(l)(2) of the Act require an 
advance agreement with a prospective enrollee on the scope of the 
marketing appointment, which must be documented. Our regulations at 
Sec. Sec.  422.2264(c)(3)(i) and 423.2264(c)(3)(i) reiterate this 
requirement, designating this requirement as a Scope of Appointment. 
Both the statute and the regulations require an advance agreement 
between the beneficiary and the agent. Previously, we interpreted

[[Page 79531]]

this standard of agreement in advance in our MCMG guidance as meaning 
as 48 hours prior the appointment when practicable. We propose 
codifying our previous marketing (MCMG) guidance by prohibiting 
personal marketing appointments from taking place until after 48 hours 
have passed since the time the SOA was completed by the beneficiary. 
However, we are not proposing to include ``when practicable'' in the 
proposed regulation. We believe ``when practicable'' nullifies the 
purpose of the 48 hour timeframe, given the many reasons that might be 
cited for why waiting the full 48 hours is not ``practicable,'' such as 
the beneficiary living an hour away, the beneficiary wanting to discuss 
the products immediately following the signing of the SOA, the 
beneficiary may feel pressured by the agent to discuss the product 
immediately, or the beneficiary needs to arrange to have the person 
that helps them with health care decisions available at the meeting. 
The reasons for why a meeting must occur within the 48 hour timeframe 
are numerous and subjective, meaning what is practicable for one person 
may not be practicable for another, thus we are concerned about our 
ability to enforce the regulation if we include ``when practicable'' in 
requiring advance agreement at least 48 hours before the meeting. In 
addition, given today's technology and the fact that we permit SOAs to 
be completed via telephone, electronically, or in paper form, obtaining 
a SOA 48 hours prior to the appointment should not present a 
significant burden for either beneficiaries or the plan representatives 
and agents that engage in these meetings. Therefore, we are proposing 
to add ``At least 48 hours'' before the word ``Prior'' to Sec. Sec.  
422.2264(c)(3)(i) and 423.2264(c)(3)(i) to read, ``At least 48 hours 
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).''
    Regulations at Sec. Sec.  422.2264(c)(3)(iii) and 
423.2264(c)(3)(iii) prohibit an MA organization/Part D sponsor, 
including their agents and brokers and other first tier and downstream 
entities, from marketing a health care product during a personal 
marketing appointment beyond the scope agreed upon by the beneficiary. 
Sections Sec. Sec.  422.2274(g)(1) and 423.2274(g)(1) require that MA 
organizations/Part D sponsors ensure TPMOs acting on their behalf 
adhere to any requirements that apply to the plan itself. Therefore, 
the requirement for noting the scope of a personal marketing 
appointment (that is, the SOA) is applicable to TPMOs. Currently, CMS 
requires permission to be granted and completed, concerning the 
products that will be discussed, prior to the marketing discussion. The 
existing regulations do not stipulate a timeframe in which the 
beneficiary may be contacted after an SOA is completed or an expiration 
date after which the SOA is invalid.
    CMS also is aware that MA organizations, Part D sponsors and TPMOs 
encourage beneficiaries to fill out business reply cards (BRC) or 
similar mechanisms so the MA organization/Part D sponsor or TPMO has 
permission to contact the beneficiary at a later date. BRCs are 
different from SOAs in that the SOA must have the products to be 
discussed on the document, while many times the BRC is simply obtaining 
contact information (that is, name, phone number, address, email). 
While SOAs are required, BRCs are not required. However, we have the 
same concerns with BRCs as we do with SOAs, BRCs often are open-ended, 
allowing an MA organization, Part D sponsor or TPMO to contact a 
beneficiary at any point in the future. For example, a beneficiary 
could fill out a BRC in October of 1 year and be contacted by the MA 
organization/Part D sponsor or TPMO 24 months later, well beyond the 
timeframe that the beneficiary would reasonably expect to be contacted 
about their plan choices and decision-making when they filled out the 
card.
    CMS is proposing to modify the current regulations at Sec. Sec.  
422.2264(c)(3)(iii)(A), 422.2264(c)(3)(iii)(B), 423.2264(c)(3)(iii)(A) 
and 423.2264(c)(3)(iii)(B) to limit the validity of the SOAs and BRCs 
in Sec. Sec.  422.2264(c)(3)(iii)(A) and 423.2264(c)(3)(iii)(A), and 
the SOAs in Sec. Sec.  422.2264(c)(3)(iii)(B) and 
423.2264(c)(3)(iii)(B), to six months from the beneficiary's signature 
date or the beneficiary's request for more information. BRCs and 
requests for additional information are not applicable to paragraph (B) 
because CMS does not have the authority to regulate how long a BRC is 
valid for non-MA/Part D products. A beneficiary's permission to allow 
contact by an MA organization/Part D sponsor or a TPMO is not, and 
should not be, open-ended. Beneficiaries who request information 
regarding MA organizations/Part D sponsors are requesting information 
at that present time. Since the purpose of the SOA or BRC is for 
beneficiaries to discuss plan products applicable for the present or 
following contract year, having the SOA or BRC expire after 6 months 
satisfies that purpose, and would prevent agents from using it in 
perpetuity and thus avoiding the statutory and regulatory prohibitions 
on unsolicited contact and cold calling. If a beneficiary wants the 
agent tied to the SOA or BRC to continue contacting them beyond 6 
months, the agent may secure and document that permission through a new 
SOA, BRC, or similar mechanism.
    In accordance with Sec.  422.2265(b)(4), MA organizations are 
required to have a searchable provider directory on their website. The 
current regulations do not identify the elements by which the provider 
directory can be searched, leaving that up to each organization. We are 
proposing to modify Sec.  422.2265(b)(4) by requiring the 
organization's provider directory be searchable by every element, such 
as name, location, and specialty, required in CMS' model provider 
directory. We believe this proposal is necessary to assist 
beneficiaries in finding particular providers. For example, if an 
organization only provides a beneficiary with the ability to search by 
location, the beneficiary would have significant difficulties finding a 
particular specialty or a particular provider. In section III.A.3. of 
this proposed rule, we are proposing to add two new requirements to 
Sec.  422.111(b)(3)(i) that organizations must include providers' 
cultural and linguistic capabilities and identify certain providers 
waived to treat patients with MOUD in their provider directories. As 
adopted and with our proposed revisions, Sec.  422.111(b)(3)(i) 
requires organizations to include these two new elements in their 
provider directories, therefore, our proposed modification to Sec.  
422.2265(b)(4) would require the organization's provider directory be 
searchable by these two new elements. By requiring website provider 
directories be searchable by every element, our proposal would ensure 
that a beneficiary would be able to locate specific provider 
specialties, as well as providers by names, addresses, or other 
elements the organization has listed in the online provider directory. 
Therefore, we propose to modify Sec.  422.2265(b)(4) to require the 
directory be searchable by every element.
    CMS is also proposing to modify the pre-enrollment checklist (PECL) 
requirements at Sec. Sec.  422.2267(e)(4) and 423.2267(e)(4). First, we 
are proposing to add new paragraphs at Sec. Sec.  422.2267(e)(4)(viii) 
and 423.2267(e)(4)(viii), to add ``Effect on current coverage'' to the 
list of references currently provided within Sec. Sec.  
422.2267(e)(4)(i)-(vii) and 423.2267(e)(4)(i)-(vii). Second, we are

[[Page 79532]]

proposing to update Sec. Sec.  422.2267(e)(4) and 423.2267(e)(4) to 
require that plans review the PECL with the prospective enrollee during 
telephonic enrollments.
    The PECL contains important information prospective enrollees need 
to know prior to enrolling in an MA or Part D plan. It ensures 
beneficiaries understand important documents and what information is in 
such documents, such as the Evidence of Coverage, which provides all 
costs, benefits, and plan coverage. The PECL also includes information 
designed to help beneficiaries, such as a reminder to make sure their 
doctors, pharmacies, and prescriptions are either in the plan's network 
or covered in their formulary. Finally, the existing PECL reminds 
beneficiaries of certain plan rules, formularies, and out-of-network 
services are not covered except for emergency and urgently needed care, 
and that benefits and costs may change on January 1 of each year.
    In Sec. Sec.  422.2267(e)(4)(viii) and 423.2267(e)(4)(viii), we 
propose to add ``Effect on current coverage'' to the list of 
information that must be referenced as part of the PECL. Over the past 
2 years, CMS has been doing an in-depth review of 1-800-MEDICARE 
complaints. Our reviews revealed numerous beneficiary complaints that 
they were not aware their current coverage, such as an existing MA 
plan, a Medigap plan, or their Tri-care plan would end once they 
enrolled in an MA plan. Thus, CMS is proposing to add effect on current 
coverage to the list of information that plans must provide to 
prospective enrollees in the PECL, as we believe it will provide 
additional education to beneficiaries on the implications of choosing 
an MA or Part D plan and ensure beneficiaries are fully aware that this 
selection will cause their existing coverage to end.
    In Sec. Sec.  422.2267(e)(4) and 423.2267(e)(4), we are also 
proposing that the PECL be reviewed with the prospective enrollee 
during telephonic enrollments as well as provided when hard-copy 
enrollment forms are provided. As previously mentioned, the PECL 
provides information necessary for beneficiaries to understand the 
details of the plan for which they are enrolling. Although the PECL 
must be provided with an enrollment form, CMS' review of telephonic 
enrollments revealed that the neither the PECL nor its substance was 
being conveyed to beneficiaries during the enrollment process. 
Specifically, complaints received by 1-800-MEDICARE included 
beneficiaries who called 1-800-MEDICARE to inform the Agency via the 
toll-free line that agents failed to inform the beneficiary that their 
doctors were not in the MA plan's network, were inaccurately told that 
there would be no costs, or were inappropriately told that their 
existing coverage would not be affected by enrolling into a new MA or 
Part D plan. During CMS' review of the telephonic enrollment audio 
recordings between beneficiaries and agents, it was clear that some 
beneficiaries were confused that their current coverage would be 
ending. It also was clear that some were misled by the agent and were 
told that their existing benefits would not change, and others were 
never informed by the agent that enrollment into an MA or Part D plan 
would cancel the beneficiary's current coverage. There also were cases 
where the agent failed to go over the beneficiary's current providers 
or Part D drugs. In addition, few, if any, calls with agents included 
explanations that all of the benefits and cost sharing for the plan 
could be found in the plan's Evidence of Coverage.
    By requiring the PECL to be reviewed with prospective enrollees as 
part of telephonic enrollments, we hope to ensure that beneficiaries 
are better informed about the details surrounding the plan for which 
they are enrolling. Under this proposal, MA organizations and Part D 
sponsors would decide whether they require their contracted agents and 
brokers to read the PECL in its entirety or to require that each item 
contained on the PECL be discussed. It is CMS' expectation that the 
agent ensures the beneficiary understands the items in the PECL. Agents 
may do this by receiving an affirmative answer to whether the 
prospective enrollee understands the information provided, as well as 
asking the prospective enrollee if she or he has any questions. CMS 
believes that an actual review of the PECL elements with prospective 
enrollees will decrease inaccurate information and misunderstandings, 
resulting in fewer 1-800-MEDICARE complaints and higher beneficiary 
satisfaction.
    Therefore, CMS is proposing to add the reference to ``Effect on 
current coverage'' to Sec. Sec.  422.2267(e)(4)(viii) and 
423.2267(e)(4)(viii) and requiring, in Sec. Sec.  422.2267(e)(4) and 
423.2267(e)(4), that the PECL be reviewed with the prospective enrollee 
during telephonic enrollments.
    CMS also is proposing a change to Sec.  422.2267(e)(5)(ii)(A) to 
require Summary of Benefits medical benefits be listed in the top half 
of the first page and in the order currently listed in Sec. Sec.  
422.2267(e)(5)(ii)(A)(1) through 422.2267(e)(5)(ii)(A)(10). Currently, 
Sec.  422.2267(c)(2) states that model materials, like the Summary of 
Benefits, must follow CMS' order of content when specified. This 
existing regulation permits CMS to specify the order of content 
presented in MA required model materials. CMS has already specified the 
order of information on medical benefits in the Summary of Benefits 
instructions, mirroring the regulatory list of medical benefits 
provided at Sec.  422.2267(e)(5)(ii)(A)(1) through (10). By requiring 
all plans to list certain benefits in the same location and in a 
specified order, beneficiaries will be able to more easily compare 
benefits across different plans and in a more standardized way. The 
ability for beneficiaries to review and compare benefits across 
different MA Plans will assist beneficiaries in making a more informed 
health care choice.
    We are also proposing a change to 42 CFR 422.2267(e)(10) and 
423.2267(e)(13), which provides that the non-renewal notice is a model 
communications material through which plans must provide the 
information required under Sec. Sec.  422.506 and 423.507, 
respectively. Per Sec. Sec.  422.2267(c) and 423.2267(c), model 
materials and content are those required materials and content created 
by CMS as an example of how to convey beneficiary information. 
Modifications to model materials, including the non-renewal notice, can 
be made at the MA organization's/Part D sponsor's discretion within 
certain limits outlined in Sec. Sec.  422.2267(c) and 423.2267(c). Our 
current non-renewal document and accompanying instructions do not 
permit plan changes, except where noted, to the non-renewal notice. To 
ensure accuracy and consistency, we are proposing to update Sec. Sec.  
422.2267(e)(10) and 423.2267(e)(13) to specify that the non-renewal 
notice is a ``standardized communications material'' so that it is 
clear these materials must be used without modifications except where 
noted. This is necessary to ensure that the vital information contained 
in the non-renewal notice about a beneficiary's alternative healthcare 
options and the timing for the plan to make a selection are conveyed in 
a way that CMS has determined is accurate and understandable. 
Beneficiaries receiving the non-renewal notice are provided a Special 
Enrollment Period (SEP) (as per Sec.  422.62(b)(1)) with deadlines to 
make new health care decisions. This notice provides beneficiaries with 
this information, as well as other plans available to them. As a model 
notice, MA organizations/Part D sponsors would be able to place this 
vital information anywhere in the document,

[[Page 79533]]

potentially highlighting their other plan options, instead of providing 
equal prominence to all health care choices. Our proposal would 
eliminate that possibility.
    In the May 2022 final rule, CMS implemented a Third Party Marketing 
Organization (TPMO) disclaimer at Sec. Sec.  422.2267(e)(41) and 
423.2267(e)(41). The required disclaimer states, ``We do not offer 
every plan available in your area. Any information we provide is 
limited to those plans we do offer in your area. Please contact 
Medicare.gov or 1-800-MEDICARE to get information on all of your 
options.'' We currently require TPMOs that represent more than one MA 
or Part D plan in a given service area, but do not represent all plans, 
to verbally convey the disclaimer within the first minute of a sales 
call, electronically convey the disclaimer when communicating with a 
beneficiary via email or online chat, or prominently display the 
disclaimer on their website, and to include the disclaimer on all 
marketing materials. We are proposing to modify this disclaimer to add 
State Health Insurance Programs (SHIPs) as a source of information for 
beneficiaries. We are also proposing that an additional disclaimer 
requirement, which would require all TPMOs to list names of the MA 
organizations or Part D sponsors with which they contract in the 
applicable service area.
    Although TPMOs may contract with one or more MA organizations and 
Part D sponsors, they do not necessarily contract with all available 
options in a service area. When a beneficiary contacts a TPMO that does 
not contact with all MA organizations or Part D sponsors in a 
particular service area, the beneficiary may not know that the TPMO 
does not sell or represent all of the available options. To ensure 
beneficiaries in this situation are aware that other options exist, the 
disclaimers at Sec. Sec.  422.2267(e)(41) and 423.2267(e)(41) require 
TPMOs to notify the beneficiary that a complete list of plans could be 
obtained from 1-800-MEDICARE or Medicare.gov. We are proposing to 
modify Sec. Sec.  422.2267(e)(41) and 423.2267(e)(41) to provide that 
TPMOs in this situation also notify beneficiaries that they may contact 
their local SHIP for more information. SHIPs are another resource that 
beneficiaries can contact to obtain unbiased information on all 
available health and drug plan options. We believe adding SHIPs to this 
disclaimer provides beneficiaries with important and unbiased 
information regarding other sources of assistance.
    In addition, CMS is proposing that TPMOs disclose the names of the 
MA organizations or Part D sponsors with which they contract. This 
ensures that beneficiaries are aware of all of their choices when 
communicating a TPMO. In CMS's review of hundreds of sales, marketing, 
and enrollment audio calls, CMS found over 80% of the calls only 
mentioned one plan option from one MA organization. The audio reviews 
CMS conducted also showed that agents rarely, if ever, informed the 
beneficiary that there were multiple plans available in the service 
area. Although the agent may have researched other plans on behalf of 
the beneficiary the agent was assisting, information about those plan 
options was rarely communicated to the beneficiary, and thus the 
beneficiary may not have known about their other options to make an 
informed decision about the plan that best meets the beneficiary's 
needs.
    CMS is proposing to revise the existing TPMO disclaimer at 
Sec. Sec.  422.2267(e)(41) and 423.2267(e)(41) to require TPMOs that do 
not contract with every available MA organization or Part D sponsor in 
a service area to include a list the MA organizations or Part D 
sponsors with which they do contract in the beneficiary's service area. 
In addition, because the existing TPMO disclaimer at Sec. Sec.  
422.2267(e)(41) and 423.2267(e)(41) does not apply to TPMOs that 
contract with every MA organization or Part D sponsor in a given 
service area, CMS is also proposing to revise Sec. Sec.  
422.2267(e)(41) and 423.2267(e)(41) to include a new disclaimer for 
TPMOs that do contract with every MA organization or Part D sponsor in 
the service area. This new disclaimer would need to be provided within 
the first minute of the call, as required for TPMOs that do not 
contract with MA organization or Part D sponsor in a service area. As 
with the existing TPMO disclaimer, this new disclaimer would need to be 
electronically conveyed when communicating with a beneficiary through 
email, online chat, or other electronic means, prominently displayed on 
the TPMO's website, and included in any TPMO marketing materials, 
including print materials and television advertising.
    Therefore, we propose modifying Sec. Sec.  422.2267(e)(41) and 
423.2267(e)(41), to require two disclaimers. The first disclaimer, 
which applies to TPMOs that do not sell for all MA organizations or 
Part D sponsors in a service area, would read, ``We do not offer every 
plan available in your area. Any information we provide is limited to 
those plans we do offer in your area which are [insert list of MA 
organizations or Part D sponsors]. Please contact Medicare.gov, 1-800-
MEDICARE, or your local State Health Insurance Program to get 
information on all of your options.'' The second disclaimer, for those 
TPMOs that sell for all MA organizations or Part D sponsors in a 
service area, would read, ``We offer the following plans in your area 
[insert list of MA organizations or Part D sponsors]. You can always 
contact Medicare.gov, 1-800-MEDICARE, or your local State Health 
Insurance Program for help with plan choices.''
    We are proposing a technical change to Sec.  423.2267(e) to add new 
paragraphs (e)(43) and (e)(44), to include the comprehensive medication 
review (CMR) written summary which, in accordance with Sec.  
423.153(d)(1)(vii)(B), Part D sponsors must provide to all MTM program 
enrollees who receive a CMR, as well as the safe disposal information 
that, in accordance with Sec.  423.153(d)(1)(vii)(E), Part D sponsors 
must provide to all plan enrollees targeted for MTM. As noted in the 
January 2021 final rule (86 FR 5984), we intended Sec.  423.2267(e) to 
be a complete list of all required materials and content. The CMR 
written summary and safe disposal information are materials that Part D 
sponsors are already required to provide under existing regulations at 
42 CFR 423.153(d)(1)(vii)(B) and (E), and were inadvertently omitted 
from this section during the previous rulemaking. Because MA-PDs must 
comply with Part D regulations per Sec.  422.500, this proposal 
regarding the MTM and safe disposal instructions will also apply to MA-
PDs.
    Based on our review of complaints and audio calls, we are concerned 
about the level of oversight that MA organizations and Part D sponsors 
provide over their contracted agents and brokers. In our review of 
complaints and discussions with MA organizations and Part D sponsors, 
MA organizations and Part D sponsors appear to be reactive instead of 
proactive in addressing inappropriate agent and broker behavior. CMS 
has received complaints through 1-800-MEDICARE as well as other CMS 
staff. Once a complaint is received, the complaint is provided to the 
applicable MA organization or Part D sponsor to review, investigate, 
and take appropriate action. However, this method of oversight is more 
reactive, and requires organizations and sponsors to respond to issues 
that CMS has already been made aware. As a result, we are concerned 
that inappropriate behavior by agents and brokers is not being 
sufficiently addressed and corrected by MA organizations and Part D 
sponsors. In Sec. Sec.  422.2272 and 423.2272, we propose requiring

[[Page 79534]]

sponsoring organizations have an agent and broker monitoring and 
oversight plan that ensures agents and brokers are adhering to CMS 
requirements and that the MA organization or Part D sponsor is actively 
monitoring and reporting agents and brokers to CMS who are not 
compliant with CMS requirements.
    We believe a thorough oversight and monitoring plan will assist in 
identifying and stopping poor performing agents and brokers more 
quickly, whether they are independent, captive, or employed agents or 
brokers. To that end, CMS requires MA organizations and Part D sponsors 
to oversee the agent and brokers with which they contract (Sec. Sec.  
422.2274(c) and 423.2274(c)). A proper oversight program includes the 
review of internal grievances, 1-800-MEDICARE complaints, random 
samplings of past audio calls, listening to sales/marketing/enrollment 
calls in real-time, secretly shopping in-person education and sales 
events, and secretly shopping web-based education and sales events. 
These types of activities will improve the overall marketing and sales 
activities of plans. MA organizations and Part D sponsors should be 
able to identify areas where agents and brokers have not been 
adequately trained, agents and brokers who may not fully understand the 
product offerings, and agents and brokers who improperly market to 
beneficiaries. MA organizations and Part D sponsors can then quickly 
act, such as tailored training or disciplinary measures, based on the 
specific issues for each agent or broker. Once an MA organization or 
Part D sponsor identifies the non-compliance, the MA organization or 
Part D sponsor would then be required to report that agent or broker 
non-compliance to CMS. This will assist plans and sponsors in gauging 
the scope of marketing issues, and help plans and sponsors in 
developing methods to stop inappropriate agent and broker activity. 
Therefore, we are proposing to add a new (e) to Sec. Sec.  422.2272 and 
423.2272 to read, ``Establish and implement an oversight plan that 
monitors agent and broker activities, identifies non-compliance with 
CMS requirements, and reports non-compliance to CMS.''
    Section 1856(b) of the Act provides CMS the authority to publish 
regulations creating standards for organizations to carry out the MA 
program. CMS is proposing to adopt, at a new paragraph (c)(12) of 
Sec. Sec.  422.2274 and 423.2274, additional standards for agents and 
brokers in their marketing of MA and Part D plans to beneficiaries to 
require that sponsoring organizations ensure that agents and brokers 
discuss specific topics and information with beneficiaries prior to 
enrollment. We believe that adopting these standards is consistent with 
and achieves a similar goal as the statutory requirement in section 
1851(j)(2)(D) of the Act that compensation to agents and brokers create 
incentives for agents and brokers to enroll beneficiaries in the plan 
that best meets their health care needs. For an agent or broker to 
ensure the beneficiary is in a plan that best meets their needs, the 
agent or broker needs to obtain enough information to determine the 
health care needs of the beneficiary. If the agent or broker fails to 
have sufficient information to ensure that he or she is enrolling the 
beneficiary in a plan that best meets the beneficiary's health care 
needs, but is compensated for enrolling the beneficiary in a plan, we 
believe that section 1851(j)(2)(D) of the Act is undermined. CMS is 
concerned that agents and brokers too often fail to adequately 
determine the kind of health plan into which a beneficiary wishes to 
enroll, such as a plan that offers a lower premium and higher copays, 
one that has specific providers in their network, or one that provides 
coverage for a certain durable medical equipment. Therefore, in 
Sec. Sec.  422.2274(c) and 423.2274(c), we are proposing that all 
agents and brokers (employed, captive, and independent agents) go 
through a CMS-developed list of items that must be asked and/or 
discussed during the marketing and sale of an MA plan or Part D plan.
    CMS has listened to hundreds of marketing and enrollment audio 
calls. In the majority of these calls (over 80 percent), agents and 
brokers failed to ask pertinent questions to help a beneficiary enroll 
in a plan that best meets his or her needs. CMS listened to calls where 
the agent or broker only asked about primary care providers and 
prescription drugs. There were also calls that CMS listened to where 
the agent or broker only discussed ``extra benefits'' such as dental 
and vision. During many of the calls CMS reviewed, the agent or broker 
failed to ask important questions, such as whether there was a 
specialist that the beneficiary wished to see (or currently sees) and 
whether that specialist was in the plan's network, whether the 
beneficiary would prefer lower copays and a higher premium or vice 
versa, which hospitals the beneficiary preferred, or whether the 
beneficiary wanted dental and hearing benefits. Some calls were under 
twenty (20) minutes in length. This short time period led CMS to 
question whether an agent or broker could have realistically obtained 
the necessary information from the beneficiary in order to adequately 
determine their needs and wants, review available options, and complete 
the enrollment.
    In order to properly assist a beneficiary in choosing a Medicare 
health and/or drug plan, the agent or broker must have sufficient 
information about the beneficiary's needs and goals. We do not believe 
a beneficiary can be enrolled in a plan that best meets his or her 
needs when, for example, an agent or broker fails to ask the 
beneficiary about their current providers, including specialists and 
preferred hospitals or other facilities. To ensure a beneficiary's 
needs are reviewed, CMS is proposing to add a new (12) to Sec. Sec.  
422.2274(c) and 423.2274(c), requiring an MA organization or Part D 
sponsor ensure that the agent's/broker's sales call goes over each CMS 
required question or topic, including information regarding primary 
care providers and specialists (that is, whether or not the 
beneficiary's current providers are in the plan's network), 
prescription drug coverage and costs (including whether or not the 
beneficiary's current prescriptions are covered), costs of health care 
services, premiums, benefits, and specific health care needs. CMS would 
provide in sub-regulatory guidance more detailed questions and areas to 
be covered based on these general topics.
    If agents and brokers are required to ask beneficiaries certain 
questions, or cover certain topics, prior to beginning the enrollment 
process, we expect that beneficiaries will be more knowledgeable about 
the plans that are available to them, and thus better able to make an 
informed choice. We are not proposing that agents or brokers would be 
required to read standardized questions or statements regarding the 
topics discussed here. Rather, we are proposing that certain required 
topics are addressed, prior to the enrollment, whether it be asking 
questions about the medications the beneficiary takes or covering 
topics such as the premium the beneficiary will be charged for the 
plan. We propose to add a new (12) to Sec. Sec.  422.2274(c) and 
423.2274(c) which will read, ``Ensure, prior to an enrollment, CMS' 
required questions and topics regarding beneficiary needs in a health 
plan choice are fully discussed. Topics include information regarding 
primary care providers and specialists (that is, whether or not the 
beneficiary's current providers are in the plan's network), 
prescription drug coverage and costs (including whether or not the 
beneficiary's current prescriptions are covered), costs of health care 
services, premiums, benefits, and specific health care needs.'' or

[[Page 79535]]

``Ensure, prior to an enrollment CMS' required questions and topics 
regarding beneficiary needs in a health plan choice are fully 
discussed. Topics include information regarding pharmacies (that is, 
whether or not the beneficiary's current pharmacy is in the plan's 
network), prescription drug coverage and costs (including whether or 
not the beneficiary's current prescriptions are covered), premiums, and 
other services (such as over-the-counter medications and other 
incentives).''
    Currently in Sec. Sec.  422.2274(g)(2)(ii) and 423.2274(g)(2)(ii), 
TPMOs must record all calls with beneficiaries. This regulation was put 
into effect to ensure that TPMOs, including agents and brokers, were 
appropriately marketing to beneficiaries. As stated above, CMS's 
experience with reviewing complaints and in listening to recorded calls 
revealed many instances where agents and brokers have failed to provide 
enough information, confused beneficiaries, and, most concerning, 
provided inaccurate information about plan benefits. In other cases, 
these entities led beneficiaries to believe the beneficiaries were 
calling Medicare rather than an insurance agent. This requirement for 
recording all calls with beneficiaries was proposed on January 6, 2022, 
and finalized in the May 2022 final rule; we had received few pertinent 
comments prior to the rule being finalized. However, following this 
rule, CMS has heard from trade organizations, plans, as well as 
individual agents regarding the obligation to record all calls. Many of 
these post-final rule questions and comments centered around whether 
``smaller'' agent companies had to record conversations. Some of the 
comments received after the final rule requested clarification on 
whether all calls really needed to be recorded.
    CMS is not proposing to change the requirement that TPMOs, 
including agents and brokers, regardless of their size, must record 
calls. However, we are proposing to limit calls that must be recorded 
from all calls to only those calls regarding sales, marketing, and 
enrollment. CMS believes the current requirement is too broad because 
under the current requirement calls placed to merely set up an in-
person meeting, make sure the beneficiary received the plan welcome 
packet, or ask non-marketing questions, such as when the plan will be 
effective, must all be recorded. We believe this is an unnecessary 
burden since our goal is to obtain call recordings to ensure the 
marketing, sales, and enrollment activities conducted by agents, 
brokers and TPMOs meet the applicable regulatory requirements. 
Therefore, we are proposing to modify Sec. Sec.  422.2274(g)(2)(ii) and 
423.2274(g)(2)(ii) to limit the calls that must be recorded to the 
complete duration of marketing, sales, and enrollment calls. The 
definition of marketing in Sec. Sec.  422.2260 and 423.2260 will apply 
to new paragraph (g)(2)(ii) and we intend the words ``sales'' and 
``enrollment'' to include the plain meaning of those terms.
    In addition to modifying Sec. Sec.  422.2274(g)(2)(ii) and 
423.2274(g)(2)(ii) to only require marketing, sales, and enrollment 
calls to be recorded, we are also proposing to add language to clarify 
the platform(s) of calls which much be recorded. Since implementing the 
May 2022 final rule, we have received questions asking whether 
technology-based meetings (for example, Zoom meetings) need to be 
recorded. CMS considers meetings taking place on Zoom, Facetime, Skype, 
or other technology-based platforms to be the same as telephonic calls 
with the same concerns as telephonic calls. Technology is changing the 
way people interact and Medicare beneficiaries aging into the program 
are more likely to have experienced newer technologies and may be more 
comfortable using technology. In addition, during the COVID-19 
pandemic, many beneficiaries learned to use different technologies to 
keep in touch with people. Moreover, because of the pandemic, many 
agents and brokers have moved to using these newer technologies, 
holding meetings through web-based technologies.
    Based on the reasons stated above, we propose to modify Sec. Sec.  
422.2274(g)(2)(ii) and 423.2274(g)(2)(ii) to read ``Record all 
marketing, sales, and enrollment calls, including calls occurring via 
web-based technology, in their entirety.''
    Finally, in Sec. Sec.  422.2274(g) and 423,2274(g), we are 
proposing to add a new paragraph (4) to address issues with TPMOs 
distributing beneficiary contact information to multiple entities, in 
any manner, including selling this information. When a beneficiary 
calls a 1-800 number from a direct mail flyer, a television 
advertisement, or an internet advertisement, the beneficiary most 
likely believes they are only calling--and requesting contact with--the 
entity that answers the call. However, some of these entities, in 
quickly read disclaimers or through disclaimers in very small print, 
that actually inform the beneficiary that their information may be sold 
to other entities. The contact information (name, address, phone 
number) obtained by these entities is then sold to one or more field 
marketing organizations and/or agents/brokers. In turn, these other 
entities then call the beneficiary, using the initial incoming call and 
the contact information obtained by the TPMO from that incoming call, 
as a form of permission to reach out and contact the beneficiary.
    When a beneficiary calls a company based on an advertisement, CMS 
asserts that the beneficiary is only expecting to connect with that 
particular company, not to have return calls made to their personal 
home or cell number from other companies. Through environmental 
scanning efforts, however, CMS has learned that the selling and 
reselling of beneficiary contact information is happening as described 
here and that beneficiaries are unaware that by placing the call or 
clicking on the web-link they are unwittingly agreeing for their 
contact information to be collected and sold to other entities and 
providing consent for future marketing activities.
    We do not believe beneficiaries knowingly give their permission to 
receive multiple calls from multiple different entities on the basis of 
a single call made by a beneficiary. We believe beneficiaries intend in 
these scenarios that their information will be received only by one 
entity, that being the plan that will ultimately receive the 
beneficiary's enrollment request. Additionally, providing a quickly-
read disclaimer or providing a disclaimer in very small print or in an 
inconspicuous place when that disclaimer indicates that a beneficiary's 
contact information may be provided or sold to another party, are 
considered misleading marketing tactics because these entities are 
using beneficiary data and contact information in a manner in which the 
beneficiary did not intend. Organizations that require the beneficiary 
to agree to allowing their contact information to be resold prior to 
speaking with a representative or having access to any information are 
another example of this. In these situations, a beneficiary initiates 
contact with one organization and then ends up receiving calls from 
multiple other unrelated entities. In light of the statutory 
prohibition on unsolicited contact (Sec. Sec.  1851(j)(1)(A) and 1860D-
04(l)(1)), and the regulatory interpretation of that prohibition 
(Sec. Sec.  422.2264(a)(3) and 423.2264(a)(3)), this practice goes 
beyond the scope of what we consider permissible. Therefore, we are 
proposing to add a new (4) to Sec. Sec.  422.2274(g) and 423.2274(g) to 
read, ``Personal beneficiary data collected by

[[Page 79536]]

a TPMO may not be distributed to other TPMOs.''
    We solicit comment on these marketing and communications proposals 
and whether the proposed regulatory changes will sufficiently achieve 
the goals we have outlined of protecting beneficiaries.

Q. Changes to an Approved Formulary (Sec. Sec.  423.4, 423.100, 
423.104, 423.120, and 423.128)

1. Overview and Summary
    We propose regulatory changes regarding (1) obtaining approval to 
make changes to a formulary already approved by CMS--including 
extending the scope of immediate substitutions; and (2) providing 
notice of such changes.
    In section III.Q.2.b. of this proposed rule, Approval of Changes to 
Approved Formularies, we propose to codify longstanding sub-regulatory 
guidance and terminology (such as classification of changes as either 
maintenance or non-maintenance) that specify when and how Part D 
sponsors obtain approval to make negative formulary changes and the 
enrollees to whom these changes would apply. Section III.Q.2.b.(3). of 
this proposed rule includes our proposal to permit Part D sponsors that 
meet certain requirements to immediately substitute a new 
interchangeable biological product for its corresponding reference 
product; a new unbranded biological product for its corresponding brand 
name biological product; or a new authorized generic for its 
corresponding brand name equivalent. Section III.Q.2.b.(3). of this 
proposed rule also includes a proposal for a third category of negative 
formulary changes defined as immediate negative formulary changes.
    Currently, we exempt Part D sponsors that make immediate generic 
substitutions under the regulation from providing transition supplies; 
we now propose in section III.Q.2.b.(3). of this proposed rule to 
exempt Part D sponsors making any immediate negative formulary changes 
(that is, all types of immediate substitutions and also market 
withdrawals) from providing transition supplies. We also propose to 
conform our regulations to provide that the same timing rules would 
apply for all immediate negative formulary changes, that is they all 
could take place at any time.
    Section III.Q.3. of this proposed rule proposes to align our 
regulatory requirements for appropriate advance notice of formulary 
changes to guidance and longstanding operations, including streamlining 
certain requirements.
2. Approval of Changes to Approved Formularies
a. Background: Statutes, Regulations, and Longstanding Operational 
Implementation of Changes to Approved Formularies
    Section 1860D-11(e)(2) of the Act provides that the Secretary may 
only approve Part D plans if certain requirements are met, including 
the provision of qualified prescription drug coverage.\112\ Section 
1860D-11(e)(2)(D) of the Act specifically predicates approval on a 
finding by the Secretary that plan design, including formulary and 
tiered formulary structure, is not likely to substantially discourage 
enrollment by certain Part D eligible individuals. Section 1860D-
4(c)(1)(A) of the Act calls for ``a cost-effective drug utilization 
management program, including incentives to reduce costs when medically 
appropriate.'' \113\
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    \112\ Section 1860D-4 of the Act on beneficiary protections for 
qualified prescription drug coverage includes requirements for 
beneficiary access such as the development and application of 
formularies. For instance, under section 1860D-4(b)(3)(B) of the 
Act, the pharmacy and therapeutic committee of each Part D sponsor 
must base clinical decisions on certain scientific evidence and 
standards of practice, while subparagraphs (C) and (G) of section 
1860D-4(b)(3) of the Act require formularies to include drugs within 
certain categories and classes.
    \113\ See discussion in the January 2005 Part D final rule (70 
FR at 4299).
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    We have taken a number of steps to implement the approval process. 
For instance, under Sec.  423.272(b)(2)(i), CMS does not approve a bid 
for which the plan design and benefits (including any formulary and 
tiered formulary structure) or utilization management program are 
likely to substantially discourage enrollment by certain individuals. 
There are also regulations specific to the development and content of 
formularies. For example, Sec.  423.120(b)(1) requires Part D sponsors 
to establish pharmacy and therapeutic committees to develop and review 
formularies as specified, and Sec.  423.120(b)(2) requires provision of 
an adequate formulary.
    Each year we undertake a multi-step process to review and approve 
all formularies submitted by Part D sponsors as part of their annual 
bid packages. We review each formulary, and associated utilization 
management tools, to ensure that they do not discourage enrollment by 
beneficiaries with certain types of disease states. We do this by 
utilizing formulary review checks such as: provision of drugs across 
different classes and categories per Sec. Sec.  423.120(b)(2)(i), (ii), 
and (iv) and 423.272(b)(2); consistency with best practice formularies 
currently in widespread use; clinical merit per Sec.  423.120(b)(1)(v); 
and treatment guidelines for disease states in Sec.  
423.120(b)(2)(iii). As part of the process, we reach out to Part D 
sponsors when necessary to provide an opportunity to address any issues 
identified during our review prior to final approval.
    The statute contemplates changes to approved formularies: section 
1860D-4(b)(3)(E) of the Act specifies that Part D sponsors may remove a 
covered Part D drug or change its preferred or tiered cost-sharing 
status after providing appropriate notice. We understand that the 
statute does not contemplate a static formulary. Prescription drug 
therapies are constantly evolving, and new drug availability, medical 
knowledge, evidence-based clinical guidelines, and opportunities for 
improving safety and quality in prescription drug use at a lower cost 
will inevitably occur over the course of the year.
    Realizing that implementing new developments may require formulary 
changes, we support formulary changes that would allow enrollees to 
quickly benefit from the latest clinical research, new potentially 
lower-cost options, or possibly result in better health outcomes. For 
instance, Sec.  423.120(b)(5)(iii) permits Part D sponsors to 
immediately remove drugs from their formularies when Food & Drug 
Administration (FDA) deems them unsafe and drug manufacturers remove 
them from the market. Similarly, Sec.  423.120(b)(5)(iv) permits a Part 
D sponsor that adds an equivalent generic drug, and otherwise meets 
requirements, to immediately remove a brand name drug or change its 
preferred or tiered cost-sharing status. In addition, in the final rule 
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,'' which appeared in the April 16, 2018 Federal Register 
(hereinafter referred to as the April 2018 final rule), we reduced the 
time for advance direct notice of certain formulary changes from 60 to 
30 days.
    That said, as discussed at section III.M. of this proposed rule, 
midyear changes to the Part D benefit can violate uniformity and 
undermine the integrity of bids. And despite the statute's 
contemplation of changes in the tiered or preferred cost sharing status 
of a specific drug, which accords with the goal of providing an 
opportunity for Part D sponsors to respond to new information specific 
to a particular drug by making changes that could result in

[[Page 79537]]

better treatment for enrollees, the statute does not contemplate 
allowing plans to make large scale changes to their formularies after 
they have undergone the robust approval process described above. 
Permitting large scale formulary changes midyear could lead to ``bait 
and switch'' concerns. During open enrollment, beneficiaries decide 
whether to enroll (or remain) in particular plans based on the benefit, 
including drugs offered on the formulary and tier placement, and as 
represented to them by the Part D sponsor. Formulary stability is 
extremely important so that enrollees maintain access to the benefit 
they chose. Moving too often from one drug to a different drug for non-
clinical reasons could also pose undue threats to enrollee health. 
Indeed, the current regulation, Sec.  423.120(b)(6), prohibits Part D 
sponsors from removing drugs or making changes to preferred or tiered 
cost-sharing status between open enrollment up through the first 60 
days of the contract year except as specified.\114\
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    \114\ Section 423.120(b)(6) exempts Sec.  423.120(b)(5)(iii) and 
(iv), which permit Part D sponsors to immediately remove drugs 
deemed unsafe by FDA or withdrawn by their manufacturers or make 
immediate generic substitutions as specified.
---------------------------------------------------------------------------

    To balance the need for a rigorously vetted, stable formulary 
against the need to permit formulary changes that respond to 
developments such as new drug therapies and knowledge, we have, since 
the start of the program, permitted certain drug-specific changes to 
approved formularies.
    Our process for reviewing and approving changes to approved 
formularies can be broken out into several categories, each of which is 
subject to a different level of CMS review and/or approval. Consistent 
with existing Chapter 6 of the Prescription Drug Benefit Manual (PDBM), 
we are proposing to codify our process for review and approval of 
changes to approved formularies.
b. Proposed Provisions for Approval of Formulary Changes
    In this rule, we propose to define several types of formulary 
changes, adopt rules for CMS approval of negative formulary changes, 
revise requirements for implementation of certain formulary changes 
that may be made immediately, and update and streamline our notice 
requirements. As part of this proposal, we are proposing organizational 
changes to the existing regulations to streamline them and improve 
their clarity.
(1) Proposed Definitions
    In our existing guidance in PDBM Chapter 6, we use the term 
``negative formulary change'' and categorize negative formulary changes 
as either ``maintenance'' or ``non-maintenance.'' Our policies with 
respect to the form of sponsor submission, means of CMS approval, and 
which individuals are considered to be affected by an approved 
formulary change differ as between ``maintenance'' and ``non-
maintenance'' negative formulary changes. We now propose to codify our 
existing policy with respect to negative changes to approved 
formularies, including when and how notice must be provided to 
``affected enrollees.''
    In Sec.  423.100 we propose to define negative formulary changes as 
the following changes with respect to a Part D drug: (1) removing the 
drug from a formulary; (2) moving the drug to a higher cost-sharing 
tier; or (3) adding or making more restrictive prior authorization 
(PA), step therapy (ST), or quantity limits (QL) requirements for the 
drug. We would note that QL restrictions would not include safety edits 
described at Sec.  423.153(c)(2) to prevent unsafe or inappropriate 
dosing of drugs. CMS does not require such edits to be submitted to CMS 
as part of the formulary. Accordingly, we propose that negative 
formulary changes do not include safety-based claim edits which are not 
submitted to CMS. (See section IV.W.2. of this proposed rule on 
Codifying Current Part D Transition and Continuity of Care Policies for 
the proposal to define safety-based claim edits.) Negative formulary 
changes would, however, include adding PA, ST, or QL to apply to a drug 
for the first time, making existing applicable PA or ST requirements 
more restrictive, or making QL edits more restrictive by reducing 
allowances (for instance, reducing a daily dose from two tablets per 
day to one tablet per day) unless the reduction is a safety edit as 
described above.
    In Sec.  423.100, we propose to update the definition of ``affected 
enrollee'' to reference beneficiaries affected by all negative 
formulary changes instead of just removal or change in preferred or 
tiered cost-sharing status.
    PDBM Chapter 6 also classifies negative formulary changes as either 
maintenance or non-maintenance changes. Maintenance changes are changes 
generally expected to pose a minimal risk of disrupting drug therapy or 
are warranted to address safety concerns or administrative needs (for 
example, drug availability such as shortages and determining 
appropriate payment such as coverage under Part B or Part D). In our 
experience the vast majority of negative formulary changes are 
``maintenance'' changes that CMS routinely approves, and the vast 
majority of maintenance changes are generic substitutions, in which the 
Part D sponsor removes a brand name drug and adds its generic 
equivalent.
    Consistent with our current manual policy and operations, we 
propose at Sec.  423.100 to define ``maintenance changes'' to mean the 
following negative formulary changes: (1) making any negative formulary 
changes to a drug and at the same time adding a corresponding drug at 
the same or lower cost-sharing tier and with the same or less 
restrictive PA, ST, or QL requirements (other than those meeting the 
requirements of immediate substitutions currently permitted and that we 
propose to permit below); (2) removing a non-Part D drug; (3) adding or 
making more restrictive PA, ST, or QL requirements based upon a new 
FDA-mandated boxed warning; (4) removing a drug deemed unsafe by FDA or 
withdrawn from sale by the manufacturer if the Part D sponsor chooses 
not to treat it as an immediate negative formulary change; (5) removing 
a drug based on long-term shortage and market availability; (6) making 
negative formulary changes based upon new clinical guidelines or 
information or to promote safe utilization; or (7) adding PA to help 
determine Part B versus Part D coverage. We additionally intend through 
the use of the plural tense to clarify that Part D sponsors may request 
to apply more than one negative formulary change simultaneously to that 
drug.
    Non-maintenance changes, which are infrequently warranted, are 
negative formulary changes that limit access to a specific drug without 
implementing a corresponding offset (such as adding an equivalent drug) 
or addressing safety or administrative needs. We propose to define 
``non-maintenance change'' at Sec.  423.100 to mean a negative 
formulary change that is not a maintenance change or (as discussed in 
the next paragraph) an immediate negative formulary change.
    To these two longstanding categories of negative formulary changes, 
maintenance and non-maintenance, we would introduce in Sec.  423.100 a 
third category to capture negative formulary changes that fall within 
certain parameters and that may be made immediately. We propose to 
define ``immediate negative formulary changes'' as those which meet the 
requirements as either an immediate substitution or market withdrawal

[[Page 79538]]

under Sec.  423.120(e)(2)(i) or (ii) respectively. We note, however, 
that while such changes may be made immediately, Part D sponsors retain 
the option to implement such changes as maintenance changes. This 
means, those Part D sponsors that can meet all applicable requirements 
would have a choice as to whether to make such changes immediately and 
thereafter provide notice of specific changes or submit a negative 
change request and provide specific notice of such changes 30 days 
before they occur.
    To effectuate our proposal, discussed in section III.Q.2.b.(3). of 
this proposed rule, to permit certain immediate substitutions in the 
case of authorized generics, interchangeable biological products, and 
unbranded biological products, we propose to define ``corresponding 
drug'' in Sec.  423.100 to mean, respectively, a generic or authorized 
generic of a brand name drug, an interchangeable biological product of 
a reference biological product, or an unbranded biological product of a 
biological product.
    Finally, we propose to move our current regulatory description of 
``other specified entities'' currently in Sec.  423.120(b)(5)(i) to be 
a standalone definition of the term in Sec.  423.100 that lists State 
Pharmaceutical Assistant Programs (SPAPs), entities providing other 
prescription drug coverage, prescribers, network pharmacies, and 
pharmacists as specified.
(2) Proposed Approval and Implementation of Maintenance and Non-
Maintenance Changes
    We propose to codify our existing practice with respect to CMS 
review and approval of negative formulary changes. Specifically, we 
propose in Sec.  423.120(e) that Part D sponsors may not make any 
negative formulary changes to the CMS-approved formulary except as 
specified in the regulation. We would maintain our existing 
requirements for immediate implementation of certain formulary changes 
for immediate substitutions and market withdrawals at Sec.  
423.120(e)(2), with some modifications, as discussed in section 
III.Q.2.b.(3). of this proposed rule.
    We propose to codify our existing policy with respect to 
maintenance changes, which would, at proposed Sec.  423.120(e)(3)(i), 
permit Part D sponsors that have submitted a maintenance change request 
to assume that CMS has approved their negative change request if they 
do not hear from CMS within 30 days of submission. We propose to codify 
our existing policy with respect to non-maintenance changes as well, 
which would specify at Sec.  423.120(e)(3)(ii) that Part D sponsors 
must not implement non-maintenance changes until they receive notice of 
approval from CMS. We also propose to codify our longstanding policy 
that affected enrollees are exempt from approved non-maintenance 
changes for the remainder of the contract year at Sec.  
423.120(e)(3)(ii).
    As discussed further in section III.Q.2.b.(3). of this proposed 
rule, we also propose revisions to our current requirement at Sec.  
423.120(b)(6), which prohibits Part D sponsors from making certain 
changes between the beginning of the annual election period until 60 
days after the beginning of their contract year to reference negative 
formulary changes and to appear at Sec.  423.120(e)(4).
(3) Immediate Negative Formulary Changes
    Under current regulations at Sec.  423.120(b)(5)(iv), a Part D 
sponsor meeting certain requirements can add a new equivalent generic 
drug to its formulary and immediately remove a brand name drug or 
change its preferred or tiered cost-sharing and then provide 
retrospective direct notice to affected enrollees. Such generic 
substitutions are exempt from the transition process under Sec.  
423.120(b)(3)(i)(B) and are not subject to the limitation on when 
formulary changes may take place under Sec.  423.120(b)(6). In 
addition, under current regulations at Sec.  423.120(b)(5)(iii), Part D 
sponsors can immediately remove drugs deemed unsafe by FDA or withdrawn 
from sale by their manufacturers. As a matter of operations, CMS has 
most recently not required Part D sponsors to submit negative change 
requests for immediate generic substitutions. (Instances of drugs 
removed when FDA deems them unsafe or a drug manufacturer withdraws 
them from sale are infrequent.)
    Our current immediate generic substitutions policy has generated 
the question of whether Part D sponsors can immediately substitute 
drugs in other circumstances, such as substituting an authorized 
generic for its brand name equivalent. A central goal of our formulary 
policy is to provide flexibility to Part D sponsors to substitute a 
drug when such substitution poses minimal risk to disrupting an 
enrollee's drug therapy. For this reason, we are proposing in this rule 
to broaden the scope of permitted immediate substitutions so that Part 
D plans can make such substitutions not only in the case of a generic 
equivalent, but also in the case of authorized generics and for certain 
biological products. We propose to permit immediate substitution of 
authorized generics for the brand name product under the same terms 
that are currently permitted for generic equivalents. By generic 
equivalents, we mean drugs approved under an Abbreviated New Drug 
Application (ANDA) in accordance with section 505(j) of the Federal 
Food, Drug, and Cosmetic Act that are therapeutically equivalent to a 
brand name drug. Authorized generics, as defined in section 505(t)(3) 
of the Federal Food, Drug, and Cosmetic Act, are marketed under their 
corresponding brand name drug's New Drug Application (NDA) \115\ and 
are the exact same drug product as their corresponding brand name 
drugs. We therefore propose to revise the regulation to define an 
authorized generic drug at Sec.  423.4 and to include the immediate 
substitution of authorized generics at Sec.  423.120(e)(2)(i).
---------------------------------------------------------------------------

    \115\ See FDA website entitled ``FDA List of Authorized Generic 
Drugs'' at: https://www.fda.gov/drugs/abbreviated-new-drug-
application-anda/fda-list-authorized-generic-
drugs#:~:text=The%20term%20%E2%80%9Cauthorized%20generic%E2%80%9D%20d
rug,product%20as%20the%20branded%20product. Accessed April 26, 2022: 
``Because an authorized generic drug is marketed under the brand 
name drug's New Drug Application (NDA), it is not listed in FDA's 
Approved Drug Products With Therapeutic Equivalence Evaluations (the 
Orange Book).''
---------------------------------------------------------------------------

    When we first adopted the immediate substitution policy, we stated 
that the regulation would not apply to biological products, but that we 
would reconsider the issue when interchangeable biological products 
became available in Part D. At the time of this writing, there is at 
least one interchangeable biological product \116\ and there is also an 
unbranded biological product marketed under the same license. Other 
licensed interchangeable biological products may become available in 
Part D in the future. Accordingly, we believe it is appropriate to 
expand our policy to include interchangeable and unbranded biological 
products when immediate substitution would not disrupt existing 
therapy. As discussed in the preamble to the proposed rule 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,'' which appeared in the November 28, 2017 Federal Register (82 
FR 56413), in deciding to permit immediate generic substitutions 
without advance direct notice of specific changes to affected 
beneficiaries, CMS, or other specified entities, we weighed the need to 
maintain the continuity of a plan's formulary for beneficiaries who

[[Page 79539]]

sign up for plans based on the drugs offered at the time of enrollment 
against the need to provide Part D sponsors more flexibility to 
facilitate the use of new generics. Key to our decision to permit such 
substitutions was the fact that the rule would apply only to 
therapeutically equivalent generics of the affected brand name drug 
because such generics are the same as an existing approved brand-name 
drug in dosage form, safety, strength, route of administration, and 
quality. Congress defined ``interchangeable'' in reference to 
biological products, stating that interchangeable biological products 
``may be substituted for the reference product without the intervention 
of the health care professional who prescribed the reference product.'' 
\117\ FDA noted on a web page for consumers that this is similar to how 
generic drugs are routinely substituted for brand name drugs.\118\
---------------------------------------------------------------------------

    \116\ Semglee[supreg] (insulin glargine-yfgn).
    \117\ PHSA Sec.  351(i)(3) (42 U.S.C. 262(i)(3)).
    \118\ See ``Biosimilar and Interchangeable Biologics: More 
Treatment Choices'' at the following FDA website: https://www.fda.gov/consumers/consumer-updates/biosimilar-and-interchangeable-biologics-more-treatment-choices. Accessed April 26, 
2022.
---------------------------------------------------------------------------

    All 50 states now permit or require substitution of interchangeable 
biological products for prescribed biological products when available, 
subject to varying requirements regarding patient and prescriber 
notice, documentation of the substitution, and patient savings as a 
result of the substitution, among other safeguards.\119\ In the context 
of a growing market for interchangeable biological products, to follow 
the lead of FDA in encouraging uptake of these products, and to provide 
flexibility that could to lead to better management of the Part D 
benefit that does not impede State pharmacy practices, we propose at 
Sec.  423.120(e)(2)(i) to permit Part D sponsors meeting the applicable 
requirements to immediately substitute a reference biological product 
on its formulary with the corresponding interchangeable biological 
product. In support of that proposal, we also propose the following 
definitions at Sec.  423.4: An ``interchangeable biological product'' 
would mean a product licensed under section 351(k) of the Public Health 
Service Act (42 U.S.C. 262(k)) that FDA has determined to be 
interchangeable with a reference product in accordance with sections 
351(i)(3) and 351(k)(4) of the Public Health Service Act (42 
U.S.C.Sec.  262(i)(3) and 262(k)(4)).\120\ A ``biological product'' 
would mean a product licensed under section 351 of the PHSA and a 
``reference biological product'' would mean a product as defined in 
section 351(i)(4) of the PHSA.
---------------------------------------------------------------------------

    \119\ Cardinal Health. Biosimilar Interchangeability Laws by 
State. Updated July 2021. Available from: https://www.cardinalhealth.com/content/dam/corp/web/documents/publication/Cardinal-Health-Biosimilar-Interchangeability-Laws-by-State.pdf.
    \120\ See sections 351(i)(3) and 351(k)(4) of the PHSA (42 
U.S.C. 262(i)(3) and 262(k)(4)). For information current as of this 
writing, see ``Considerations in Demonstrating Interchangeability 
With a Reference Product Guidance for Industry'' at the following 
FDA website: https://www.fda.gov/regulatory-information/search-fda-guidance-documents/considerations-demonstrating-interchangeability-reference-product-guidance-industry. Accessed September 2, 2022.
---------------------------------------------------------------------------

    In addition to interchangeable biological products, unbranded 
biological products have recently become available. In the frequently 
asked questions of FDA's ``Purple Book Database of Licensed Biological 
Products,'' available at https://purplebooksearch.fda.gov/faqs#9, FDA 
describes an ``unbranded biologic'' or ``unbranded biological product'' 
as an approved brand name biological product that is marketed under its 
approved biologics license application (BLA) without its brand name on 
its label. Thus, like an authorized generic, an unbranded biological 
product is the same product as the brand name biological product. 
Accordingly, since we are proposing to permit Part D sponsors to 
immediately substitute a brand name drug with its authorized generic 
version, we similarly propose at Sec.  423.120(e)(2)(i) to permit 
immediate substitution, as specified, of unbranded biological products 
for corresponding brand name biological products. We would further 
propose at Sec.  423.4 to define ``brand name biological products'' to 
mean biological products licensed under section 351(a) or 351(k) of the 
PHSA and marketed under a brand name. We also propose at Sec.  423.4 to 
define ``unbranded biological products'' as biological products 
marketed under a licensed section 351(a) or 351(k) BLA without a brand 
name on its label.
    We are not proposing to permit Part D sponsors to immediately 
substitute biosimilar products. Biosimilar products have not met 
additional requirements to support a demonstration of 
interchangeability based on further evaluation and testing of the 
product, as outlined by the Biologics Price Competition and Innovation 
(BPCI) Act. Nevertheless, we encourage Part D plan sponsors to offer 
more biosimilar products on their formularies.
    To reflect the fact that this regulation as proposed would then 
permit immediate switches for more types of drugs than generic drugs, 
we propose to refer to all of these changes as ``immediate 
substitutions'' rather than ``immediate generic substitutions,'' and 
drugs eligible to be immediately substituted as ``corresponding drugs'' 
as defined in Sec.  423.4.
    Additionally, through use of the plural tense (``negative formulary 
changes''), we intend in our proposed description of immediate 
substitutions in Sec.  423.120(e)(2)(i) to make clear that a Part D 
sponsor that otherwise meets our requirements that adds a corresponding 
drug and chooses to retain, rather than remove, the drug currently on 
its formulary may apply more than one negative formulary change to that 
drug (for instance, add an interchangeable biologic product to the 
formulary and both move the reference product currently on the 
formulary to a higher cost-sharing tier and add prior authorization 
requirements).
    Our proposal would exempt negative immediate changes that meet our 
requirements from the negative change request and approval process 
discussed earlier in III.Q.2., but would require Part D sponsors to 
submit such changes in their next required or scheduled CMS formulary 
updates. We also propose to renumber Sec.  423.120(b)(6) to appear at 
Sec.  423.120(e)(4). That section currently requires that, other than 
immediate generic substitutions or instances in which a plan removes a 
drug deemed unsafe by FDA or withdrawn from sale by a manufacturer, 
Part D sponsors cannot remove a covered Part D drug from its formulary 
or make any change in the preferred or tiered cost-sharing status of a 
formulary drug between the beginning of the annual election period 
until 60 days after the beginning of their contract year. We propose to 
revise this provision to refer to negative formulary changes and exempt 
all immediate negative formulary changes--be they immediate 
substitutions or market withdrawals.
    As noted earlier, the current regulation exempts Part D sponsors 
that make immediate generic substitutions from the regulatory 
requirement to provide transition supplies. The regulations do not 
specify that such an exemption exists for drugs deemed unsafe by FDA or 
withdrawn from sale by their manufacturers. We now propose to include 
market withdrawals as well as all types of immediate substitutions: 
Sec.  423.120(b)(3)(i)(B) would exempt Part D sponsors making any 
immediate negative formulary changes from providing transition supplies 
of such affected drugs.

[[Page 79540]]

(4) Relation to Inflation Reduction Act of 2022
    Section 11001 of the IRA amended section 1860D-4(b)(3)(I)(i) of Act 
to require the inclusion on a plan's formulary of selected drugs for 
which a maximum fair price is in effect with respect to the plan year. 
Section 1860D-4(b)(3)(I)(ii) of the Act specifies that nothing in 
clause (i) shall be construed as prohibiting a Part D sponsor from 
removing such a selected drug from a formulary if such removal would be 
permitted under Sec.  423.120(b)(5)(iv) or any successor regulation. We 
propose to identify Sec.  423.120(e)(2)(i) as the successor regulation 
to Sec.  423.120(b)(5)(iv) for purposes of section 1860D-4(b)(3)(I)(ii) 
of the Act.
3. Notice Requirements
a. Background: Statutes, Regulations, and Guidance on Notice of Changes
    Section 1860D-4(b)(3)(E) of the Act requires Part D sponsors to 
provide ``appropriate notice'' to the Secretary, affected enrollees, 
physicians, pharmacies, and pharmacists before removing a Part D drug 
from a formulary or changing the preferred or tiered cost-sharing 
status of such a drug. We implemented this statute in regulations 
issued at the start of the program in the January 2005 Part D final 
rule and updated in the April 2018 final rule. We consider various 
forms of advance notice to be appropriate in different situations, and 
in some cases our current regulations reflect these distinctions, such 
as in the case of permitted immediate generic substitutions (which we 
propose earlier to broaden to include other substitutions of 
corresponding drugs), where advance general notice is appropriate so 
long as direct notice is provided at a later time.
    In this section of the proposed rule, we are proposing various 
changes to update and streamline the requirements that apply to the 
provision of notice of formulary changes and to propose revised 
requirements for appropriate advance notice of such changes. These 
proposals will bring our regulations into better alignment with our 
longstanding practice as reflected in PDBM Chapter 6.
b. Alignment of Approval and Notice Policy
    We propose a series of changes to our notice requirements, both to 
reorganize and streamline them, as well as to provide for faster 
implementation of all formulary changes (other than negative formulary 
changes), such as moving a drug to a lower cost-sharing tier or making 
a utilization management tool less restrictive.
    First, we propose in Sec.  423.120(f)(1) to specify that only 
maintenance and non-maintenance negative formulary changes would 
require 30 days' advance notice to CMS and other specified entities, 
and in writing to affected enrollees. We are also proposing to retain 
at Sec.  423.120(f)(1) an alternative option for Part D sponsors to 
provide an affected enrollee who requests a refill an approved month's 
supply of the Part D drug under the same terms as previously allowed, 
as well as written notice of the change. We further propose in Sec.  
423.120(f)(5)(i) to require Part D sponsors to provide advance general 
notice of other formulary changes to all current and prospective 
enrollees and other specified entities, in formulary and other 
applicable beneficiary communication materials advising that the 
formulary may change subject to CMS requirements; providing information 
about how to access the plan's online formulary and contact the plan; 
and stating that the written notice of any change made when provided 
would describe the specific drugs involved. For immediate 
substitutions, we would require information on the steps that enrollees 
may take to request coverage determinations and exceptions. Our current 
model documents already largely provide advance general notice of such 
changes. Section 423.120(f)(5)(ii) as proposed would further state that 
Part D sponsors provide enrollees and other specified entities notice 
of specific formulary changes by complying with Sec. Sec.  
423.128(d)(2) and provide CMS with notice of specific changes through 
formulary updates.
    We propose to revise and renumber the existing regulation to 
specify that, except for negative immediate changes, negative formulary 
changes require at least 30 days advance notice. Consistent with our 
proposal for approval of maintenance changes, a Part D sponsor could 
submit the negative change request, which would constitute its notice 
to CMS, and notice to other specified entities at the same time. This 
would permit the Part D sponsor to implement the maintenance change 
once it is deemed approved under proposed Sec.  423.120(e)(3)(i)--
although facing the risk of sending notice of a change that is 
subsequently disapproved by CMS.
    Part D sponsors currently submit negative change requests to CMS 
via HPMS that specify the negative change's intended effective date, 
which under our proposed approach, would have to be at least 30 days 
after submission for a maintenance change. However, consistent with our 
proposal under Sec.  423.120(f)(3)(ii) to prohibit Part D sponsors from 
implementing non-maintenance changes until they receive notice of 
approval from CMS, Part D sponsors would not be permitted to provide 
notice to other specified entities or affected enrollees, or to 
otherwise update formularies or other materials, until CMS has approved 
the non-maintenance change.
    We propose to update Sec.  423.128(d)(2)(iii), to require online 
notice of negative formulary changes. As we observed in our April 2018 
final rule (83 FR 1607 and 1608), online postings that are otherwise 
consistent with our requirements for notice to ``other specified 
entities (currently described in Sec.  423.120(b)(5) and, as discussed 
in section II.W.2.b.(1). of this proposed rule, proposed to be defined 
in Sec.  423.100) may constitute sufficient notice of formulary 
changes. Consistent with this observation and that Sec.  
423.128(d)(2)(ii) requires an online formulary to be updated monthly, 
our proposed revisions would clarify that the requirement to provide 
notice to other specified entities is satisfied by the Part D sponsor's 
compliance with Sec.  423.128(d)(2).
    As suggested in PDBM, Chapter 6, Sec.  30.3.4.2, sponsors may elect 
to provide other specified entities an annual notice providing 
information on the sponsor's formulary change policy (that is, timing 
of notice, methods of communication with beneficiaries, and any 
electronic notices providers may receive at the point-of-sale regarding 
formulary status) and the sponsor's website where these entities can 
verify the formulary status of particular drugs.
c. Notice of Negative Immediate Changes
    Consistent with our existing requirements for immediate generic 
substitutions (which we propose above to broaden to include other 
corresponding drugs), we propose to require advance general notice of 
immediate substitutions and market withdrawals at Sec.  423.120(f)(2), 
followed by written notice to affected enrollees as soon as possible 
under Sec.  423.120(f)(3), but by no later than the end of the month 
following any month in which a change takes effect.
    We propose at Sec.  423.120(f)(4) to maintain our current 
requirements for the contents of the direct written notice, but 
reorganize and renumber them for clarity. We also propose to revise the 
regulation at Sec.  423.120(f)(4)(iv) to require information on 
appropriate alternative drugs that treat the same

[[Page 79541]]

condition in the same or a lower cost-sharing tier in addition to 
retaining the long standing requirement for information on expected 
cost-sharing. We are providing more flexibility by removing the 
requirement that the alternative drugs must be in the same therapeutic 
category or class: while alternative drugs are likely to be, they might 
not necessarily be in the same therapeutic category or class based on a 
plan's classification system. Therefore, we are increasing flexibility 
with the understanding the Part D sponsor's P&T committee would 
identify clinically appropriate formulary alternatives at the time the 
formulary change is being evaluated.
    We further propose that the contents of the written notice would be 
the same regardless of when the notice must be provided. That is, for 
notices of maintenance and non-maintenance changes, which must be 
provided to affected enrollees at least 30 days in advance per Sec.  
423.120(f)(1), and for notices of negative immediate changes, which can 
be provided after the changes take effect per Sec.  423.120(f)(3), the 
content of the written notice would remain largely the same. Consistent 
with existing requirements, the notice proposed in Sec.  423.120(f)(4) 
would contain the name of the affected drug, the type of negative 
formulary change being made and why, alternatives and expected cost 
sharing, and for immediate substitutions, how an affected enrollee can 
obtain a coverage determination or exception.
    Lastly, we propose to make conforming amendments to cross citations 
in Sec. Sec.  423.104(d)(2)(iv)(A)(6) and 423.128(e)(6) as applicable 
that we have moved the bulk of our discussion on changes to the 
formulary from Sec.  423.120(b)(5) and (6) to Sec.  423.120(e) and (f).
4. Conclusion
    We would like to take this opportunity to note that sections 
Sec. Sec.  423.2265(c)(1)(v) and 423.2265(c)(1)(ii) respectively 
require Part D sponsors each year to provide a Formulary to current 
enrollees along with an Annual Notice of Change, for which the model 
language instructs enrollees to review the drug list to confirm 
continued coverage for their drug. However, while we do not require 
plans to identify specific formulary changes impacting enrollees for 
the next contract year, several years of experience have shown that 
educating beneficiaries about formulary changes helps reduce 
beneficiary confusion and complaints at the start of the plan year. We 
encourage plans, particularly those with significant formulary or 
benefits changes due to PBM transition, plan crosswalks, contract 
consolidations, or other reasons to engage in beneficiary education and 
outreach regarding formulary changes.
    In the process of proposing the regulatory changes described in 
this section, we realized that the burden associated with these 
policies was not accurately captured in PRA package CMS-10141. This 
package attributed a number of hours for each plan to provide notice to 
CMS and other entities for removal of drugs from the Part D formulary, 
however, the package did not properly estimate burden at the level of 
granularity associated with the complete scope of negative changes, 
negative change requests, or providing notice to affected enrollees. In 
section VII.B.6. of this proposed rule, we describe burden associated 
with our policies related to negative formulary changes as we propose 
to codify them. We note that while we make this correction to the PRA 
package, we believe that Part D sponsors have been following the 
guidance provided in PDBM chapter 6 and annual formulary operations 
memoranda. CMS monitors negative change request submission and changes 
to HPMS formularies as a matter of standard operations, and we have 
received few complaints from beneficiaries stating they have been 
subject to formulary changes without proper notice. Thus, we believe 
that Part D sponsors have been complying with the enrollee notice 
component of current policy. The model notice letter for enrollees 
affected by negative formulary changes will be included with the 
associated updates to PRA package CMS-10141. With respect to impact of 
the current policy to the Medicare Trust Fund, Part D sponsors have 
been able to make negative changes to their formularies, subject to CMS 
guidance and oversight, since the start of the Part D program. We 
therefore assume that there is no net impact to the Medicare Trust Fund 
as a result of codifying existing policy related to negative formulary 
changes. We also assume there is no net impact to the Medicare Trust 
Fund as a result of the proposed policy permitting immediate 
substitution of new interchangeable biological products; unbranded 
biological products; and authorized generics since when the initial 
immediate substitution policy was adopted, there was no net impact 
expected, as discussed in the April 2018 final rule.
    In summary, we propose regulatory changes on how to obtain approval 
to make changes to a formulary already approved by CMS and to provide 
notice of such changes. In regards to approval, we propose to codify, 
with some revisions, longstanding sub-regulatory guidance and 
terminology specifying when and how Part D sponsors can obtain approval 
to make negative formulary changes and the enrollees to whom these 
changes would apply. Specifically, we propose to codify our existing 
practice with respect to CMS review and approval of negative formulary 
changes by proposing in Sec.  423.120(e) that Part D sponsors may not 
make any negative formulary changes to the CMS-approved formulary 
except as specified in the regulation. We would codify longstanding 
policy at proposed Sec.  423.120(e)(3)(i), to permit each Part D 
sponsor that has submitted a maintenance change request to assume that 
CMS has approved its negative change request if it does not hear back 
from CMS within 30 days of submission, and at Sec.  423.120(e)(3)(ii) 
to specify that that Part D sponsors must not implement any non-
maintenance changes until they receive notice of approval from CMS. We 
also propose to codify our longstanding policy that affected enrollees 
are exempt from approved non-maintenance changes for the remainder of 
the contract year at Sec.  423.120(e)(3)(i).
    In support thereof, we would define ``negative formulary changes'' 
in Sec.  423.100 to Part D drugs to include drug removals, moves to 
higher cost-sharing tiers, and adding or making more restrictive PA, 
ST, or QL requirements. We would specify that negative formulary 
changes can be classified in one of three categories, which we also 
propose to define in that same section as:
     ``Maintenance changes,'' which we would define to 
encompass seven types of changes including drug substitutions that do 
not meet our requirements of immediate substitutions under Sec.  
423.120(e)(2)(i); changes based on particular events such as certain 
FDA actions, long-term shortages, and new clinical guidelines or 
information or to promote safe utilization; or adding PA to help 
determine Part B versus Part D coverage;
     ``Non-maintenance changes,'' which we would define as 
negative formulary changes that are not maintenance changes or 
immediate negative formulary changes; or,
     ``Immediate negative formulary changes'', a newly coined 
term that would compass all types of immediate substitutions or market 
withdrawals under Sec.  423.120(e)(2)(i) or (ii) respectively.

[[Page 79542]]

    As an exception to the general rule requiring prior CMS approval of 
formulary changes, our current regulations permit immediate generic 
substitutions and for plans to remove drugs deemed unsafe by FDA or 
withdrawn from the market. We propose to move and incorporate that 
regulation text as follows: In Sec.  423.120(e)(2)(i), we propose to 
permit what we would newly describe as immediate substitutions, which 
would mean Part D sponsors could immediately make generic substitutions 
as well as substitute a new ``interchangeable biological product'' for 
its corresponding reference product; a new ``unbranded biological 
product'' for its corresponding brand name biological product; and a 
new ``authorized generic'' for its corresponding brand name equivalent. 
We would support this proposal by defining the above quoted terms in 
Sec.  423.4; identifying the corresponding relationships (including the 
previously permitted generic substitutions) in our definition of a 
``corresponding drug'' in Sec.  423.100; and in Sec.  423.4 also 
defining ``biological product'', ``brand name biological product'', and 
``reference biological product''. In proposing in Sec.  
423.120(e)(2)(ii) to continue to permit plans to immediate remove from 
their formulary any Part D drugs deemed unsafe by FDA or withdrawn from 
sale by their manufacturer, we would newly describe these changes as 
``market withdrawals''. Under proposed Sec.  423.120(e)(2), Part D 
sponsors meeting our requirements for immediate substitutions and 
market withdrawals would be able to make these changes immediately 
without submitting negative change requests to CMS but under proposed 
Sec.  423.120(f)(2) and (3) would be required to provide advance 
general notice of such changes and to submit specific changes in their 
next required or scheduled CMS formulary updates.
    We propose in respective Sec. Sec.  423.120(b)(3)(i)(B) and 
423.120(e)(4) to conform our regulations to provide that the same 
transition and timing rules would apply for all immediate negative 
formulary changes: as proposed all immediate negative formulary changes 
could take place at any time (previously this exception only applied to 
immediate generic substitutions and market withdrawals) and Part D 
sponsors would not need to provide a transition supply therefor 
(previously we only specified in regulation that this exception applied 
to immediate generic substitutions).
    We also propose to move to the current regulation at Sec.  
423.120(b)(6) which prohibits Part D sponsors from making certain 
changes from the start of the annual enrollment period to 60 days after 
the beginning of the contract year: We propose to revise it at Sec.  
423.120(e)(4) to specify that plans cannot make negative formulary 
changes during the stated time period except, as noted earlier, for 
immediate negative formulary changes (that is, immediate substitutions 
or market withdrawals).
    Miscellaneous proposed changes in Sec.  423.100 in support of the 
above changes include updating the definition of ``affected enrollee'' 
to encompass beneficiaries affected by all negative formulary changes; 
and moving our current regulatory description of ``other specified 
entities'' from Sec.  423.120(b)(5)(1) to be a standalone definition of 
the term in Sec.  423.100.
    In regards to notice, we also propose to move, with some revisions 
and streamlining, current regulations on notice of changes, and align 
them to our proposed approval requirements. Specifically, in Sec.  
423.120(f)(1) we would specify that only maintenance and non-
maintenance negative formulary changes require 30 days' advance notice 
to CMS, other specified entities, and in written form to affected 
enrollees. We propose to retain and move to Sec.  423.120(f)(1) an 
alternative option for Part D sponsors to provide a month's supply with 
notice at point of sale as specified. We would move and extend our 
existing requirements for immediate generic substitutions to include 
substitutions of corresponding drugs and market withdrawals, by 
proposing to require advance general notice of immediate negative 
formulary changes at Sec.  423.120(f)(2), followed by written 
retrospective notice required under Sec.  423.120(f)(3) to affected 
enrollees. We propose that this retrospective notice be provided to 
affected enrollees as soon as possible after a specific change, but by 
no later than the end of the month following any month in which a 
change takes effect. We propose at Sec.  423.120(f)(4) to reorganize 
and renumber our current requirements for the contents of the direct 
written notice, and provide more flexibility by no longer restricting 
appropriate alternative drugs to those in the same or a lower cost-
sharing tier. Our proposed revision would make clear that the contents 
of the written notice would be largely the same regardless of the 
timing: whether Part D sponsors are providing notice before making a 
particular change (for maintenance and non-maintenance changes under 
Sec.  423.120(f)(1)) or after (for negative immediate changes under 
Sec.  423.120(f)(3)). Section 423.120(f)(5) would newly specify how to 
provide advance general notice and specific notice of changes other 
than negative formulary changes.
    We are also proposing conforming amendments to update Sec.  
423.128(d)(2)(iii) to require online notice of ``negative formulary 
changes'' and to update to cross citations in Sec. Sec.  
423.104(d)(2)(iv)(A)(6) and 423.128(e)(6) to reflect the fact we would 
be moving the bulk of our discussion on formulary changes from Sec.  
423.120(b)(5) and (6) to Sec.  423.120(e) and (f). We also propose to 
revise text at Sec.  423.120(b)(5) and (6) to indicate that Part D 
sponsors must provide notice of formulary changes and can only make 
changes to CMS-approved formularies as specified, respectively, in 
Sec.  423.120(f) and (e).

R. Part D Medication Therapy Management (MTM) Program (Sec.  
423.153(d))

1. MTM Eligibility Criteria (Sec.  423.153(d)(2))
a. Background
    Section 1860D-4(c) of the Act requires all Part D sponsors to have 
an MTM program designed to assure, with respect to targeted 
beneficiaries, that covered Part D drugs are appropriately used to 
optimize therapeutic outcomes through improved medication use, and to 
reduce the risk of adverse events, including adverse drug interactions. 
Section 1860D-4(c)(2)(A)(ii) of the Act requires Part D sponsors to 
target those Part D enrollees who have multiple chronic diseases, are 
taking multiple Part D drugs, and are likely to meet a cost threshold 
for covered Part D drugs established by the Secretary. Since January 1, 
2022, Part D sponsors are also required by section 1860D-
4(c)(2)(A)(ii)(II) of the Act to target all at-risk beneficiaries 
(ARBs) in their Part D drug management program (DMP) for MTM.
    In the January 2005 Part D final rule (70 FR 4279 through 4283), 
CMS codified MTM targeting criteria at Sec.  423.153(d)(2), without 
further detail on the number of chronic diseases, the number of covered 
Part D drugs, or the annual cost threshold that would be used to 
identify targeted beneficiaries. In guidance provided during the 
Medication Therapy Management (MTM) Program User Group Discussions on 
May 13, 2005 and March 15, 2006, and in the HPMS Memorandum Changes to 
Part D Sponsors' Medication Therapy Management Program (MTMP) dated 
August 29, 2006, CMS initially set the annual cost threshold at $4,000 
at the start of the Part D program. In the 2010 Call Letter, issued on 
March 30, 2009, CMS subsequently lowered the

[[Page 79543]]

threshold to $3,000 for 2010. This approach allowed maximum flexibility 
for industry to develop best practices for the provision of MTM 
services. After gaining Part D program experience, in the final rule 
titled, ``Medicare Program; Policy and Technical Changes to the 
Medicare Advantage and the Medicare Prescription Drug Benefit 
Programs,'' (75 FR 19772 through 19776), which appeared in the Federal 
Register on April 15, 2010, CMS revised Sec.  423.153(d)(2) by 
establishing more specific targeting criteria based on an enrollee's 
number of chronic diseases (with 2 being the minimum, and 3 being the 
maximum a sponsor may require), number of covered Part D drugs (with 2 
being the minimum, and 8 being the maximum a sponsor may require), and 
estimated annual Part D drug costs greater than or equal to $3,000 for 
2011, which is then increased by the annual percentage increase (API) 
specified in Sec.  423.104(d)(5)(iv) to determine the annual cost 
threshold for 2012 and subsequent years. With those changes, CMS sought 
to promote greater consistency across the Part D program and allow for 
better evaluation and comparison of MTM programs going forward. With 
the exception of adding the requirement that Part D sponsors target all 
ARBs in their DMP for MTM as described previously, the MTM eligibility 
framework has not been updated since that time.
    In the Draft CY 2012 Call Letter (See page 109, available at 
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2012.pdf), we solicited comment on evaluating and 
addressing disparities in the MTM eligibility criteria. Subsequently, 
in January 2014, we issued a proposed rule titled, ``Medicare Program; 
Contract Year 2015 Policy and Technical Changes to the Medicare 
Advantage Program and the Medicare Prescription Drug Benefit 
Programs,'' (79 FR 1918) in which we proposed changes to broaden the 
targeting criteria to 2 or more chronic diseases (with at least one 
being a core chronic disease), 2 or more covered Part D drugs, and 
average annual cost associated with taking 2 generic drugs ($620 at 
that time). As discussed in the subsequent final rule, which appeared 
in the Federal Register on May 23, 2014 (79 FR 29865 through 29867), 
those proposals were not finalized, primarily due to the significant 
number of commenters that strongly opposed the broad expansion of MTM 
eligibility and concerns about the potential impact on plan 
administrative costs, beneficiary premiums, and the quality of existing 
MTM programs.\121\ However, we stated that we would continue to 
evaluate information on MTM programs and monitor sponsors' compliance 
with the MTM requirements, with the goal of proposing revisions to the 
criteria in future rulemaking that would help to expand the program.
---------------------------------------------------------------------------

    \121\ In the proposed rule, we estimated that approximately 55 
percent of Part D enrollees would have been eligible for MTM based 
on the proposed criteria (79 FR 1951).
---------------------------------------------------------------------------

    MTM eligibility rates have steadily declined over time. At the 
start of the Part D program, CMS expected about 25 percent of the Part 
D population would be eligible for MTM. By 2020, MTM eligible 
beneficiaries had declined to just 8 percent. In conjunction with the 
decreasing eligibility rate, CMS has observed near-universal 
convergence among Part D sponsors to the most restrictive targeting 
criteria currently permitted under Sec.  423.153(d)(2). When we 
finalized the current regulatory requirements for targeting criteria 
over 12 years ago, CMS elected to give plan sponsors significant 
flexibility in establishing their MTM eligibility criteria. However, 
most plans now require 3 or more chronic diseases, 8 or more Part D 
drugs, and target a narrow and variable list of chronic diseases. 
Because plans may also limit their targeting criteria to certain 
diseases, drugs, or both, in addition to the low eligibility rates 
overall, enrollees with equivalent patient profiles (for example, same 
chronic diseases, same number of chronic diseases, same number of Part 
D drugs, and similar estimated drug costs) may or may not be eligible 
for MTM depending on the criteria their plan requires.\122\ Under the 
current methodology at Sec.  423.153(d)(2)(i)(C), the annual MTM cost 
threshold for 2023 will be $4,935, which also significantly limits the 
number of beneficiaries who are eligible to be targeted for MTM 
enrollment.
---------------------------------------------------------------------------

    \122\ Medication Therapy Management in a Chronically Ill 
Population: Interim Report, available at https://innovation.cms.gov/files/reports/mtm_final_report.pdf.
---------------------------------------------------------------------------

    The high cost threshold and restrictive plan criteria have 
significantly reduced the MTM program size over time, and Part D 
enrollees with more complex drug regimens who would benefit most from 
MTM services are often not eligible. After an extensive review of CMS 
and plan-reported data, CMS has identified several issues with the 
current MTM targeting criteria and proposes the regulatory changes 
discussed in the following sections in an effort to increase MTM 
eligibility rates, reduce variability of MTM eligibility criteria 
across plans, and address disparities to ensure that those who would 
benefit the most from MTM services have access. Taken together, the 
proposed changes to the MTM program targeting criteria would balance 
eligibility and program size while allowing us to address specific 
problems identified in the Part D MTM program, including marked 
variability and inequitable beneficiary access to MTM services.
b. Multiple Chronic Diseases
    The regulation at Sec.  423.153(d)(2)(i)(A) specifies that to be 
targeted for MTM, beneficiaries must have multiple chronic diseases, 
with 3 chronic diseases being the maximum number a Part D sponsor may 
require for targeted enrollment. In the current guidance (See HPMS 
Memorandum Correction to Contract Year 2022 Part D Medication Therapy 
Management Program Guidance and Submission Instructions dated April 30, 
2021), CMS identifies 9 core chronic diseases, some of which are 
enumerated in the statute, including conditions that are highly 
prevalent in the Part D population, align with common targeting 
practices across sponsors, and are commonly treated with Part D drugs, 
where MTM services could most impact therapeutic clinical outcomes. The 
9 core chronic diseases are: Alzheimer's disease; bone disease-
arthritis (such as osteoporosis, osteoarthritis, or rheumatoid 
arthritis); chronic congestive heart failure (CHF)*; diabetes*; 
dyslipidemia*; end-stage renal disease (ESRD); hypertension*; mental 
health (such as depression, schizophrenia, bipolar disorder, or other 
chronic/disabling mental health conditions); and respiratory disease 
(such as asthma*, chronic obstructive pulmonary disease (COPD), or 
other chronic lung disorders).\123\ While the Act specifically names 
congestive heart failure (CHF), we are proposing to specify only 
chronic CHF as a core disease. The Act also names hyperlipidemia, but 
we are proposing to codify dyslipidemia as a core disease to include 
both chronically high (hyperlipidemia) and low (hypolipidemia) lipid 
levels. This list of core chronic diseases aligns with longstanding MTM 
guidance identifying core chronic diseases and is also consistent with 
the discretion granted in the statute to identify chronic diseases.
---------------------------------------------------------------------------

    \123\ *denotes a disease that is enumerated in statute at 
section 1860D-4(c)(2)(A)(ii)(I)(aa) of the Act.
---------------------------------------------------------------------------

    As explained in the CMS guidance, as previously cited, sponsors may 
target enrollees with any chronic diseases or

[[Page 79544]]

target beneficiaries with specific chronic diseases. Plans that do not 
target all chronic diseases should target at least 5 of the 9 core 
chronic diseases identified by CMS. Sponsors may also offer MTM 
services to an expanded population of enrollees who do not meet the 
eligibility criteria for targeted enrollment under Sec.  423.153(d)(2).
    Based on our review of 2020 plan-reported MTM program targeting 
criteria and Part D enrollment data, submitted at the contract level, 
86 percent of Part D enrollees were in a plan that targeted the minimum 
of only 5 of the 9 core chronic diseases. In the same year, only 1 
percent of the Part D population was enrolled in a plan that targeted 
all 9 core chronic diseases, a decrease from 3 percent in 2015. Those 
plans had an MTM enrollment rate of 15 percent versus the overall 
enrollment rate across Part D of 8 percent, based on analysis of 
contract year 2020 MTM plan-reported and validated beneficiary-level 
data.\124\ Combined with CMS administrative claims data, we found that 
a significant proportion of the Part D population that we identified as 
having 3 or more core chronic conditions and using 8 or more drugs 
(approximately 9 million beneficiaries) were not eligible to be 
targeted for MTM (6 million). We estimate that approximately one-third 
of the ineligible beneficiaries (about 2 million) were not eligible due 
to variations in plan-specific targeting criteria (for example, plans 
targeting fewer than all of the core chronic diseases or targeting 
specific drug classes as opposed to all or most covered Part D 
maintenance drugs).
---------------------------------------------------------------------------

    \124\ Part D reporting requirements (OMB Control No. 0938-0992).
---------------------------------------------------------------------------

    HIV/AIDS is not currently included in the list of core chronic 
diseases. Our analysis of 2020 data, including PDE data, Parts A and B 
claims data, validated beneficiary-level MTM data, and other available 
program data, revealed that Part D enrollees with HIV/AIDS have an 
average of 4 core chronic diseases (including HIV/AIDS), take 12 Part D 
covered drugs (including 8 maintenance drugs), and incur $40,490 in 
Part D annual drug spend. Many of these individuals are not eligible 
for MTM because their plan does not target HIV/AIDS or does not target 
enough of their other chronic conditions. Individuals with HIV/AIDS 
often have complex Part D drug regimens where medication adherence is 
critical, very high Part D drug costs, and multiple comorbidities, and 
are more likely to be members of populations affected by disparities. 
125 126  Although not currently identified as a core chronic 
disease, HIV/AIDS is more likely to be targeted by plans (about 10 
percent of plans in 2021) than any other non-core chronic disease.
---------------------------------------------------------------------------

    \125\ https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/OMH_Dwnld-DataSnapshot-HIV.pdf https://www.cdc.gov/hiv/group/hiv-idu.html.
    \126\ Kogut SJ. Racial disparities in medication use: 
imperatives for managed care pharmacy. J Manag Care Spec Pharm. 
2020;26(11):1468-1474. doi:10.18553/jmcp.2020.26.11.1468.
---------------------------------------------------------------------------

    Based on our internal analyses and published literature, we propose 
to amend the regulations at Sec.  423.153(d)(2) by adding a new 
paragraph (iii) to require all Part D sponsors to include all core 
chronic diseases when identifying enrollees who have multiple chronic 
diseases, as provided under Sec.  423.153(d)(2)(i)(A). As part of the 
proposed new provision at Sec.  423.153(d)(2)(iii), we also propose to 
codify the 9 core chronic diseases currently identified in guidance and 
to add HIV/AIDS, for a total of 10 core chronic diseases. Under this 
proposal, sponsors would maintain the flexibility to target 
beneficiaries with additional chronic diseases that are not identified 
as core chronic diseases, or to include all chronic diseases in their 
targeting criteria. Because we developed the existing regulations and 
guidance early in the Part D program, and without the benefit of 
substantial program experience, we initially permitted significant plan 
discretion in developing targeting criteria. We now have data showing 
that approximately 20 percent of enrollees who meet even the most 
restrictive criteria permitted (that is, have 3 or more chronic 
diseases, are taking 8 or more Part D drugs, and are likely to meet the 
cost threshold) are not eligible because almost all plans also adopt 
the most restrictive number of core chronic diseases to target (5 core 
chronic diseases). Accordingly, this proposed change aims to close this 
gap in access and better ensure that the beneficiaries who are most in 
need of MTM services are targeted for enrollment. By reducing the 
variability in targeting criteria across plans, we would eliminate 
situations where enrollees meet the requirement in Sec.  
423.153(d)(2)(i) of having 3 chronic diseases but are not targeted for 
MTM enrollment because their plan does not target their chronic 
diseases. This reduced variability would also allow CMS to more 
accurately estimate program size when calculating burden and assessing 
impact.
    CMS solicits comment on whether we should consider including 
additional diseases in the core chronic diseases proposed at Sec.  
423.153(d)(2)(iii), including cancer to support the goals of the Cancer 
Moonshot.\127\ We seek comment on broadly including cancer as a core 
chronic condition or alternatively including specific cancers that are 
likely to be treated with covered Part D drugs such as oral 
chemotherapies where MTM could be leveraged to improve medication 
adherence and support careful monitoring. In particular, we are 
interested in feedback from Part D sponsors, MTM providers, and 
prescribers, including oncologists, on any potential implications if 
CMS were to include cancer as a core chronic condition as part of the 
MTM eligibility criteria. We are also interested in comments on the 
impact of including any additional core chronic diseases on specialized 
MTM provider training and on MTM program size. We also solicit comments 
on whether MTM services furnished under a Part D MTM program are an 
effective mechanism for management of certain diseases (for example, 
those with high use of Part B drugs or frequently changing medication 
regimens) given the statutory goals of the MTM program--specifically, 
reducing the risk of adverse events, including adverse drug 
interactions, and ensuring that covered Part D drugs prescribed to 
targeted beneficiaries are appropriately used to optimize therapeutic 
outcomes through improved medication use. We will consider the comments 
received in developing our policies with respect to targeting of core 
chronic diseases for the final rule.
---------------------------------------------------------------------------

    \127\ https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/02/fact-sheet-president-biden-reignites-cancer-moonshot-to-end-cancer-as-we-know-it/.
---------------------------------------------------------------------------

c. Multiple Part D Drugs
    Section 1860D-4(c)(2)(A)(ii) of the Act requires that targeted 
beneficiaries be taking multiple covered Part D drugs. The current 
regulation at Sec.  423.153(d)(2)(i)(B) specifies that 8 Part D drugs 
is the maximum number a Part D plan sponsor may require for targeted 
MTM enrollment. Under current CMS guidance (See HPMS Memorandum CY 2020 
Medication Therapy Management Program Guidance and Submission 
Instructions dated April 5, 2019), sponsors are permitted to include 
either all Part D drugs, all Part D maintenance drugs, or specific drug 
classes.
    Based on our internal analyses and published literature, we propose 
to amend the regulations at Sec.  423.153(d)(2) by adding a new 
paragraph (iii) to require all Part D sponsors to include all

[[Page 79545]]

core chronic diseases when identifying enrollees who have multiple 
chronic diseases, as provided under paragraph Sec.  
423.153(d)(2)(i)(A). As part of this provision, we also propose to 
codify the 9 core chronic diseases currently identified in guidance and 
to add HIV/AIDS, for a total of 10 core chronic diseases. Under this 
proposal, sponsors would maintain the flexibility to target 
beneficiaries with additional chronic diseases that are not identified 
as core chronic diseases, or to include all chronic diseases in their 
targeting criteria. In 2020, only 13 percent of Part D plans (4 percent 
of the Part D population) included all covered Part D drugs in their 
criteria, while 81 percent of plans (87 percent of the Part D 
population) limited their criteria to chronic/maintenance drugs, and 7 
percent of plans (9 percent of the Part D population) limited their 
criteria to specific drug classes only.
    We propose to revise Sec.  423.153(d)(2)(i)(B) to decrease the 
maximum number of Part D drugs a sponsor may require from 8 to 5 for 
plan years beginning on or after January 1, 2024. Published literature 
demonstrates increased risk of medication errors and increased MTM 
effectiveness for individuals taking only a few drugs. While there is 
no consensus definition of polypharmacy, concurrent and/or prolonged 
use of 5 or more drugs has been associated with significant increases 
in adverse events.\128\ Decreasing the maximum number of Part D drugs a 
sponsor may require from 8 to 5 would serve as a more accurate proxy to 
help ensure that the MTM program continues to focus on individuals with 
more complex drug regimens and increased risk of medication therapy 
problems, reduce potential gaps in eligibility due to utilization 
disparities, and take into account Part D utilization trends. While we 
are proposing changes to the targeting criteria with respect to the 
number of Part D drugs, we note that the CMR described in Sec.  
423.153(d)(1)(vii)(B) will continue to include review of all 
prescription medications, over-the-counter drugs (OTCs), herbal 
therapies, and dietary supplements.
---------------------------------------------------------------------------

    \128\ M.-C. Weng, et al., The impact of number of drugs 
prescribed on the risk of potentially inappropriate medication among 
outpatient older adults with chronic diseases, QJM: An International 
Journal of Medicine, Volume 106, Issue 11, November 2013, Pages 
1009-1015, https://doi.org/10.1093/qjmed/hct141.
---------------------------------------------------------------------------

    The statutory requirement specifying that MTM targeted 
beneficiaries have multiple chronic diseases and take multiple covered 
Part D drugs suggests that the focus of MTM should be Part D covered 
drugs for longer term use. Maintenance drugs are drugs that are 
commonly prescribed to treat a chronic disease, usually administered 
continuously rather than intermittently, and typically prescribed for a 
longer course of therapy. Beneficiaries taking maintenance medications 
for chronic diseases may benefit most over time from the close 
monitoring provided by MTM required interventions, including 
comprehensive medication reviews (CMRs) and routine targeted medication 
review assessments. Accordingly, we propose to add a new provision at 
Sec.  423.153(d)(2)(iv), which would require all sponsors to include 
all Part D maintenance drugs in their targeting criteria beginning in 
2024. Plans are currently able to include all maintenance drugs in 
their targeting criteria as an option in the MTM Submission Module in 
HPMS; however, CMS does not have guidance related to how maintenance 
drugs are identified for this purpose. To ensure consistency across the 
MTM program, we also propose that, for the purpose of identifying 
maintenance drugs, plans would be required to rely on information 
contained within a widely accepted, commercially or publicly available 
drug information database commonly used for this purpose, such as Medi-
Span or First Databank, but would have the discretion to determine 
which one they use. Under this proposal, sponsors would no longer be 
allowed to target only specific Part D drug classes, but would be 
required to target all Part D maintenance drugs. However, plans would 
retain the option to expand their criteria by targeting all Part D 
drugs. CMS solicits public comment on our proposed parameters for 
defining maintenance drugs, including potential additional sources for 
making such determinations.
    These proposed changes would reduce variability in MTM eligibility 
across plans and improve access to MTM services for Medicare Part D 
beneficiaries at risk of medication therapy problems. Black and 
Hispanic individuals tend to use fewer prescription drugs and incur 
lower prescription drug costs than Non-Hispanic White individuals.\129\ 
Consequently, the Part D utilization- and cost-based MTM eligibility 
criteria, if set too high, may be an access barrier for those 
populations, as well as other populations with similar utilization 
patterns. Medically underserved individuals may benefit from MTM 
services to address potential medication therapy problems, including 
nonadherence. MTM services may also benefit underserved individuals 
through identification of un- or under-treated conditions, help with 
utilization of preventative therapy, or referral to needed health 
services. Furthermore, using 2020 data, including PDE data, Parts A and 
B claims data, validated beneficiary-level MTM data, and other 
available program data to look at the entire Part D population, we 
found that Part D enrollees overall have an average of 2 core chronic 
diseases (including the 9 core chronic diseases in the current guidance 
along with the proposed addition of HIV/AIDS), take 5 Part D 
maintenance drugs, and incur $3,931 in Part D annual drug spend (median 
is $617). The subset of Part D enrollees with at least one core chronic 
disease (including the 9 core chronic diseases in the current guidance 
along with the proposed addition of HIV/AIDS) have an average of 3 core 
chronic diseases, take 6 Part D maintenance drugs, and incur $4,595 in 
Part D annual drug spend (median is $899).
---------------------------------------------------------------------------

    \129\ Wang et al. Potential Health Implications of the MTM 
Eligibility Criteria in the Affordable Care Act Across Racial and 
Ethnic Groups. J Manag Care Spec Pharm. 2015 November; 21(11): 993-
1003.
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d. Annual Cost Threshold
    Section 1860D-4(c)(2)(A)(ii) of the Act specifies that targeted 
beneficiaries for MTM must be likely to incur annual costs for covered 
Part D drugs that exceed a threshold determined by CMS. The regulation 
at Sec.  423.153(d)(2)(i)(C) codifies the current cost threshold 
methodology, which was set at costs for covered Part D drugs greater 
than or equal to $3,000 for 2011, increased by the annual percentage 
specified in Sec.  423.104(d)(5)(iv) for each subsequent year beginning 
in 2012. The annual cost threshold for 2023 will be $4,935. The cost 
threshold has increased substantially since it was established in 
regulation, while the availability of lower cost generics and the 
generic utilization rates have also increased significantly since the 
Part D program began.\130\ Together, these factors have resulted in a 
cost threshold that is grossly misaligned with CMS' intent and 
inappropriately reduces MTM eligibility among Part D enrollees who have 
multiple chronic conditions and are taking multiple Part D drugs. The 
current cost threshold is more than three times the average annual cost 
of 8 generic Part D drugs, which is the maximum number of Part D drugs

[[Page 79546]]

sponsors may require for MTM targeting under the current regulations.
---------------------------------------------------------------------------

    \130\ The Part D generic dispensing rate (the total number of 
generic drug fills divided by the sum of generic and brand drug 
fills), was approximately 60 percent in 2006 and has increased 
steadily to a rate of 83 percent in 2019.
---------------------------------------------------------------------------

    The cost threshold has been identified as a significant barrier to 
MTM access, and, in the past, interested parties have recommended that 
it be lowered. CMS has found that the increasing threshold has 
significantly reduced MTM eligibility rates over the program's 
lifetime. Using 2020 data, CMS identified approximately 9 million Part 
D beneficiaries with 3 or more core chronic conditions and using 8 or 
more Part D drugs, which are the most restrictive criteria CMS 
currently permits. Based on validated beneficiary-level plan-reported 
data, about one third (approximately 3 million) of those beneficiaries 
were eligible for MTM, and the remaining two thirds (approximately 6 
million) were not. We estimate that about 65 to 70 percent 
(approximately 4 million) of the ineligible beneficiaries had Part D 
drug costs below the MTM cost threshold based on 2020 Part D PDE data, 
confirming that the cost threshold substantially decreases the MTM 
program size.
    When CMS initially codified the MTM requirements in the January 
2005 Part D final rule (70 FR 4282), we noted that cost might not be 
the best proxy for identifying patients that could benefit most from 
MTM. Since that time, a robust body of published literature concludes 
that polypharmacy, often defined as concurrent or prolonged use of 
multiple drugs, increases the risk of adverse drug events. While there 
is no consensus definition of polypharmacy, concurrent use of 5 or more 
drugs is commonly cited in research studies. Although other definitions 
include considerations of the number of comorbid chronic disease 
states, drug indications, drug interactions, healthcare setting, and 
duration of therapy, none of these definitions include drug cost.\131\ 
As plans continue to adopt the most restrictive eligibility criteria 
CMS permits with respect to the minimum number of chronic diseases and 
Part D drugs, lowering the cost threshold is especially important to 
help ensure MTM access for the targeted population contemplated in the 
statute. Based on published literature, comments from stakeholders, and 
extensive internal analysis of CMS data, we continue to believe that 
the cost threshold remains the biggest driver of reduced MTM 
eligibility rates.
---------------------------------------------------------------------------

    \131\ Mansoon, N., et al. What is polypharmacy? A systematic 
review of definitions. BMC Geriatrics (2017) 17:230.
---------------------------------------------------------------------------

    Accordingly, we propose to set the MTM cost threshold for the 2024 
plan year and each subsequent plan year at the average annual cost of 5 
generic drugs. Based on 2020 PDE data, the annual cost of five generic 
drugs was approximately $1,004. Under this proposal, for 2024 and 
subsequent years, CMS would calculate the dollar amount of the MTM cost 
threshold based on the average daily cost of a generic drug using PDE 
data from the plan year that ended 12 months prior to the applicable 
plan year, which is the PDE data currently used to determine the 
specialty-tier cost threshold as specified in the current provision at 
Sec.  423.104(d)(2)(iv)(C). For 2024, the calculation would use PDE 
data from 2022 to identify the average daily cost of a generic fill, 
multiplied by 365 days for an annual amount. The average daily cost for 
a drug, would be based on the ingredient cost, dispensing fees, sales 
tax, and vaccine administration fees, if applicable, and would include 
both plan paid amounts and enrollee cost sharing. As is currently the 
case, the MTM cost threshold will be published in the annual Part D 
Bidding Instructions memo.
    While the dollar amount would continue to be calculated annually, 
revising the methodology to base the cost threshold on the average cost 
of 5 generic drugs would considerably reduce year-to-year variability. 
Under the current methodology, the threshold amount has increased by an 
average of $140 each year since it was established in 2011. In 
contrast, the average annual cost of a generic drug, adjusted for days' 
supply, decreased slightly between 2012 and 2020. The proposed change 
to the cost threshold would also greatly reduce the likelihood that 
enrollees taking primarily lower cost generic alternatives would be 
excluded from MTM as a result of a prohibitively high cost threshold, 
aligning with a pillar of the Part D program: encouraging the use of 
generics/lower cost drugs when medically appropriate.
    We propose to amend the regulation at Sec.  423.153(d)(2)(i)(C) to 
reflect this new MTM cost threshold for plans years starting in 2024 
and subsequent years. Specifically, we propose to set the MTM cost 
threshold at the average cost of 5 generic drugs, as defined at Sec.  
423.4. We also propose to codify that CMS will set the MTM cost 
threshold for a plan year beginning on or after January 1, 2024, by 
calculating the average daily cost of a generic drug using the PDE data 
specified at Sec.  423.104(d)(2)(iv)(C).
e. Summary
    The MTM eligibility criteria established in regulation early in the 
Part D program were identified based on a targeted program size. The 
changes we are proposing would reframe the criteria and the MTM program 
to focus on Part D drug utilization and beneficiaries with complex 
patient profiles and drug regimens, with less emphasis on high drug 
costs. Under our proposal, cost would continue to play a role in 
determining which beneficiaries must be targeted for MTM, but would no 
longer be the main driver of eligibility. The revisions proposed in 
this section would also better align MTM eligibility criteria with the 
statutory goals of reducing the risk of adverse events, including 
adverse drug interactions, and optimizing therapeutic outcomes for 
beneficiaries with multiple chronic conditions and who take multiple 
Part D drugs, while maintaining a reasonable cost criterion.
    In summary, we are proposing to:
     Add a new paragraph at Sec.  423.153(d)(2)(iii) to: (1) 
codify the current 9 core chronic diseases in regulation and add HIV/
AIDS as a core chronic disease, for a total of 10 core chronic diseases 
and (2) require sponsors to include all 10 core chronic diseases in 
their targeting criteria;
     Revise Sec.  423.153(d)(2)(i)(B) to lower the maximum 
number of covered Part D drugs a sponsor may require from 8 to 5 drugs;
     Add a new paragraph at Sec.  423.153(d)(2)(iv) to require 
sponsors to include all Part D maintenance drugs when determining the 
number of drugs an enrollee is taking for purposes of MTM eligibility; 
and
     Revise Sec.  423.153(d)(2)(i)(C) to change the annual cost 
threshold methodology ($4,935 in 2023) to be commensurate with the 
average annual cost of 5 generic drugs ($1,004 in 2020). We are 
proposing that these changes would be applicable beginning in plan year 
2024. With these proposed changes, we estimate an MTM program size of 
approximately 23 percent of the Part D population. Burden estimates and 
impacts are discussed in sections IV.X. and VIII.X. of this proposed 
rule, respectively.
2. Define ``unable to accept an offer to participate'' in a 
Comprehensive Medication Review (CMR)
    Section 1860D-4(c) of the Act requires all Part D plan sponsors to 
have a Medication Therapy Management (MTM) program that is designed to 
assure, with respect to targeted beneficiaries, that covered Part D 
drugs are appropriately used to optimize therapeutic outcomes through 
improved medication use and to reduce the risk of adverse events. This 
requirement was codified at Sec.  423.153(d)(1) in the January 2005 
Part D final rule (70 FR

[[Page 79547]]

4279). CMS subsequently finalized a requirement at Sec.  
423.153(d)(1)(vii)(B) specifying that, beginning in 2011, MTM programs 
must offer each MTM enrollee an annual CMR, including an interactive, 
person-to-person consultation performed by a pharmacist or other 
qualified provider unless the beneficiary is in a long-term care (LTC) 
setting (75 FR 19772 through 19774). We included this exemption from 
the requirement to offer a CMR because we recognized that many LTC 
residents may not be able to participate in the interactive 
consultation due to cognitive impairment.
    For 2013 and subsequent plan years, the Affordable Care Act (ACA) 
amended the Act by adding section 1860D-4(c)(2)(C)(i), which requires 
all Part D sponsors to offer all enrollees targeted for MTM an annual 
CMR. Consistent with the statutory change, CMS revised the regulation 
at Sec.  423.153(d)(1)(vii)(B) in the April 2012 final rule (77 FR 
22072) to remove the exemption for residents of LTC settings beginning 
in 2013. In the preamble to the final rule, we noted that the ACA 
provision did not provide a basis for creating an exception to the 
requirement to offer a CMR based on the setting of care (77 FR 22140 
through 22142). However, CMS acknowledged that many LTC residents, as 
well as individuals in other health care settings (for example, 
hospice), may suffer cognitive impairments and, therefore, may not be 
able to participate in the CMR. Accordingly, in the same rule, we 
finalized a new provision at Sec.  423.153(d)(1)(vii)(B)(2) to permit 
the CMR provider to perform the CMR with an enrollee's prescriber, 
caregiver, or other authorized individual if the enrollee is unable to 
accept the offer to participate.
    In guidance issued annually, including our most recent HPMS 
guidance memorandum titled ``Correction to CY 2022 MTM Program Guidance 
and Submission Instructions'' dated April 30, 2021, CMS has 
consistently stated that we consider a beneficiary to be unable to 
accept an offer to participate in the CMR only when the beneficiary is 
cognitively impaired and cannot make decisions regarding their medical 
needs. In this proposed rule, we propose to codify this definition by 
amending the current regulation text at Sec.  423.153(d)(1)(vii)(B)(2) 
to specify that in order for the CMR to be performed with an individual 
other than the beneficiary, the beneficiary must be unable to accept 
the offer to participate in the CMR due to cognitive impairment.
    Consistent with existing CMS guidance, the flexibility to perform 
the CMR with an individual other than the beneficiary would 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 the beneficiary declines the CMR offer.
    Cognitive status may be determined using interviews with the 
beneficiary or their authorized representative, caregiver, or 
prescriber. If the MTM provider determines a beneficiary is unable to 
accept the offer to participate in a CMR, and the MTM provider is 
unable to identify another individual who is able to participate, a CMR 
cannot be performed. However, sponsors are still required to provide 
the other required MTM services detailed in Sec.  423.153(d)(1)(vii). 
Although claims data or diagnosis codes may be used to gather 
information about a beneficiary's medical conditions, Part D sponsors 
must not rely on such administrative information alone to determine 
whether a beneficiary is cognitively impaired and unable to accept the 
offer to participate in their own CMR.
    We continue to recommend that when a targeted beneficiary moves to 
a LTC facility, Part D plan sponsors should identify the appropriate 
contact for each beneficiary. This contact could be the authorized 
representative, caregiver, or prescriber. Sponsors, or their MTM 
providers, could contact the admissions coordinator, Minimum Data Set 
(MDS) coordinator, Director of Nursing, or other appropriate facility 
staff person to ascertain if an authorized representative has been 
designated in the beneficiary's medical record or chart. Sponsors are 
encouraged to develop processes and procedures to contact the facility 
in the least burdensome manner to request assistance from the facility 
to identify beneficiaries who are not cognitively impaired and may be 
able to accept the offer to participate in their CMR, and beneficiaries 
who have a health care proxy. In the event that the definition of 
authorized representative differs by State or in settings other than 
LTC, we defer to State law.
    The change we are proposing to the regulatory text reflects 
longstanding CMS guidance and is also consistent with the discussion of 
this policy in the preamble to the April 2012 final rule (77 FR 22140). 
Plan sponsors have complied with this policy for several years as 
evidenced by CMS data analyses using plan-reported data to identify 
contract-level outliers regarding CMR completion rates, the CMR 
recipient, and cognitive impairment status of MTM program enrollees. As 
such, there is no associated paperwork burden not already accounted for 
and approved by the Office of Management and Budget under OMB control 
number 0938-1154 (CMS-10396).
3. Requirement For In-Person or Synchronous Telehealth Consultation
    Since 2011, the regulation at Sec.  423.153(d)(1)(vii)(B)(1)(i) has 
required that CMRs provided under a Part D sponsor's MTM program 
include an interactive, person-to-person, or telehealth consultation 
performed by a pharmacist or other qualified provider. In the preamble 
to both the proposed (74 FR 54693) and final rules (75 FR 19773) in 
which we first adopted this requirement, CMS emphasized that the 
consultation must be conducted in real-time, either face-to-face or via 
an alternative real-time method, such as the telephone. We further 
specified in response to public comments that plans would have the 
discretion to determine the method used, including emerging 
technologies, as long as the CMR is conducted in real-time. In MTM 
guidance issued annually through Call Letters and HPMS memoranda, most 
recently in the April 30, 2021 HPMS memorandum titled, ``Correction to 
CY 2022 MTM Program Guidance and Submission Instructions,'' CMS has 
specified that CMRs should be performed in real-time.
    In the 12 years since we finalized the current regulation text, 
including during the COVID-19 public health emergency, telehealth 
capabilities have developed considerably and experienced significant 
growth. In its Best Practice Guide: Telehealth for Direct-To-Consumer 
Care (https://telehealth.hhs.gov/providers/direct-to-consumer/), HHS 
refers to synchronous telehealth as an interaction that occurs in live, 
real-time settings, usually via phone or video. Asynchronous 
telehealth, also referred to as ``store-and-forward,'' involves 
communication that is sent and received at different times (for 
example, a patient sends photos to their doctor that the doctor reviews 
later). Advancements in telehealth, such as widespread use of smart 
phones and secure video interactions, have confounded the concept of 
``person-to-person'' interaction, which CMS--in the context of the 
current CMR requirements in Sec.  423.153(d)(1)(vii)(B)(1)(i)--intended 
to refer to an in-person interaction as opposed to a telehealth 
consultation.
    As a result of these developments, CMS has identified a need to 
update our regulatory text. We propose to amend

[[Page 79548]]

the existing regulation text at Sec.  423.153(d)(1)(vii)(B)(1)(i) to 
require that the CMR be performed either in person or via synchronous 
telehealth to clarify that the CMR must include an interactive 
consultation that is conducted in real-time, regardless of whether it 
is done in person or via telehealth. While the consultation must be 
conducted in real-time, under this proposal, plans would continue to 
have the discretion to determine whether the CMR can be performed in 
person or using the telephone, video conferencing, or another real-time 
method.
    The change proposed in this section is consistent with our 
longstanding policy that the CMR be conducted in real-time as described 
in the original rulemaking establishing the CMR requirement and 
codifies existing guidance, issued annually, which plan sponsors have 
complied with for years. Sponsors are required to submit their MTM 
program parameters to CMS for review each year, and, in doing so, are 
required to indicate the type of interactive, person-to-person or 
telehealth consultation (for example, face-to-face, telephone, 
telehealth), and to supply a detailed description of the CMR 
consultation. Because this proposed change codifies existing program 
guidance with which plans are already compliant, there is no paperwork 
burden associated with it.
4. MTM Program Technical Changes
    We are proposing several technical changes to the regulation text 
related to the Part D MTM program. At Sec.  423.4, we propose to add a 
definition for ``MTM program'' to clarify the meaning of this term as 
used in Part 423. In the heading for Sec.  423.153(d), we propose to 
remove the dash and replace it with a period to be consistent with 
other paragraph headings in Subpart D. We propose to amend Sec.  
423.153(d) by striking ``or'' from the end of existing paragraph 
(d)(2)(i)(C)(2) to clarify that, consistent with section 1860D-
4(c)(2)(A)(ii) of the Act, plan sponsors must target enrollees 
described in paragraph (d)(2)(i) and enrollees described in paragraph 
(d)(2)(ii). Throughout Part 423, Subpart D, we propose to replace 
``MTMP'' with ``MTM program'' to ensure that the terminology is used 
consistently.

S. Standards for Electronic Prescribing (Sec.  423.160)

    We propose updates to the standards to be used by Medicare Part D 
prescription drug plans for electronic prescribing (e-prescribing). 
This includes: (1) after a transition period, requiring the National 
Council for Prescription Drug Plans (NDPDP) SCRIPT standard version 
2022011 proposed for adoption at 45 CFR 170.205(b), and retiring the 
current NCPDP SCRIPT standard version 2017071, as the e-prescribing 
standard for transmitting prescriptions and prescription-related 
information (including medication history and electronic prior 
authorization (ePA) transactions) using electronic media for covered 
Part D drugs for Part D eligible individuals; (2) requiring the NCPDP 
Real-Time Prescription Benefit (RTPB) standard version 12 proposed for 
adoption at 45 CFR 170.205(c) as the standard for prescriber real-time 
benefit tools (RTBTs) supported by Part D sponsors; and (3) revising 
current regulatory text referring to standards for eligibility 
transactions.
    In this proposed rule, we propose a novel approach to updating e-
prescribing standards by cross-referencing Part D requirements with 
standards adopted by the Office of the National Coordinator for Health 
Information Technology (ONC) and the standards adopted for electronic 
transactions in the Health Insurance Portability and Accountability Act 
of 1996 (HIPAA) regulations. A joint approach to adopting and updating 
electronic prescribing standards aims to mitigate potential compliance 
challenges for HHS and the healthcare industry that may result from 
independent adoption of such standards.
    The NCPDP SCRIPT standards are used to exchange information between 
prescribers, dispensers, intermediaries and Medicare prescription drug 
plans (PDPs). The Medicare Part D statute at section 1860D-4(e) of the 
Act and regulations at Sec.  423.160(a) require drug plans 
participating in the prescription benefit to support e-prescribing, as 
defined at Sec.  423.159(a), and physicians and pharmacies who transmit 
prescriptions and related communications electronically, to utilize the 
adopted standards. The proposed updated NCPDP SCRIPT standards have 
been requested by the industry and provide a number of updates that the 
industry and CMS support. Accordingly, we propose to update Sec.  
423.160 throughout for prescription, medication history, and ePA 
transactions utilizing the NCPDP SCRIPT standard, as well as to permit 
an 18-month transition period beginning July 1, 2023 where either NCPDP 
SCRIPT standard version 2017071 or 2022011 can be used, with exclusive 
use of NCPDP SCRIPT standard version 2022011 required by January 1, 
2025.
    The NCPDP RTPB standard enables the exchange of patient 
eligibility, preferred pharmacy network participation status, product 
coverage (including any restrictions and alternatives), and associated 
cost sharing so prescribers have access to this information through a 
RTBT application that can be utilized at the point-of-prescribing. As 
discussed in section III.Y.2. of this proposed rule, CMS requires at 
Sec.  423.160(b)(7) that Part D sponsors implement one or more 
electronic RTBTs that are capable of integrating with at least one 
prescriber's electronic prescribing system or electronic health record, 
as of January 1, 2021; however, at the time CMS established this 
requirement, no single industry RTPB standard was available. The NCPDP 
RTPB standard version 12 has since been developed and tested in real-
world applications. We propose to require it as the standard for 
prescriber RTBT applications at Sec.  423.160(b)(7) starting January 1, 
2025.
    Eligibility transactions utilize the NCPDP Telecommunication or 
Accredited Standards Committee X12 standard for pharmacy or other 
health benefits, respectively. The Part D program has adopted standards 
based on the HIPAA electronic transaction standards, which have not 
been updated for more than a decade. Pursuant to legal authority that 
we discuss in this rule, we propose to update the Part D regulation at 
Sec.  423.160(b)(3) by adding a new paragraph (iii) indicating that 
eligibility transactions must utilize the applicable standard named in 
the HIPAA regulation at 45 CFR 162.1202, which we propose to be 
required beginning July 1, 2023 in 42 CFR 423.160(b)(1)(vi). Since the 
HIPAA regulation currently identifies the same standards that are named 
at Sec.  423.160(b)(3)(i) and (ii), we anticipate no immediate impact 
from this proposed change in regulatory language. However, on November 
9, 2022, HHS's proposed rule titled ``Administrative Simplification: 
Modifications of Health Insurance Portability and Accountability Act of 
1996 (HIPAA) National Council for Prescription Drug Programs (NCPDP) 
Retail Pharmacy Standards; and Adoption of Pharmacy Subrogation 
Standard,'' (87 FR 67634), which proposes to adopt updated versions of 
the retail pharmacy standards for electronic transactions at 45 CFR 
462.1202, appeared in the Federal Register. Thus, our proposal will 
assure Part D requirements align with the HIPAA requirements should a 
newer version of the NCPDP Telecommunication (or other) standards be 
adopted as the HIPAA standard for these types of electronic 
transactions as

[[Page 79549]]

a result of the aforementioned proposed rule and any future HHS rules.
1. Legislative Background
    Section 1860D-4(e) of the Act requires the adoption of Part D e-
prescribing standards. Part D sponsors are required to establish 
electronic prescription drug programs that comply with the e-
prescribing standards that are adopted under this authority. For a 
further discussion of the statutory requirements at section 1860D-4(e) 
of the Act, refer to the proposed rule titled ``Medicare Program; E-
Prescribing and the Prescription Drug Program,'' which appeared in the 
February 4, 2005 Federal Register (70 FR 6255). Section 6062 of the 
Substance Use-Disorder Prevention that Promotes Opioid Recovery and 
Treatment for Patients and Communities Act (Pub. L. 115-271), 
hereinafter referred to as the SUPPORT Act, amended section 1860D-
4(e)(2) of the Act to require the adoption of transaction standards for 
the Part D e-prescribing program to ensure secure ePA request and 
response transactions between prescribers and Part D plan sponsors for 
Part D-covered drugs prescribed to Part D-eligible individuals. There 
is generally no requirement that Part D prescribers or dispensers 
implement e-prescribing, with the exception of required electronic 
prescribing of Schedule II, III, IV, and V controlled substances that 
are Part D drugs, consistent with section 2003 of the SUPPORT Act and 
as specified at Sec.  423.160(a)(5). However, prescribers and 
dispensers who electronically transmit and receive prescription and 
certain other information regarding covered drugs prescribed for 
Medicare Part D eligible beneficiaries, directly or through an 
intermediary, are required to comply with any applicable standards that 
are in effect.
2. Regulatory History
    As specified at Sec.  423.160(a)(1), Part D plan sponsors are 
required to support the Part D e-prescribing program transaction 
standards. Likewise, as specified at Sec.  423.160(a)(2), providers and 
pharmacies that conduct electronic transactions for covered Part D 
drugs for Part D eligible individuals for which a program standard has 
been adopted must do so using the adopted standard. Transaction 
standards are periodically updated to take new knowledge, technology, 
and other considerations into account. As CMS adopted specific versions 
of the standards when it initially adopted the foundation and final e-
prescribing standards, there was a need to establish a process by which 
the standards could be updated or replaced over time to ensure that the 
standards did not hold back progress in the industry. CMS discussed 
these processes in the final rule titled ``Medicare Program; E-
Prescribing and the Prescription Drug Program,'' which appeared in the 
November 7, 2005 Federal Register (70 FR 67579). An account of 
successive adoption of new and retirement of previous versions of 
various e-prescribing standards is described in the final rule titled 
``Medicare Program; Revisions to Payment Policies Under the Physician 
Fee Schedule, Clinical Laboratory Fee Schedule & Other Revisions to 
Part B for CY 2014,'' which appeared in the December 10, 2013 Federal 
Register (78 FR 74229); the proposed rule 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,'' which 
appeared in the November 28, 2017 Federal Register (82 FR 56336); and 
the corresponding final rule (83 FR 16440), which appeared in the April 
16, 2018 Federal Register. The final rule titled ``Medicare Program; 
Secure Electronic Prior Authorization For Medicare Part D,'' which 
appeared in the December 31, 2020 Federal Register (85 FR 86824), 
codified the requirement that Part D sponsors support the use of NCPDP 
SCRIPT standard version 2017071 for certain ePA transactions (85 FR 
86832).
    The final rule titled ``Modernizing Part D and Medicare Advantage 
To Lower Drug Prices and Reduce Out-of-Pocket Expenses,'' which 
appeared in the May 23, 2019 Federal Register (84 FR 23832), codified 
at Sec.  423.160(b)(7) the requirement that Part D sponsors adopt an 
electronic RTBT capable of integrating with at least one prescriber's 
electronic prescribing or electronic health record (EHR) system, but 
did not name a standard since no industry standard was available at the 
time. The electronic standards for eligibility transactions were 
codified in the final rule titled ``Medicare and Medicaid Program; 
Regulatory Provisions to Promote Program Efficiency, Transparency, and 
Burden Reduction,'' which appeared in the May 16, 2012 Federal Register 
(77 FR 29001), to align with the applicable HIPAA standards.
    The Part D program has historically adopted electronic prescribing 
standards independently of other HHS components that may adopt 
electronic prescribing standards under separate authorities; however, 
past experience has demonstrated that duplicative adoption of health IT 
standards by other agencies within HHS under separate authorities can 
create significant burden on industry as well as HHS when those 
standards impact the same technology systems. Notably, independent 
adoption of the NCPDP SCRIPT standard version 2017071 by CMS at Sec.  
423.160 (83 FR 16638) in 2018, which required use of the standard 
beginning in 2020, led to a period where ONC had to exercise special 
enforcement discretion in its Health Information Technology (IT) 
Certification Program until the same version was incorporated into 
regulation at 45 CFR 170.205(b)(1) through the final rule titled ``21st 
Century Cures Act: Interoperability, Information Blocking, and the ONC 
Health IT Certification Program,'' which appeared in the May 1, 2020 
Federal Register (85 FR 25679). This resulted in significant impact on 
both ONC and CMS program resources in order to address stakeholder 
concerns about misalignment. See section III.T. of this proposed rule 
for additional discussion of ONC's proposal and authority. Similarly, 
the preamble of the May 2012 final rule noted that, in instances in 
which an e-prescribing standard has also been adopted as a HIPAA 
transaction standard in 45 CFR part 162, the process for updating the 
e-prescribing standard would have to be coordinated with the 
maintenance and modification of the applicable HIPAA transaction 
standard (77 FR 29018).
3. Adoption of NCPDP SCRIPT Standard Version 2022011 as the Part D 
Electronic Prescribing Standard, Retirement of NCPDP SCRIPT Standard 
Version 2017071, and Related Conforming Changes in Sec.  423.160
    The NCPDP SCRIPT standard has been the adopted electronic 
prescribing standard for transmitting prescriptions and prescription-
related information using electronic media for covered Part D drugs for 
Part D eligible individuals since foundation standards were named in 
the final rule titled ``Medicare Program; E-Prescribing and the 
Prescription Drug Program,'' which appeared in the November 7, 2005 
Federal Register (70 FR 67568), at the start of the Part D program. The 
NCPDP SCRIPT standard is used to exchange information between 
prescribers, dispensers, intermediaries and Medicare prescription drug 
plans. In addition to electronic prescribing, the NCPDP SCRIPT standard 
is used in electronic prior authorization (ePA) and medication history 
transactions.
    Although electronic prescribing is optional for physicians, except 
as to Schedule II, III, IV, and V controlled substances that are Part D 
drugs prescribed under Part D, and

[[Page 79550]]

pharmacies, the Medicare Part D statute and regulations require drug 
plans participating in the prescription benefit to support electronic 
prescribing, and physicians and pharmacies who elect to transmit 
prescriptions and related communications electronically must utilize 
the adopted standards except in limited circumstances.
    NCPDP requested that CMS adopt the proposed updated NCPDP SCRIPT 
standard version 2022011 in a letter to CMS dated January 14, 
2022.\132\ The updated version provides a number of updates that the 
industry and CMS support. A major enhancement includes functionality 
that supports a 3-way transaction among prescriber, facility, and 
pharmacy, which will enable electronic prescribing of controlled 
substances in the long-term care (LTC) setting (for which compliance 
actions will commence on or after January 1, 2025 as specified in Sec.  
423.160(a)(5)). Additional major enhancements include general 
extensibility, redesign of the Product/Drug groupings, Observation 
elements added to REMS transaction, ProhibitRenewalRequest added to 
RxChangeResponse and RxRenewalResponse, modified Structured and 
Codified Sig Structure format, and data element refinements and support 
related to dental procedure codes, RxBarCode, PatientConditions, 
patient gender and pronouns, TherapeuticSubstitutionIndicator, and 
multi-party communications and withdrawal/retracting of a previous sent 
message using the MessageIndicatorFlag.
---------------------------------------------------------------------------

    \132\ https://standards.ncpdp.org/Standards/media/pdf/Correspondence/2022/202201NCPDP-SCRIPTNextVersionLetter.pdf.
---------------------------------------------------------------------------

    Because the functionality offered in NCPDP SCRIPT standard version 
2022011 offers important updates and efficiencies to the healthcare 
industry, we believe it would be an appropriate electronic prescribing 
standard for the Medicare Part D program. NCPDP SCRIPT standard version 
2022011 is fully backwards compatible with NCPDP SCRIPT standard 
version 2017071. This allows for a less burdensome implementation 
process and flexible adoption timeline for the industry since backwards 
compatibility permits a transition period where both versions of the 
NCPDP SCRIPT standards may be used simultaneously.
    In addition to its use for electronic prescriptions, the NCPDP 
SCRIPT standard is used for medication history (Sec.  423.160(b)(4)) 
and ePA transactions (Sec.  423.160(b)(8)). Thus, we propose conforming 
amendments to require, after a transition period, NCPDP SCRIPT standard 
version 2022011 as the Part D electronic prescribing standard for the 
medication history transactions and ePA transactions in Sec.  
423.160(b)(4) and Sec.  423.160(b)(8), respectively.
    Instead of independently naming the NCPDP SCRIPT standard version 
2022011 and incorporating the corresponding implementation guide by 
reference at Sec.  423.160(c), we propose to amend Sec.  423.160(b) 
throughout by cross referencing 45 CFR 170.205(b), where ONC proposes 
to adopt NCPDP SCRIPT standard version 2022011. See section III.T.5. of 
this proposed rule for additional discussion of this coordination 
effort. We propose the same approach for the amendments listed at Sec.  
423.160(b)(2) for prescription transactions, discussed in this section 
of this proposed rule, and conforming changes at Sec.  423.160(b)(4) 
for medication history transactions and at Sec.  423.160(b)(8) for ePA 
transactions.
    The proposed approach would enable CMS and ONC to avoid 
misalignment from independent adoption of NCPDP SCRIPT standard version 
2022011 for their respective programs. Updates to the standard would 
impact requirements for both programs at the same time, ensure 
consistency, and promote alignment for providers, payers, and health IT 
developers participating in and supporting the same prescription 
transactions.
    Since the NCPDP SCRIPT standard version 2022011 is fully backwards 
compatible with NCPDP SCRIPT standard version 2017071, the industry can 
accommodate a transition period when either version may be used. We 
propose changes at Sec. Sec.  423.160(b)(1)(vi), 423.160(b)(4)(iii), 
and 423.160(b)(8)(iii), which, taken together with ONC proposals for 45 
CFR 170.205(b), would establish a transition period from July 1, 2023 
until January 1, 2025, with a compliance deadline of January 1, 2025, 
when use of NCPDP SCRIPT standard version 2022011 will be mandatory. 
Given NCPDP SCRIPT standard version 2022011 is backwards compatible 
with NCPDP SCRIPT standard version 2017071, we are seeking to allow 
Part D plans to begin updating to NCPDP SCRIPT standard version 2022011 
as soon as practicable. While we are proposing July 1, 2023 for the 
start of the transition period, we will consider updating the proposed 
start date for the transition period in the final rule to align with 
the effective date for the final rule if it falls before July 1, 2023.
    In its letter to CMS requesting CMS to adopt NCPDP SCRIPT standard 
version 2022011, NCPDP requested that CMS identify certain transactions 
for prescriptions for which use of the standard is mandatory. The 
transactions for prescriptions that we propose to codify at Sec.  
423.160(b)(2)(v)(A)-(Y) are:
     GetMessage;
     Status;
     Error;
     NewRxRequest;
     NewRx;
     RxChangeRequest;
     RxChangeResponse;
     RxRenewalRequest;
     Resupply;
     RxRenewalResponse;
     Verify;
     CancelRx;
     CancelRxResponse;
     RxFill;
     DrugAdministration;
     NewRxResponseDenied;
     RxTransferInitiationRequest (previously named 
RxTransferRequest in NCPDP SCRIPT standard version 2017071);
     RxTransfer (previously named RxTransferResponse NCPDP 
SCRIPT standard version 2017071);
     RxTransferConfirm;
     RxFillIndicatorChange;
     Recertification;
     REMSIinitiationRequest;
     REMSIinitiationResponse;
     REMSRequest; and
     REMSResponse.
    The transactions for ePA that we propose to codify at Sec.  
423.160(b)(8)(iii)(A)-(I) are:
     PAInitiationRequest;
     PAInitiationResponse;
     PARequest;
     PAResponse;
     PAAppealRequest;
     PAAppealResponse;
     PACancelRequest;
     PACancelResponse; and
     PANotification.
    The transactions specific to electronic prescribing remain the same 
as those required for NCPDP SCRIPT standard version 2017071 (Sec.  
423.160(b)(2)(iv)), except where renamed as noted above. The 
transactions specific to ePA are also the same as those required with 
NCPDP SCRIPT standard version 2017071, with one additional transaction 
(PANotification) which was incorporated into the standard after NCPDP 
SCRIPT standard version 2017071. As discussed in section III.T.6. of 
this proposed rule, NCPDP SCRIPT standard version 2022011 is proposed 
for adoption at 45 CFR 170.205(b)(2), and SCRIPT version 2017071 is 
proposed to expire on January 1, 2025 at 45 CFR 170.205(b)(1). 
Consequently, use of NCPDP SCRIPT standard version 2022011 for the 
transactions related to electronic prescribing and ePA (proposed at 
Sec. Sec.  423.160(b)(2)(v)(A)-(Y) and 423.160(b)(8)(iii)(A)-(I),

[[Page 79551]]

respectively) will be mandatory by January 1, 2025, if the expiration 
date for SCRIPT version 2017071 is adopted as proposed. We also note 
that the RxTransfer-related transactions take place between pharmacies 
(that is, dispensers) and are not applicable to prescribers. Therefore, 
we have proposed to acknowledge this in the proposed regulation at 
Sec.  423.160(b)(2)(v) by adding language that indicates that the 
business functions supported by the transactions listed for the 
transmission of prescription-related information may be between 
prescribers and dispensers (as stated in Sec.  423.160(b)(2)(iv)) or 
between dispensers.
    Mandatory use of the NCPDP SCRIPT standard for the transactions 
listed means that the specified version of the NCPDP SCRIPT standard 
must be used to carry out the particular business function supported by 
the transaction. Mandatory use does not mean that all transactions must 
be utilized (that is, if the business function supported by the 
transaction is not needed, then the NCPDP SCRIPT standard transaction 
would not be utilized). For example, we have been informed that the 
``GetMessage'' transaction is not widely used among prescribers. For 
this reason, we are reiterating guidance \133\ that the NCPDP SCRIPT 
standard transactions named are not themselves mandatory, but rather 
they are to be used as applicable to the entities specified at Sec.  
423.160(a) involved in completing or supporting such business functions 
when and if they are utilized. Our intent is that the applicable NCPDP 
SCRIPT standard version is used for business functions that the 
applicable NCPDP SCRIPT standard transactions support, which are named 
in regulation. We believe the pharmacy industry has implemented the 
standards in this manner, based on discussions with NCPDP. However, we 
acknowledge that the transactions currently named in regulation, and as 
we propose, are specific to the NCPDP SCRIPT standard. Thus, the 
specific transactions (based on literal interpretation) can only be 
used in the context of the NCPDP SCRIPT standard as a whole. We propose 
to add language at Sec. Sec.  423.160(b)(2)(v) and 423.160(b)(8)(iii) 
to indicate that these transactions represent the business functions 
for which the NCPDP SCRIPT standard transactions must be used if such 
business function is utilized.
---------------------------------------------------------------------------

    \133\ Supporting Electronic Prescribing Under Medicare Part D. 
September 19, 2008. https://www.hhs.gov/guidance/document/supporting-electronic-prescribing-under-medicare-part-d.
---------------------------------------------------------------------------

    In summary, we propose to amend Sec.  423.160 by:
     Revising paragraph Sec.  423.160(b)(1)(v) to reference 
applicable standards for transactions until June 30, 2023;
     Adding paragraph Sec.  423.160(b)(1)(vi) to identify 
applicable standards for transactions beginning July 1, 2023;
     Adding paragraph Sec.  423.160(b)(2)(v) to acknowledge the 
entities to whom certain transactions are applicable, to include 
distinction that the transactions listed represent business functions 
for which the NCPDP SCRIPT standard must be used, and to indicate that 
communication of prescriptions and prescription-related transactions 
listed at Sec.  423.160(b)(2)(v)(A)-(Y) must comply with 45 CFR 
170.205(b). This cross-reference permits a transition period when 
either NCPDP SCRIPT standard versions 2017071 or 2022011 may be used 
because, as ONC has proposed at 45 CFR 170.205(b)(1), the NCPDP SCRIPT 
standard version 2017071 would not expire until January 1, 2025;
     Revising paragraph Sec.  423.160(b)(4)(ii) to indicate 
exclusive use of NCPDP SCRIPT standard version 2017071 for medication 
history transactions is required from January 1, 2020 until June 30, 
2023;
     Adding paragraph Sec.  423.160(b)(4)(iii) indicating that 
starting July 1, 2023, medication history transactions must comply with 
45 CFR 170.205(b). This cross-reference would permit a transition 
period when either NCPDP SCRIPT standard versions 2017071 or 2022011 
may be used to complete medication history transactions because ONC 
proposes at 45 CFR 170.205(b)(1) that the NCPDP SCRIPT standard version 
2017071 would not expire until January 1, 2025;
     Revising paragraph Sec.  423.160(b)(8)(ii) to indicate 
exclusive use of NCPDP SCRIPT standard version 2017071 for ePA 
transactions is required from January 1, 2022 until June 30, 2023; and
     Adding paragraph Sec.  423.160(b)(8)(iii) indicating that 
starting July 1, 2023, ePA transactions listed at Sec.  
423.160(b)(8)(iii)(A)-(I) represent business functions which must 
comply with 45 CFR 170.205(b). This cross-reference would permit a 
transition period when either NCPDP SCRIPT standard versions 2017071 or 
2022011 may be used for ePA transactions because ONC proposes at 45 CFR 
170.205(b)(1) that the NCPDP SCRIPT standard version 2017071 would not 
expire until January 1, 2025.
    We specifically solicit comment on the following aspects of this 
proposal: (1) requiring NCPDP SCRIPT version 2022011 and retiring NCPDP 
SCRIPT standard version 2017071, following a transition period; (2) 
requiring compliance with 45 CFR 170.205(b) to align Part D electronic 
prescribing requirements with standards adopted by ONC; and (3) whether 
the proposed date of January 1, 2025 to retire NCPDP SCRIPT standard 
version 201071 provides a sufficient transition period for industry and 
other interested stakeholders or if delaying this date to January 1, 
2026 or later offers advantages or disadvantages.
4. Adoption of the NCPDP Real-Time Prescription Benefit (RTPB) Standard
    In the May 2019 final rule (84 FR 23832), which implemented the 
statutory provision at section 1860D-4(e)(2)(D) of the Act, CMS 
required at Sec.  423.160(b)(7) that Part D plan sponsors implement, by 
January 1, 2021, an electronic real-time benefit tool (RTBT) capable of 
integrating with at least one prescriber's e-prescribing system or 
electronic health record (EHR) to provide prescribers with complete, 
accurate, timely and clinically appropriate patient-specific real-time 
formulary and benefit information (including out-of-pocket cost, 
clinically appropriate formulary alternatives, and utilization 
management requirements). At that time, there were no industry-wide 
standards for RTBTs. NCPDP has since developed and tested an RTPB 
standard for use with RTBT applications. In an August 20, 2021 letter 
to CMS, NCPDP recommended adoption of RTPB standard version 12.\134\ 
The NCPDP RTPB standard version 12 enables the real-time exchange of 
information about patient eligibility, patient-specific formulary and 
benefit information, and preferred pharmacy network participation 
status. For a submitted drug product, the RTPB standard will indicate 
coverage status, coverage restrictions, and patient financial 
responsibility. The RTPB standard also supports providing information 
on alternative pharmacies and products.
---------------------------------------------------------------------------

    \134\ https://standards.ncpdp.org/Standards/media/pdf/Correspondence/2021/20210820_To_CMS_RTPBandFandBStandardsAdoptionRequest.pdf.
---------------------------------------------------------------------------

    The NCPDP RTPB standard version 12 standard is designed for 
prescriber, not beneficiary, RTBT applications; however, CMS is aware 
that the use of the NCPDP RTPB standard for the prescriber RTBT may 
facilitate beneficiary RTBTs since the data elements from the NCPDP 
RTPB standard would also be able to feed into a beneficiary RTBT. CMS 
is not

[[Page 79552]]

prohibiting such a practice, but we emphasize that we are not proposing 
that the proposed standard be required for beneficiary RTBTs. The 
requirements for the beneficiary RTBT are discussed in the final rule 
titled ``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,'' which 
appeared in the January 19, 2021 Federal Register (86 FR 5864).
    As discussed in section III.T.6. of this proposed rule, ONC 
proposes to adopt the NCPDP RTPB standard version 12 at 45 CFR 
170.205(c). We therefore propose to add paragraphs Sec.  
423.160(b)(1)(vii) and Sec.  423.160(b)(7)(i) to indicate that as of 
January 1, 2025, Part D sponsors' RTBT must comply with 45 CFR 
170.205(c).
    We solicit comment on this proposal.
5. Standards for Eligibility Transactions
    We propose to revise Sec.  423.160(b)(3) by adding a new paragraph 
(iii) to indicate that eligibility transactions must comply with 45 CFR 
162.1202. Both sections currently name the NCPDP Telecommunication 
standard Version D.0 with equivalent batch standard Version 1.2 and the 
Accredited Standards Committee X12N 270/271-Health Care Eligibility 
Benefit Inquiry and Response, Version 5010 (ASC X12N/005010x279). The 
eligibility standards adopted at Sec.  423.160(b)(3)(i) and (ii) were 
adopted to align with those adopted at 45 CFR 162.1202, pursuant to the 
final rule titled ``Health Insurance Reform; Modifications to the 
Health Insurance Portability and Accountability Act HIPAA) Electronic 
Transaction Standards,'' which appeared in the January 16, 2009 Federal 
Register (74 FR 3326). The proposed rule titled ``Administrative 
Simplification: Modifications of Health Insurance Portability and 
Accountability Act of 1996 (HIPAA) National Council for Prescription 
Drug Programs (NCPDP) Retail Pharmacy Standards; and Adoption of 
Pharmacy Subrogation Standard,'' which appeared in the November 9, 2022 
Federal Register (87 FR 67634), proposes to update the HIPAA standards 
used for eligibility transactions. We therefore propose to streamline 
the Part D regulation by indicate that eligibility transactions must 
comply with the applicable HIPAA regulations, as opposed to naming 
standards independently, which would ensure, should the HIPAA standards 
be updated as a result of HHS rulemaking, that the Part D regulation 
would be synchronized with the required HIPAA standards. We foresee no 
immediate impact of this proposed change since the HIPAA regulation at 
45 CFR 162.1202 currently identifies the same standards as those named 
in the Part D regulation at Sec.  423.160(b)(3)(i) and (ii), but we 
believe establishing a cross-reference would help avoid potential 
future conflicts so that the industry and CMS would not be at risk of 
compliance issues.
    Thus, we propose to modify Sec.  423.160(b)(3) by adding a new 
paragraph (iii) to indicate that eligibility transactions should comply 
with 45 CFR 162.1202. We also propose to replace earlier references to 
Sec.  423.160(b)(3) in paragraphs Sec.  423.160(b)(1)(i) through 
(b)(1)(iv) with revised references to Sec.  423.160(b)(3)(i) and (ii), 
to specify where these historical standards referred to the standards 
specifically named at Sec.  423.160(b)(3)(i) and (ii). This approach 
would avoid ambiguity with respect to historical expectations from 
prior to April 1, 2009 through the proposed effective date of July 1, 
2023, which we propose in Sec.  423.160(b)(1)(vi).
    We solicit comment on this proposal.

T. Adoption of Health IT Standards (45 CFR 170.205)

1. Overview
    In this section ONC proposes to adopt standards for electronic 
prescribing and related activities on behalf of HHS under the authority 
in Section 3004 of the Public Health Service Act (42 U.S.C. 300jj-14). 
ONC is proposing these standards for adoption by HHS as part of a 
nationwide health information technology infrastructure that supports 
reducing burden and health care costs and improving patient care. ONC 
is proposing to adopt these standards on behalf of HHS in one location 
within the Code of Federal Regulations for HHS use, including by the 
Part D Program as proposed in section III.S. of this proposed rule. 
These proposals reflect a unified approach across the Department to 
adopt standards for electronic prescribing activities that have 
previously been adopted separately by CMS and ONC under independent 
authorities. This new approach is intended to increase alignment across 
HHS and reduce regulatory burden for stakeholders subject to program 
requirements that incorporate these standards.
2. Statutory Authority
    The Health Information Technology for Economic and Clinical Health 
Act (HITECH Act), Title XIII of Division A and Title IV of Division B 
of the American Recovery and Reinvestment Act of 2009 (the Recovery 
Act) (Pub. L. 111-5), was enacted on February 17, 2009. The HITECH Act 
amended the Public Health Service Act (PHSA) and created ``Title XXX--
Health Information Technology and Quality'' (Title XXX) to improve 
health care quality, safety, and efficiency through the promotion of 
health IT and exchange of electronic health information (EHI). 
Subsequently, Title IV of the 21st Century Cures Act (Pub. L. 114-255) 
(Cures Act) amended portions of the HITECH Act by modifying or adding 
certain provisions to the PHSA relating to health IT.
3. Adoption of Standards and Implementation Specifications
    Section 3001 of the PHSA directs the National Coordinator for 
Health Information Technology (National Coordinator) to perform duties 
in a manner consistent with the development of a nationwide health 
information technology infrastructure that allows for the electronic 
use and exchange of information. Section 3001(b) of the PHSA 
establishes a series of core goals for development of a nationwide 
health information technology infrastructure that--
     Ensures that each patient's health information is secure 
and protected, in accordance with applicable law;
     Improves health care quality, reduces medical errors, 
reduces health disparities, and advances the delivery of patient-
centered medical care;
     Reduces health care costs resulting from inefficiency, 
medical errors, inappropriate care, duplicative care, and incomplete 
information;
     Provides appropriate information to help guide medical 
decisions at the time and place of care;
     Ensures the inclusion of meaningful public input in such 
development of such infrastructure;
     Improves the coordination of care and information among 
hospitals, laboratories, physician offices, and other entities through 
an effective infrastructure for the secure and authorized exchange of 
health care information;
     Improves public health activities and facilitates the 
early identification and rapid response to public health threats and 
emergencies, including bioterror events and infectious disease 
outbreaks;
     Facilitates health and clinical research and health care 
quality;

[[Page 79553]]

     Promotes early detection, prevention, and management of 
chronic diseases;
     Promotes a more effective marketplace, greater 
competition, greater systems analysis, increased consumer choice, and 
improved outcomes in health care services; and
     Improves efforts to reduce health disparities.
    Section 3004 of the PHSA identifies a process for the adoption of 
health IT standards, implementation specifications, and certification 
criteria, and authorizes the Secretary to adopt such standards, 
implementation specifications, and certification criteria. As specified 
in section 3004(a)(1) of the PHSA, the Secretary is required, in 
consultation with representatives of other relevant Federal agencies, 
to jointly review standards, implementation specifications, and 
certification criteria endorsed by the National Coordinator under 
section 3001(c) of the PHSA and subsequently determine whether to 
propose the adoption of any grouping of such standards, implementation 
specifications, or certification criteria. The Secretary is required to 
publish all determinations in the Federal Register.
    Section 3004(b)(3) of the PHSA, which is titled ``Subsequent 
Standards Activity,'' provides that the Secretary shall adopt 
additional standards, implementation specifications, and certification 
criteria as necessary and consistent with the schedule published by the 
Health IT Advisory Committee (HITAC). As noted in the final rule, 
``2015 Edition Health Information Technology (Health IT) Certification 
Criteria, 2015 Edition Base Electronic Health Record (EHR) Definition, 
and ONC Health IT Certification Program Modifications'' (ONC 2015 
Edition Final Rule), which appeared in the October 16, 2015 Federal 
Register, we consider this provision in the broader context of the 
HITECH Act and the Cures Act to grant the Secretary the authority and 
discretion to adopt standards, implementation specifications, and 
certification criteria that have been recommended by the HITAC and 
endorsed by the National Coordinator, as well as other appropriate and 
necessary health IT standards, implementation specifications, and 
certification criteria (80 FR 62606).
    Under the authority outlined in section 3004(b)(3) of the PHSA, the 
Secretary may adopt standards, implementation specifications, and 
certification criteria as necessary even if those standards have not 
been recommended and endorsed through the process established for the 
HITAC under section 3002(b)(2) and (3) of the PHSA. Moreover, while HHS 
has traditionally adopted standards and implementation specifications 
at the same time as adopting certification criteria that reference 
those standards, the Secretary's authority under section 3004(b)(3) of 
the PHSA is not limited to adopting standards or implementation 
specifications at the same time certification criteria are adopted.
    Finally, the Cures Act amended the PHSA by adding section 3004(c), 
which specifies that in adopting and implementing standards under 
section 3004, the Secretary shall give deference to standards published 
by standards development organizations and voluntary consensus-based 
standards bodies.
4. Alignment With Federal Advisory Committee Activities
    The HITECH Act established two Federal advisory committees, the HIT 
Policy Committee (HITPC) and the HIT Standards Committee (HITSC). Each 
was responsible for advising the National Coordinator on different 
aspects of health IT policy, standards, implementation specifications, 
and certification criteria.
    Section 4003(e) of the Cures Act amended section 3002 of the PHSA 
and replaced the HITPC and HITSC with one committee, the HITAC. After 
that change, section 3002(a) of the PHSA establishes that the HITAC 
advises and recommends to the National Coordinator standards, 
implementation specifications, and certification criteria relating to 
the implementation of a health IT infrastructure, nationally and 
locally, that advances the electronic access, exchange, and use of 
health information. The Cures Act specifically directed the HITAC to 
advise on two areas: (1) A policy framework to advance an interoperable 
health information technology infrastructure (section 3002(b)(1) of the 
PHSA); and (2) priority target areas for standards, implementation 
specifications, and certification criteria (section 3002(b)(2) of the 
PHSA).
    For the policy framework, as described in section 3002(b)(1)(A) of 
the PHSA, the Cures Act tasked the HITAC with providing recommendations 
to the National Coordinator on a policy framework for adoption by the 
Secretary consistent with the Federal Health IT Strategic Plan under 
section 3001(c)(3) of the PHSA. In February of 2018, the HITAC made 
recommendations to the National Coordinator for the initial policy 
framework \135\ and subsequently published a schedule in the Federal 
Register and an annual report on the work of the HITAC and ONC to 
implement and evolve that framework.\136\ For the priority target areas 
for standards, implementation specifications, and certification 
criteria, section 3002(b)(2)(A) of the PHSA identified that in general, 
the HITAC would recommend to the National Coordinator, for purposes of 
adoption under section 3004 of the PHSA, standards, implementation 
specifications, and certification criteria and an order of priority for 
the development, harmonization, and recognition of such standards, 
specifications, and certification criteria. In October of 2019, the 
HITAC finalized recommendations on priority target areas for standards, 
implementation specifications, and certification criteria.\137\
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    \135\ HITAC Policy Framework Recommendations, February 21, 2018: 
https://www.healthit.gov/sites/default/files/page/2019-07/2018-02-21_HITAC_Policy-Framework_FINAL_508-signed.pdf.
    \136\ HITAC Annual Report CY 2019 published March 2, 2020: 
https://www.healthit.gov/sites/default/files/page/2020-03/HITAC%20Annual%20Report%20for%20FY19_508.pdf.
    \137\ HITAC recommendations on priority target areas, October 
16, 2019: https://www.healthit.gov/sites/default/files/page/2019-12/2019-10-16_ISP_TF_Final_Report_signed_508.pdf.
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5. Aligned Approach to Standards Adoption
    Historically, the ONC Health IT Certification Program and the Part 
D Program have maintained complementary policies of aligning health IT 
certification criteria and associated standards related to electronic 
prescribing, medication history, and electronic prior authorization for 
prescriptions. Prescribers of Medicare Part D covered drugs that are 
prescribed for a Medicare Part D eligible individual must generally 
adhere to the standards set by the Part D Program for conveying 
prescriptions using electronic media, while participants in the 
Promoting Interoperability programs must use technology certified under 
ONC's Health IT Certification Program to complete measures included in 
the program, including e-prescribing. Alignment across the standards 
adopted for these HHS programs is critical to ensure consistent 
regulatory requirements for Part D plan sponsors, health care 
providers, and health IT developers who implement and utilize 
technology tools for electronic prescribing. In addition to adopting 
the same standards, ONC and CMS must

[[Page 79554]]

also align the requirements for use of those standards within their 
respective programs.
    In this section of this proposed rule, we briefly summarize past 
standards adoption activities under section 3004 of the PHSA intended 
to ensure alignment for electronic prescribing and related activities 
across the ONC Health IT Certification Program and the Part D Program.
    On January 13, 2010, the Secretary issued an interim final rule 
``Health Information Technology: Initial Set of Standards, 
Implementation Specifications, and Certification Criteria for 
Electronic Health Record Technology'' (2010 interim final rule) which 
adopted an initial set of standards, implementation specifications, and 
certification criteria to meet the requirement specified at section 
3004(b)(1) of the PHSA (75 FR 2013). To ensure consistency with 
standards previously adopted by CMS under the MMA for electronic 
prescribing, the 2010 interim final rule adopted NCPDP SCRIPT standard 
version 8.1 by referencing the Part D requirement for use of the 
standard in Sec.  423.160. The 2010 interim final rule also adopted the 
Formulary and Benefits standard version 1.0 (75 FR 2031) for the 
purposes of performing a drug formulary check by referencing the Part D 
requirement for use of the standard in Sec.  423.160.
    On July 28, 2010, ONC's final rule ``Health Information Technology: 
Initial Set of Standards, Implementation Specifications, and 
Certification Criteria for Electronic Health Record Technology'' to 
complete the adoption of an initial set of standards, implementation 
specifications, and certification criteria, appeared in the Federal 
Register (75 FR 44589). In that final rule, ONC replaced the reference 
to Sec.  423.160 adopted in the 2010 interim final rule, as previously 
described, by adopting and incorporating by reference both NCPDP SCRIPT 
standard version 8.1 and NCPDP SCRIPT standard version 10.6 in 45 CFR 
170.205. As stated in the final rule, ONC finalized this policy to 
align with the adoption and incorporation by reference of NCPDP SCRIPT 
standard version 10.6 by CMS in the ``Medicare Program; Identification 
of Backward Compatible Version of Adopted Standard for E-Prescribing 
and the Medicare Prescription Drug Program (NCPDP SCRIPT 10.6)'' 
interim final rule, which appeared in the July 1, 2010 Federal Register 
(75 FR 38026).
    Most recently, in the ``21st Century Cures Act: Interoperability, 
Information Blocking, and the ONC Health IT Certification Program'' 
final rule (ONC 21st Century Cures Act Final Rule), which was effective 
June 30, 2020, ONC adopted NCPDP SCRIPT standard version 2017071 in 45 
CFR 170.205(b)(1) and incorporated it by reference in 45 CFR 170.299 
(85 FR 25678). By adopting this standard, ONC aligned with 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 (2019 Part C/D final rule), which appeared in the April 16, 
2018 Federal Register, in which CMS adopted and incorporated NCPDP 
SCRIPT standard version 2017071 in Sec.  423.160(b)(2)(iv) for use 
beginning in January 2020 (83 FR 16440).
    While CMS and ONC have worked closely together to ensure consistent 
adoption of standards through regulatory actions, as previously 
described, we recognize that the current practice of different HHS 
components conducting parallel adoption of the same standards may 
result in additional regulatory burden and confusion for stakeholders. 
As a result of different HHS components maintaining and updating 
separate regulatory provisions in different areas of the Code of 
Federal Regulations for health IT standards that impact the same 
stakeholders, impacted stakeholders must monitor changes to standards 
in multiple regulatory vehicles. In addition, ONC and CMS must identify 
separate regulatory vehicles and pursue separate rulemaking processes 
in which to adopt the same standard. Due to other constraints around 
regulatory cycles in each agency, proposed and final actions to adopt 
the same standard may occur on different timelines. For instance, due 
to discrepancies between regulatory timelines, adoption of the NCPDP 
SCRIPT standard version 2017071 in different rules (respectively, the 
ONC 21st Century Cures Act final rule and the 2019 Part C/D final rule) 
led to a period where ONC had to exercise special enforcement 
discretion in the ONC Health IT Certification Program.\138\ 
Stakeholders affected by these updates expressed repeated concerns 
during this period regarding when updates to respective standards would 
be finalized and how these regulatory contingencies would affect 
program requirements referencing these standards.
---------------------------------------------------------------------------

    \138\ See the archived version of the Certification Companion 
Guide for the ``electronic prescribing'' certification criterion in 
45 CFR 170.315(b)(3): https://www.healthit.gov/sites/default/files/page/2020-12/b3_ccg.pdf.
---------------------------------------------------------------------------

    Given past concerns, ONC and CMS are seeking to pursue a new 
approach to alignment of standards in this proposed rule. Under this 
approach, HHS would adopt the standards specified (the NCPDP SCRIPT 
standard version 2022011 and the NCPDP Real-Time Prescription Benefit 
standard version 12) under the Secretary's authority to adopt health IT 
standards in the PHSA. If finalized, these proposals would result in 
the adoption and incorporation by reference to the proposed standards 
in a single Code of Federal Regulations location at 45 CFR 170.205. 
Programs across HHS could then cross-reference the adopted standards. 
As more than one version of the NCPDP SCRIPT standard would be 
specified in 45 CFR 170.205(b) if our proposal is finalized, we have 
also identified an expiration date for the current version of the 
standard to clearly specify when versions of the NCPDP SCRIPT standard 
in 45 CFR 170.205(b) would be available for use by HHS programs.
    We note that these proposals pertain only to the adoption and 
incorporation by reference of the proposed standards, and when these 
standards are available for use by HHS. CMS and ONC would continue to 
set other program requirements independently for programs such as the 
ONC Health IT Certification Program and the Part D Program, which may 
require use of these standards. For instance, program requirements may 
continue to include provisions such as additional amendments or 
guidance related to use of standards specific to each program. However, 
we believe that the approach reflected in these proposals for adoption 
of standards in a single CFR location for HHS use will help to address 
the concerns around alignment, as previously described. We are 
requesting comment on this approach to adopting standards in a single 
location for HHS use.
6. Proposal To Adopt Standards for Use by HHS
    Consistent with section 3004(b)(3) of the PHSA and the efforts, as 
previously described, to evaluate and identify standards for adoption, 
we propose to adopt the following implementation specifications in 45 
CFR 170.205(b)(2) and (c), on behalf of the Secretary, to support the 
continued development of a nationwide health information technology 
infrastructure as described under section 3001(b) of the PHSA, and to 
support Federal alignment of standards for interoperability and health 
information exchange. Specifically, we

[[Page 79555]]

propose to adopt the following standards:
     NCPDP SCRIPT Standard, Implementation Guide, Version 
2022011.
     NCPDP Real-Time Prescription Benefit Standard, 
Implementation Guide, Version 12.
a. Electronic Prescribing
    As discussed previously, ONC has previously adopted three versions 
of the NCPDP SCRIPT standard in 45 CFR 170.205. Most recently, we 
adopted NCPDP SCRIPT standard version 2017071 in the ONC 21st Century 
Cures Act final rule to facilitate the transfer of prescription data 
among pharmacies, prescribers, and payers (85 FR 25678).
    The updated NCPDP SCRIPT standard version 2022011 includes 
important enhancements, such as additions for drug utilization review/
use (DUR/DUE) alerts and formulary information, as well as transactions 
to relay medication history and for a facility to notify a pharmacy of 
resident information. Enhancements have been added to support 
electronic prior authorization functions as well as electronic transfer 
of prescriptions between pharmacies.\139\
---------------------------------------------------------------------------

    \139\ See https://standards.ncpdp.org/Standards/media/pdf/Correspondence/2022/202201NCPDP-SCRIPTNextVersionLetter.pdf.
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    We propose to remove NCPDP SCRIPT standard version 10.6 from 45 CFR 
170.205(b)(2) and to adopt NCPDP SCRIPT standard version 2022011 \140\ 
in 45 CFR 170.205(b)(2). We note that NCPDP SCRIPT standard version 
10.6 is no longer required for use in either the Part D Program or the 
ONC Health IT Certification Program, and we believe it is appropriate 
to remove this standard from the Code of Federal Regulations. We also 
propose to incorporate NCPDP SCRIPT standard version 2022011 by 
reference in 45 CFR 170.299.
---------------------------------------------------------------------------

    \140\ See http://www.ncpdp.org/Standards/Standards-Info.
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    Regarding the NCPDP SCRIPT standard version 2017071, we propose to 
revise the regulatory text in 45 CFR 170.205(b)(1) to specify that 
adoption of this standard will expire on January 1, 2025. If these 
proposals are finalized, this would mean that both the 2017071 and 
2022011 versions of the NCPDP SCRIPT standard would be available for 
HHS use from the effective date of a final rule until January 1, 2025. 
This ``transition period'' is consistent with previous policy in both 
the ONC Health IT Certification Program and the Part D program with 
respect to versions of e-prescribing standards which allow for 
concurrent usage. On and after January 1, 2025, only the 2022011 
version of the NCPDP SCRIPT standard would be available for HHS use 
where a standard in 45 CFR 170.205(b) is required.
    We request comment on the appropriateness of this proposed 
expiration date for NCPDP SCRIPT standard version 2017071, and whether 
we should consider, as an alternative, finalizing a transition period 
of an additional year, up to January 1, 2026, or a longer period. We 
are interested in whether commenters believe an extended transition 
period, during which use of both standards would be allowed for 
programs requiring use of a standard in 45 CFR 170.205(b), would be 
appropriate. We welcome any information commenters can provide about 
the time needed for stakeholders to implement the updated version of 
the standard for different uses.
    While we are not proposing changes to the ``electronic 
prescribing'' certification criterion in the ONC Health IT 
Certification Program (45 CFR 170.315(b)(3)) in this proposed rule, ONC 
will consider any updates to this criterion in future rulemaking to 
align with the updated NCPDP SCRIPT standard and with the Part D 
program, should this proposal be finalized, consistent with past 
practice.
b. Real Time Prescription Benefit
    We propose to adopt the NCPDP Real-Time Prescription Benefit 
standard version 12 to meet the requirements of Division CC, Title I, 
Subtitle B, Section 119 of the Consolidated Appropriations Act, 2021 
(CAA), Public Law 116-260. The CAA required sponsors of Medicare 
prescription drug plans and Medicare Advantage Organizations to 
implement a real-time benefit tool that meets technical standards named 
by the Secretary, in consultation with ONC. The NCPDP Real-Time 
Prescription Benefit standard version 12 \141\ enables the exchange of 
patient eligibility, product coverage, and benefit financials for a 
chosen product and pharmacy, and identifies coverage restrictions and 
alternatives when they exist.
---------------------------------------------------------------------------

    \141\ See http://www.ncpdp.org/Standards/Standards-Info.
---------------------------------------------------------------------------

    In section III.S. of this proposed rule, CMS is proposing to 
require Part D plan sponsors to comply with this standard when 
implementing the real-time benefit tool or tools required in Sec.  
423.160(b)(7). In addition, section 119(b) of the CAA amended the 
definition of a ``qualified electronic health record'' in section 
3000(13) of the PHSA to specify that a ``qualified electronic health 
record'' must include or be capable of including a real-time benefit 
tool. ONC intends to address this provision in future rulemaking for 
the ONC Health IT Certification Program and will ensure alignment with 
the proposed NCPDP Real-Time Prescription Benefit standard version 12, 
should our proposal be finalized, and related proposals in the Part D 
program where appropriate.
    We also note that the HITAC has previously addressed real-time 
prescription benefit standards, consistent with its statutory role to 
recommend standards. In 2019, the HITAC accepted the recommendations 
included in the 2018 report of the Interoperability Priorities Task 
Force, including recommendations to continue to monitor standards then 
being developed for real-time prescription benefit transactions, and, 
when the standards are sufficiently validated, to require EHR vendors 
to provide functionality that integrates real time patient-specific 
prescription benefit checking into the prescribing workflow.\142\ In 
early 2020, the National Committee on Vital and Health Statistics 
(NCVHS) and HITAC convened another task force, the Intersection of 
Clinical and Administrative Data (ICAD) Task Force, which was charged 
with convening industry experts and producing recommendations related 
to electronic prior authorizations. The task force report was presented 
to HITAC in November 2020 \143\ and discussed the NCPDP Real-Time 
Prescription Benefit standard as an important tool for addressing 
administrative transactions around prescribing.
---------------------------------------------------------------------------

    \142\ See https://www.healthit.gov/sites/default/files/page/2019-12/2019-10-16_ISP_TF_Final_Report_signed_508.pdf.
    \143\ See https://www.healthit.gov/sites/default/files/page/2020-11/2020-11-17_ICAD_TF_FINAL_Report_HITAC.pdf.
---------------------------------------------------------------------------

    We are proposing to adopt the NCPDP Real-Time Prescription Benefit 
standard version 12 \144\ in 45 CFR 170.205(c)(1) and to incorporate 
this standard by reference in 45 CFR 170.299. As noted in section 
III.S.4. of this proposed rule, CMS proposes at Sec.  423.160(b)(7)(i) 
to require this standard for use by Part D plan sponsors to fulfill the 
requirements for real-time benefit tools at Sec.  423.160(b)(7). As 
previously noted, ONC will consider proposals to require use of this 
standard to support real-time benefit tool functionality in the ONC 
Health IT Certification Program, consistent with Section 119 of the 
CAA, in future rulemaking.
---------------------------------------------------------------------------

    \144\ See http://www.ncpdp.org/Standards/Standards-Info.
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    We solicit comment on these proposals.

[[Page 79556]]

c. Interoperability Standards Advisory
    ONC's Interoperability Standards Advisory (ISA) supports the 
identification, assessment, and public awareness of interoperability 
standards and implementation specifications that can be used by the 
health care industry to address specific interoperability needs.\145\ 
The ISA is updated on an annual basis based on recommendations received 
from public comments and subject matter expert feedback. This public 
comment process reflects ongoing dialogue, debate, and consensus among 
industry stakeholders when more than one standard or implementation 
specification could be used to address a specific interoperability 
need.
---------------------------------------------------------------------------

    \145\ See https://www.healthit.gov/isa.
---------------------------------------------------------------------------

    ONC currently identifies the standards proposed for adoption in 
this section within the ISA as available standards for a variety of 
potential use cases. The NCPDP SCRIPT standard version 2022011 and the 
NCPDP Real-Time Prescription Benefit standard version 12 are currently 
identified under the ``Pharmacy Interoperability'' domain.\146\ We 
encourage interested parties to review the ISA to better understand key 
applications for the implementation specifications proposed for 
adoption in this proposed rule.
---------------------------------------------------------------------------

    \146\ See https://www.healthit.gov/isa/section/pharmacyinteroperability.
---------------------------------------------------------------------------

7. ONC Health IT Certification Program
    As previously noted, we are not proposing new or revised 
certification criteria based on the proposed adoption of standards 
within this rulemaking. Regarding the Real-Time Prescription Benefit 
Standard, Section 119 of the CAA does not require ONC to adopt 
certification criteria for RTBT at the same time as the standard, but 
instead allows that the criteria be established after the standard has 
been adopted by HHS. We are therefore proposing to adopt the standard 
for HHS use and, as previously discussed, ONC would address new or 
revised certification criteria referencing the standard, if finalized, 
in separate rulemaking. We believe this will not only support alignment 
across HHS, but will allow for continued input from interested parties 
on how this standard should be incorporated into specific certification 
criteria for certified health IT functionality prior to any such 
proposals in future rulemaking. ONC will continue to collaborate with 
CMS to ensure that any future proposals in the ONC Health IT 
Certification Program continue to advance alignment with program 
requirements under the Part D Program.
    We believe the approach reflected in the standards proposals in 
this proposed rule will support Federal alignment and coordination of 
Federal activities with adopted standards and implementation 
specifications for a wide range of systems, use cases, and data types 
within the broad scope of health information exchange. Historically, 
State, Federal, and local partners have leveraged the standards adopted 
by ONC on behalf of HHS to inform program requirements, technical 
requirements for grants and funding opportunities, and systems 
implementation for health information exchange. We believe the adoption 
of these standards will support HHS partners in setting technical 
requirements and advancing the use of innovative health IT solutions 
for electronic prescribing and related activities.

U. Incorporation by Reference (45 CFR 170.299)

    The Office of the Federal Register has established requirements for 
materials (for example, standards and implementation specifications) 
that agencies propose to incorporate by reference in the Code of 
Federal Regulations (79 FR 66267; 1 CFR 51.5(a)). Specifically, 1 CFR 
51.5(a) requires agencies to discuss, in the preamble of a proposed 
rule, the ways that the materials it proposes to incorporate by 
reference are reasonably available to interested parties or how it 
worked to make those materials reasonably available to interested 
parties; and summarize, in the preamble of the proposed rule, the 
material it proposes to incorporate by reference.
    To make the materials we intend to incorporate by reference 
reasonably available, we provide a uniform resource locator (URL) for 
the standards and implementation specifications. In many cases, these 
standards and implementation specifications are directly accessible 
through the URLs provided. In instances where they are not directly 
available, we note the steps and requirements necessary to gain access 
to the standard or implementation specification. In most of these 
instances, access to the standard or implementation specification can 
be gained through no-cost (monetary) participation, subscription, or 
membership with the applicable standards developing organization (SDO) 
or custodial organization. In certain instances, where noted, access 
requires a fee or paid membership. As an alternative, a copy of the 
standards may be viewed for free at the U.S. Department of Health and 
Human Services, Office of the National Coordinator for Health 
Information Technology, 330 C Street SW, Washington, DC 20201. Please 
call (202) 690-7171 in advance to arrange inspection.
    The National Technology Transfer and Advancement Act (NTTAA) of 
1995 (15 U.S.C. 3701 et seq.) and the Office of Management and Budget 
(OMB) Circular A-119 require the use of, wherever practical, technical 
standards that are developed or adopted by voluntary consensus 
standards bodies to carry out policy objectives or activities, with 
certain exceptions. The NTTAA and OMB Circular A-119 provide exceptions 
to selecting only standards developed or adopted by voluntary consensus 
standards bodies, namely when doing so would be inconsistent with 
applicable law or otherwise impractical. We have followed the NTTAA and 
OMB Circular A-119 in proposing standards and implementation 
specifications for adoption, and note that the technical standards 
proposed for adoption in 45 CFR 170.205 in this proposed rule were 
developed by NCPDP, which is an ANSI-accredited, not-for-profit 
membership organization using a consensus-based process for standards 
development.
    As required by 1 CFR 51.5(a), we provide summaries of the standards 
we propose to adopt and subsequently incorporate by reference in the 
Code of Federal Regulations. We also provide relevant information about 
these standards and implementation specifications in the preamble where 
these standards are proposed for adoption.

 National Council for Prescription Drug Programs (NCPDP), 
SCRIPT Standard Implementation Guide, Version 2022011, January 2022 
(Approval Date for ANSI: December 2, 2021)

    URL: http://www.ncpdp.org/Standards/Standards-Info.
    Access requires registration, a membership fee, a user account, and 
a license agreement to obtain a copy of the standard.
    Summary: NCPDP SCRIPT is a standard created to facilitate the 
transfer of prescription data between pharmacies, prescribers, and 
payers. The current standard supports transactions regarding new 
prescriptions, prescription changes, renewal requests, prescription 
fill status notification, and prescription cancellation. Enhancements 
have been

[[Page 79557]]

added for drug utilization review/use (DUR/DUE) alerts and formulary 
information as well as transactions to relay medication history and for 
a facility to notify a pharmacy of resident information. Enhancements 
have been added to support electronic prior authorization functions as 
well as electronic transfer of prescriptions between pharmacies.

 National Council for Prescription Drug Programs (NCPDP), Real-
Time Prescription Benefit Standard, Implementation Guide, Version 12, 
October 2021 (Approval Date for ANSI: September 27, 2021)

    URL: http://www.ncpdp.org/Standards/Standards-Info.
    Access requires registration, a membership fee, a user account, and 
a license agreement to obtain a copy of the standard.
    Summary: The NCPDP Real-Time Prescription Benefit Standard 
Implementation Guide is intended to meet the industry need within the 
pharmacy services sector to facilitate the ability for pharmacy benefit 
payers/processors to communicate to providers and to ensure a 
consistent implementation of the standard throughout the industry. The 
Real-Time Prescription Benefit (RTPB) Standard enables the exchange of 
patient eligibility, product coverage, and benefit financials for a 
chosen product and pharmacy, and identifies coverage restrictions, and 
alternatives when they exist.

V. Limitation on PDP Contracts Held by Subsidiaries of the Same Parent 
(Sec.  423.272)

1. Overview and Summary
    We are proposing to limit the number of PDP contracts under which a 
Part D sponsor or its parent organization (as defined in Sec.  423.4), 
directly or through subsidiaries, can offer individual market PBPs in a 
PDP region to one contract per region. Individual market PBPs are plans 
that are marketed to all Medicare beneficiaries in a region, unlike 
employer group waiver plans, which are only open to retirees whose 
employers contract with them to provide Part D benefits. This 
requirement would promote longstanding CMS policy to encourage 
meaningful competition among and a level playing field for Part D 
sponsors in the Part D program. The policy to promote meaningful 
competition has been implemented through our crosswalk policy 
(discussed in section IV.AD. of this proposed rule), the limit of three 
per region on the number of PDP plan benefit packages (PBP) that a 
sponsor can offer (codified effective January 1, 2022 at current Sec.  
423.265(b)(2)), the requirement that PDP PBPs offered by a sponsor be 
``substantially different'' (codified effective January 1, 2011 at 
Sec.  423.272(b)(3)), and the prohibition on approval of applications 
that would result in a sponsor or its parent holding more than one PDP 
contract per region (codified effective July 22, 2014 at Sec.  
423.503(a)(3)).
2. Discussion
    Since the beginning of the Part D program, CMS has promoted 
meaningful competition among Part D sponsors and meaningful choice 
among plans for Part D beneficiaries. CMS has pursued multiple avenues 
to promote these goals. CMS attempts to ensure that PDP sponsors only 
offer the number and type of PBPs necessary to provide beneficiaries 
meaningfully different plan options. Effective January 1, 2022, we 
codified at Sec.  423.265(b) our longstanding policy limiting the 
number of PBPs a PDP sponsor may offer to no more than three in a 
service area. These offerings may not include more than one PBP 
offering basic prescription drug coverage, as defined at Sec.  423.100, 
and no more than two enhanced alternative plans, as defined at Sec.  
423.104(f)(1). The enhanced plan offerings must be ``substantially 
different'' from the basic prescription drug coverage pursuant to Sec.  
423.272(b)(3). All three PBPs are usually offered under the same 
contract, although if a sponsor or its parent holds multiple contracts, 
the sponsor may only operate three PBPs across all the contracts in the 
region. CMS allows Part D sponsors, or the parent organizations of Part 
D sponsors, a two-year transition period to meet these requirements 
after they have acquired another Part D sponsor pursuant to Sec.  
423.272(b)(3)(ii). Finally, under Sec.  423.503(a)(3), CMS does not 
approve an application to qualify as a PDP sponsor that would result in 
the applicant's parent organization, directly or through subsidiaries, 
holding more than one PDP sponsor contract offering individual market 
plans in a PDP region.
    Consistent with these requirements, CMS has traditionally 
encouraged PDP sponsors and their parent organizations that acquire new 
PDP contracts by, for example, merging with or acquiring other PDP 
sponsors to consolidate their PDP contracts so that they only offer 
individual market PBPs under one PDP contract per PDP region. 
Individual market PBPs are plans that are marketed to all Medicare 
beneficiaries in a region, unlike employer group waiver plans, which 
are only open to retirees whose employers contract with them to provide 
Part D benefits. Such contract consolidations are accomplished through 
contract consolidation crosswalks, described in section IV.AD. of this 
proposed rule, which allow sponsors to transfer enrollment from a non-
renewing PDP to the surviving PDP.
    CMS advises that plans take not more than two full benefit years to 
accomplish a consolidation. CMS uses its negotiation authority under 
section 1860D-11(d)(2)(B) of the Act, the three-plan limit, and the 
substantial difference requirement to encourage consolidations. Both 
the three-plan limit and the substantial difference requirements are 
applied at the parent organization level--that is, a parent 
organization with subsidiaries that hold multiple contracts in a PDP 
region cannot, after the two-year transition period following 
acquisition, offer more than three PDP PBPs in that region. PDP 
sponsors usually consolidate their PDPs in response to our 
encouragement and to accommodate the three-plan limit and substantial 
difference requirements, but some have delayed consolidation or 
declined to consolidate altogether. In proposing to require 
consolidations, CMS intends not only to promote meaningful choice and 
competition, but to ensure a level playing field for all affected PDP 
sponsors.
    At Sec.  423.272(b), we propose to add a new paragraph (5) to 
codify limits on the number of PDP contracts held by subsidiaries of 
the same parent organization in a PDP region. We propose to adopt this 
requirement pursuant to our authority to add additional contract terms 
and conditions, not inconsistent with Part C, as necessary and 
appropriate (see section 1860D-12(b)(3)(D) of the Act). We propose to 
add a new paragraph (5)(i) to provide that CMS would no longer approve 
bids that would result in a PDP sponsor or a PDP sponsor's parent 
organization, directly or through its subsidiaries, offering individual 
market PBPs under more than one PDP contract in a PDP region. This 
proposed requirement would not apply to EGWP PBPs. For instance, if 
Parent Organization 1 had two subsidiaries, Sponsor 1 and Sponsor 2, 
that each had a PDP contract in Region 3 for at least the past two 
years, CMS would not approve the bids from both Sponsor 1 and Sponsor 2 
unless one of the contracts was non-renewed or its service area reduced 
so it no longer served Region 3. This requirement would align bid 
review and approval criteria with our current prohibition at Sec.  
423.503(a)(3) on approving applications that would result in

[[Page 79558]]

multiple PDPs held by the same sponsor or parent organization in a 
region.
    This proposal promotes meaningful competition among Part D sponsors 
by preventing sponsors that are controlled and operated by the same 
parent organization from offering competing PDP contracts in a region. 
Two subsidiaries of the same parent organizations offering plans in the 
same PDP region are not truly competitors, as decisions concerning 
their operations are ultimately controlled by a single entity or parent 
organization. PDP sponsors under common parent organizations usually 
share leadership and operational staff, use the same pharmacy benefit 
manager, and use the same systems and procedures to administer the Part 
D benefit across different contracts. Because of Sec.  423.503(a)(3), 
the only way a parent organization could have two PDP sponsor contracts 
in a region is if they applied for them before we adopted Sec.  
423.503(a)(3) in 2014 or if they purchase an existing PDP sponsor. CMS 
does not believe that it is fair to continue to allow these exceptions 
to our general policy limiting the number of contracts that a parent 
organization may operate in a region.
    CMS is also concerned that Part D sponsors and parent organizations 
offering multiple PDPs in a region may do so to segment risk or 
manipulate Part D Star Ratings. Informal communications with 
organizations seeking multiple contracts in a region have indicated 
that some of these organizations wish to segregate low-income 
beneficiaries into their own contract and/or confine the experience of 
a low performing plan to a single contract. Allowing organizations to 
isolate low income, or otherwise high risk or high cost, individuals 
into a single contract subverts Part D nondiscrimination requirements 
at section 1860D-11(e)(2)(D)(i) of the Act. Allowing segregation of low 
performing plans in a different contract from higher performing plans 
offered by a subsidiary of the same parent organization also undermines 
the integrity of CMS's Star Ratings. CMS assigns star ratings at the 
contract level. Ratings are meant to reflect all aspects of the PDP 
operations controlled by a contracting entity. This purpose is 
undermined when a parent organization is allowed to effectively 
administer two or more PDP contracts in a region in a way that would 
allow them to inflate their Star Ratings under one of the contracts by 
confining poor-performing plans to another contract. Such manipulation 
of the Star Ratings could mislead beneficiaries about the performance 
of the organization responsible for administering a plan.
    CMS recognizes that consolidating contracts held by subsidiaries of 
the same parent organization can be complex and requires careful 
planning, particularly if one or more of these contracts was recently 
acquired through the purchase of or merger with another PDP sponsor. 
Consistent with CMS's current practice, CMS is therefore proposing at 
new paragraphs (5)(ii) and (iii) to allow sponsors or parent 
organizations that acquire new PDP contracts or that operate more than 
one contract in a PDP region as of January 1, 2024 a transition period 
of two bid cycles to reduce the number of PDP contracts offering 
individual market PBPs to one per region. This proposed requirement 
would not apply to EGWP PBPs, so that subsidiaries of a parent 
organization could continue to operate multiple PDP contracts in a 
region so long as all but one of those contracts only operated EGWP 
PBPs in that region.
    Consolidating PDP contracts results in the beneficiaries from one 
contract being transferred, or ``crosswalked,'' into a PBP in another 
contract held by a subsidiary of the same parent organization. We are 
proposing to codify this process at section IV.AD. of this proposed 
rule. Consolidations can involve substantial disruption to operations 
and affected enrollees' experience. Particularly where a newly acquired 
PDP contract is served by a different pharmacy benefit manager, 
sponsors must plan carefully to update systems and transfer information 
in a way that minimizes disruptions for beneficiaries. Benefits can 
also vary significantly between PBPs offered under different PDP 
contracts immediately following an acquisition. Based on its experience 
in the program, CMS has found that a transition period of two bid 
cycles is sufficient for plans to minimize disruptions by planning for 
transitions and, where appropriate, gradually adjusting the benefits 
offered by PBPs under different contracts each year so that benefit 
structures between two contracts are more closely aligned before 
beneficiaries are crosswalked to a different contract.
    Consistent with current practice when encouraging consolidations 
and assessing substantial difference under Sec.  423.272(b)(3), CMS 
would only apply the proposed limit on PDP contracts after the sponsor 
or its parent has submitted bids under multiple contracts for two 
contract years. For example, if a parent organization currently 
operates Contract 1 in a region and acquires Contract 2 in the same 
region on September 1, 2024, the organization would be permitted to 
operate multiple contracts for the remainder of 2024 and for 2025, as 
well as for 2026 and 2027. The parent organization would not have had 
the opportunity to adjust the 2025 bid in light of the acquisition 
because it did not acquire the contract until after the 2025 bid 
deadline. CMS would therefore allow them to submit bids for 2026 and 
2027 in 2025 and 2026, respectively, in order to plan for an orderly 
transition.
    CMS acknowledges that a few Part D sponsors and parent 
organizations have operated multiple PDP contracts offering individual 
market PBPs in a region for many years. For the reasons already 
discussed, CMS does not believe that this is consistent with our policy 
promoting meaningful competition and beneficiary choices. Nor do we 
believe that allowing parent organizations whose contracts predate the 
2014 restriction on approval of applications that would result in 
multiple PDP contracts to continue to operate multiple contracts in 
region is fair to other parent organizations. CMS also believes that 
continuing to allow these sponsors to operate multiple contracts in a 
region is unfair to organizations that may be required to reduce the 
number of contracts offered in a region following an acquisition 
pursuant to the proposed provisions at Sec.  423.272(b)(5)(i) and (ii). 
CMS therefore proposes to require these parent organizations to reduce 
the number of PDPs offered in a region to one PDP per parent, per 
region, after a transition period of two bid cycles as described 
previously. For example, if this proposed rule is finalized prior to 
the 2024 bid submission deadline of June 5, 2023, a parent organization 
holding two or more PDP contracts at that time (directly or through 
subsidiaries) would be allowed to submit 2024 and 2025 bids for 
multiple contracts in 2023 and 2024, but would be required to submit 
2026 bids in 2025 that only included one PDP per region.
    CMS solicits comments on the length of the transition period 
proposed at paragraph (b)(5)(iii). In particular, CMS solicits comments 
on whether the transition periods for new acquisitions and 
organizations offering multiple PDP contracts on January 1, 2024 should 
be the different to account for the fact that organizations offering 
multiple PDP contracts on January 1, 2024 do not face the same 
transition difficulties as organizations that acquire new PDP 
contracts.
    In summary, we are proposing to:
     Add Sec.  423.272(b)(5) to limit the number of PDP 
contracts held by subsidiaries of the same parent

[[Page 79559]]

organization to one PDP contract per region;
     At proposed Sec.  423.272(b)(5)(ii) & (iii), provide a 
two-year transition period for parent organizations that do not 
currently meet the requirement or that violate the requirement 
following a future acquisition to comply with the requirement.
    We solicit comment on these proposals.

W. Medicare Parts A, B, C, and D Overpayment Provisions of the 
Affordable Care Act (Sec. Sec.  422.326(c), 423.360(c), (Sec.  
401.305(a)(2))

    Section 6402(a) of the Patient Protection and Affordable Care Act 
(Pub. L. 111-148) as amended by the Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152) (collectively known as the 
Affordable Care Act) established section 1128J(d) of the Act. Section 
1128J(d)(1) of the Act requires a person who has received an 
overpayment to report and return the overpayment to the Secretary, the 
State, an intermediary, a carrier, or a contractor, as appropriate, and 
to notify the Secretary, State, intermediary, carrier or contractor to 
whom the overpayment was returned in writing of the reason for the 
overpayment. Section 1128J(d)(4)(B) of the Act defines the term 
``overpayment'' as any funds that a person receives or retains under 
title XVIII or XIX to which the person, after applicable 
reconciliation, is not entitled under such title. Section 
1128J(d)(4)(C) of the Act defines, the term ``person'' for purposes of 
Medicare Part A and Part B to include providers and suppliers as those 
terms are defined in the Act. Section 1128J(d)(4)(C) of the Act also 
defines the term ``person'' for purposes of Medicare Part C and Part D 
to include a Medicare Advantage organization (``MAO'') (as defined in 
section 1859(a)(1) of the Act) and a Part D sponsor (as defined in 
section 1860D-41(a)(13) of the Act).
    Section 1128J(d)(2) of the Act requires that an overpayment be 
reported and returned by the later of: (1) the date which is 60 days 
after the date on which the overpayment was identified; or (2) the date 
any corresponding cost report is due, if applicable. Section 
1128J(d)(3) of the Act specifies that any overpayment retained by a 
person after the deadline for reporting and returning an overpayment is 
an obligation (as defined in 31 U.S.C. 3729(b)(3)) for purposes of the 
False Claims Act, 31 U.S.C. 3729.
    Section 1128J(d)(4)(A) of the Act provides that the terms 
``knowing'' and ``knowingly'' have the meaning given those terms in the 
False Claims Act at 31 U.S.C. 3729(b)(1)(A). The False Claims Act (31 
U.S.C. 3729(b)(1)(A)) defines the terms ``knowing'' and ``knowingly'' 
to include information about which a person ``has actual knowledge,'' 
``acts in deliberate ignorance of the truth or falsity of the 
information,'' or ``acts in reckless disregard of the truth or falsity 
of the information.''
1. Regulations Promulgated Under Section 1128J(d) of the Act
    The agency has published two final rules under section 1128J(d) of 
the Act. On May 23, 2014, CMS published a final rule titled ``Medicare 
Program; Contract Year 2015 Policy and Technical Changes to the 
Medicare Advantage and the Medicare Prescription Drug Benefit 
Programs'' (79 FR 29844) (hereinafter referred to as the final ``Parts 
C & D Overpayment Rule''), which provided, among other things, that an 
MAO or Part D sponsor has identified an overpayment when the MAO or 
Part D sponsor has determined, or should have determined through the 
exercise of reasonable diligence, that the MAO or Part D sponsor has 
received an overpayment.
    On February 12, 2016, we published a final rule titled ``Medicare 
Program; Reporting and Returning of Overpayments, in Medicare Parts A 
and B'' (81 FR 7654) (hereinafter referred to as the final ``Parts A & 
B Overpayment Rule''), which provided, among other things, that a 
provider or supplier has identified an overpayment when the provider or 
supplier has determined, or should have determined through the exercise 
of reasonable diligence, that the provider or supplier has received an 
overpayment and quantified the amount of the overpayment.
2. Relevant Litigation
    In UnitedHealthcare Insurance Co. v. Azar, a group of MAOs 
challenged the final Parts C & D Overpayment Rule, and the District 
Court held, in relevant part, that by requiring MAOs to use 
``reasonable diligence'' in searching for and identifying overpayments, 
the final rule impermissibly created False Claims Act liability for 
mere negligence. UnitedHealthcare Ins. Co. v. Azar, 330 F. Supp. 3d 
173, 191 (D.D.C. 2018), rev'd in part on other grounds sub nom. 
UnitedHealthcare Ins. Co. v. Becerra, 16 F.4th 867 (D.C. Cir. 2021), 
cert. denied, 142 S. Ct. 2851 (U.S. June 21, 2022) (No. 21-1140). The 
District Court noted that ``(t)he False Claims Act--which the ACA 
refers to for enforcement, see 42 U.S.C. 1320a-7k(d)(3)--imposes 
liability for erroneous (`false') claims for payment submitted to the 
government that are submitted `knowingly' . . . a term of art defined 
in the FCA to include false information about which a person `has 
actual knowledge,' `acts in deliberate ignorance of the truth or 
falsity of the information,' or `acts in reckless disregard of the 
truth or falsity of the information.' '' Id. at 190. We now propose to 
amend the final Parts C & D Overpayment Rule at Sec. Sec.  422.326(c) 
and 423.360(c), as well as the final Parts A & B Overpayment Rule at 
Sec.  401.305(a)(2), to remove the reference to ``reasonable 
diligence'' and replace it with language at section 1128J(d)(4)(A) that 
gives the terms ``knowing'' and ``knowingly'' the same meaning given 
those terms in the False Claims Act at 31 U.S.C. 3729(b)(1)(A). See 
UnitedHealthcare, 330 F. Supp. 3d at 191 (finding that this language 
would be consistent with a 2000 agency rule, the FCA, and the 
Affordable Care Act's reference to the FCA).
3. Provisions of Proposed Regulations
a. Medicare Part A and Part B--Amending the Standard for When an 
Overpayment Is Identified (Sec.  401.305(a)(2))
    This section of the proposed rule would amend Sec.  401.305(a)(2) 
to change the standard for an ``identified overpayment.'' Consistent 
with the proposed Medicare Part C and Part D provisions under this 
Overpayment Rule, we propose to remove the existing standard and adopt, 
by reference, the False Claims Act definition of ``knowing'' and 
``knowingly.'' Under the proposed rule, a provider or supplier has 
identified an overpayment if it has actual knowledge of the existence 
of the overpayment or acts in reckless disregard or deliberate 
ignorance of the overpayment.
b. Medicare Advantage Program and Part D--Amending the Standard for 
When an Overpayment Is Identified (Sec. Sec.  422.326(c) and 
423.360(c))
    This section of the proposed rule would amend Sec. Sec.  422.326(c) 
and 423.360(c) to change the standard for an ``identified overpayment'' 
to align with the statutory obligation provided by Congress in section 
1128J(d)(4)(A) of the Act, which provides that the terms ``knowing'' 
and ``knowingly'' have the meaning given those terms in the False 
Claims Act at 31 U.S.C. 3729(b)(1)(A). We propose to remove the 
existing standard and adopt, by reference, the False Claims Act 
definition of ``knowing'' and ``knowingly.'' Under the proposed rule, 
an MA organization or Part D sponsor has identified an overpayment if 
it has actual knowledge

[[Page 79560]]

of the existence of the overpayment or acts in reckless disregard or 
deliberate ignorance of the overpayment.

IV. Strengthening Current Medicare Advantage and Medicare Prescription 
Drug Benefit Program Policies

A. Amending the Definition of Severe or Disabling Chronic Condition; 
Defining C-SNPs and Plan Types; and Codifying List of Chronic 
Conditions (Sec.  422.2)

    A specialized MA plan for special needs individuals, generally 
known as a special needs plan or SNP, is an MA plan specifically 
designed to provide targeted care and limit enrollment to special needs 
individuals. CMS defines Specialized MA Plans for Special Needs 
Individuals at Sec.  422.2 as an MA coordinated care plan (CCP) that 
exclusively enrolls special needs individuals as set forth in Sec.  
422.4(a)(1)(iv) and that provides Part D benefits under part 423 to all 
enrollees; and which has been designated by CMS as meeting the 
requirements of an MA SNP as determined on a case-by-case basis using 
criteria that include the appropriateness of the target population, the 
existence of clinical programs or special expertise to serve the target 
population, and whether the proposal discriminates against sicker 
members of the target population. As provided in section 1859(b)(6) of 
the Act and the definition in Sec.  422.2, a special needs individual 
could be any one of the following: an institutionalized or 
institutionalized-equivalent individual; a dual eligible individual; or 
an individual with a severe or disabling chronic condition and who 
would benefit from enrollment in a specialized MA plan. Chronic 
Condition Special Needs Plans (C-SNPs) are SNPs that restrict 
enrollment to special needs individuals with specific severe or 
disabling chronic conditions, defined at Sec.  422.2.
    The Bipartisan Budget Act of 2018 (BBA of 2018) (Pub. L. 115-123) 
amended section 1859 of the Act to revise the definition of ``severe or 
disabling chronic condition'' for purposes of identifying individuals 
eligible to enroll in C-SNPs beginning January 1, 2022; add care 
management requirements for special needs individuals who have a severe 
or disabling chronic condition; direct the Secretary to convene a panel 
of clinical advisors to establish and update a list of severe or 
disabling chronic conditions that meet certain criteria; mandate the 
inclusion of several current C-SNP chronic conditions onto the list; 
and direct that the panel take into account the availability of 
benefits in the Medicare Advantage Value-Based Insurance Design model. 
Section 1859(f)(9) of the Act, as added by the BBA, instructs the 
Secretary to convene the panel of clinical advisors not later than 
December 31, 2020 and every 5 years thereafter, to establish and update 
a list of conditions that meet the statutory criteria to be a severe or 
disabling chronic condition and conditions that meet the statutory 
criteria for certain other conditions that require prescription drugs, 
providers, and models of care that are unique to the specific 
populations covered by MA special needs plans. We are proposing to 
codify the BBA of 2018's amendment of the definition of severe or 
disabling chronic condition; define C-SNP; update and codify the 
recommended list of chronic conditions by a panel of clinical advisors 
as specified by the BBA; and codify existing subregulatory guidance 
permitting the inclusion of certain chronic condition combinations for 
the purposes of offering single standalone C-SNP plan benefit packages 
(PBPs).
1. Amending the Definition of Severe or Disabling Chronic Condition
    Section 231 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) amended sections 1851(a)(2)(A) and 
1859(b) of the Act to authorize the creation of specialized MA plans 
for special needs individuals, including specialized MA plans that 
exclusively enroll individuals with severe or disabling chronic 
conditions. The MMA did not define severe and disabling chronic 
conditions but noted that the Secretary may determine specific 
requirements that special needs individuals would need to meet in order 
to enroll in a chronic condition plan. In the proposed rule titled, 
``Medicare Program; Establishment of the Medicare Advantage Program'' 
(69 FR 46865), which appeared in the August 3, 2004 issue of the 
Federal Register (hereinafter, the August 2004 MA proposed rule), CMS 
did not propose a definition of ``severe or disabling chronic 
condition''; however, we asked for comments on whether CMS should set 
standards for the designation of an individual with severe or disabling 
chronic conditions and what criteria should be used. In the ensuing 
final rule titled Medicare Program: Establishment of the Medicare 
Advantage Program (70 FR 4588), which appeared in Federal Register on 
the January 28, 2005 (hereinafter the January 2005 MA final rule), we 
declined to establish a detailed definition of severe and disabling 
chronic because of concerns that a definition might limit plan 
flexibility. The January 2005 MA final rule stated that CMS would 
review and evaluate proposals for specialized MA plans that serve 
beneficiaries who may qualify for enrollment in SNPs covering severe or 
disabling chronic disease categories, and that among the criteria to be 
considered would be the appropriateness of the target population, the 
existence of clinical programs or special expertise to serve the target 
population, and whether the proposal discriminates against ``sicker'' 
members of the target population (70 FR 4596). CMS then developed a 
process that allowed MA organizations to identify qualifying chronic 
conditions.
    Section 164(e) of the Medicare Improvement for Patients and 
Providers Act of 2008 (MIPPA) added a new clause to section 
1859(b)(6)(B)(iii) of the Act to clarify the definition of the special 
needs individuals eligible for C-SNPs. Beginning on January 1, 2010, 
the third type of special needs individual (in addition to the 
categories for individuals who were institutionalized or dually 
eligible for Medicare and Medicaid) was defined as an individual who 
has one or more co-morbid and medically complex chronic condition(s) 
that are substantially disabling or life-threatening, has a high risk 
of hospitalization or other significant adverse health outcomes, and 
requires specialized delivery systems across domains of care. CMS 
continued to use the term ``special needs individual who has a severe 
or disabling chronic condition'' for this group. Based on the MIPPA 
amendments to the Act, CMS adopted the definition of severe or 
disabling chronic condition at Sec.  422.2 in the final rule with 
comment period titled Medicare Program; Medicare Advantage and 
Prescription Drug Benefit Programs: Negotiated Pricing and Remaining 
Revisions, which appeared in the Federal Register on January 12, 2009 
(74 FR 1493, hereafter, the January 2009 final rule (FR)). (The January 
2009 FC discussed and finalized a number of provisions related to 
eligibility for and performance requirements for C-SNPs and SNPs 
generally.)
    Section 164(e) of MIPPA also directed the Secretary to convene a 
panel of clinical advisors to determine the chronic conditions that 
meet the definition severe or disabling chronic conditions used in the 
amendment to the definition at section 1859(b)(6)(B)(iii) of the Act. 
CMS subsequently convened the panel in October 2008 and implemented the 
fifteen SNP-specific chronic conditions recommended by the panel that 
met the

[[Page 79561]]

definition of severe or disabling and needed specialized care 
management. The list was later incorporated into Chapter 16b of the 
Medicare Managed Care Manual (MMCM).
    In 2018, the BBA of 2018 amended section 1859(b)(6)(B)(iii) of the 
Act by adding a new definition of special needs individuals to apply 
beginning January 1, 2022. Under the new definition of special needs 
individual, an eligible individual must, on or after January 1, 2022, 
``have one or more comorbid and medically complex chronic conditions 
that is life threatening or significantly limits overall health or 
function, have a high risk of hospitalization or other adverse health 
outcomes, and require intensive care coordination and that is listed 
under [section 1859(f)(9)(A) of the Act].'' Subsection (f)(9)(A) 
directs the Secretary to convene a panel of clinical advisors every 5 
years to review and revise a list of chronic conditions that meet two 
sets of criteria:
     The amended definition of a severe or disabling chronic 
condition in subsection (b)(6)(B)(iii); and
     Conditions that require prescription drugs, providers, and 
models of care that are unique to the specific population of enrollees 
in a specialized MA plan for special needs individuals and either (1) 
as a result of enrollment in a C-SNP, the enrollee with the condition 
would have a reasonable expectation of meeting a certain standard 
regarding health status, outcomes and costs compared to other coverage 
options, or (2) the condition has a low prevalence in the general 
population of Medicare beneficiaries or a disproportionally high per-
beneficiary cost.
    We are proposing now to amend the definition of severe or disabling 
chronic condition at Sec.  422.2 to match the definition at section 
1859(b)(6)(B)(iii)(II) of the Act and to include the specific 
conditions identified by the panel convened under section 1859(f)(9)(A) 
of the Act.
    Currently, CMS provides guidance on severe or disabling chronic 
conditions that meet the current regulatory definition of the term in 
Chapter 16b of the Medicare Managed Care Manual (MMCM), which includes 
a list of SNP-specific chronic conditions in section 20.1.2. That list 
of conditions was drawn from a panel of clinical advisors established 
under section 164(e)(2) of the MIPPA of 2008. Starting in 2010, CMS 
adopted subregulatory guidance whereby a C-SNP could only offer a plan 
benefit package (PBP) that covered one of the fifteen SNP-specific 
chronic conditions identified in the guidance. Several of the chronic 
condition categories include a list of sub conditions that provide 
further information regarding the types of diseases that qualify under 
the chronic condition categories. Examples of such conditions include 
autoimmune disorders, cardiovascular disorders, severe hematologic 
disorders, chronic lung disorders, chronic disabling mental health 
conditions, and chronic disabling neurologic disorders. A C-SNP that 
targets several sub-categorical disorders must enroll an eligible 
beneficiary who has one or more of these sub-categorical disorders; the 
C-SNP is not permitted to exclude an eligible beneficiary having the 
covered condition or a covered sub-categorical condition. For example, 
a C-SNP that enrolls special needs individuals with a chronic and 
disabling mental health condition must enroll special needs individuals 
with one or more of the following sub-categorical conditions: bipolar 
disorders, major depressive disorder, paranoid disorder, schizophrenia, 
or schizoaffective disorder. Currently, C-SNPs may only cover one of 
the fifteen qualifying chronic conditions in a single PBP, unless the 
C-SNP receives approval from CMS to focus on a group of severe or 
disabling chronic conditions. Generally, CMS believes that structuring 
a C-SNP to target multiple commonly co-morbid conditions that are not 
clinically linked in their treatment would result in a general market 
product rather than an MA plan that is sufficiently tailored for 
special needs individuals. Therefore, CMS will approve targeting of 
multiple severe or disabling chronic conditions by a C-SNP only for: 
(1) one of the CMS-developed group of commonly co-morbid and clinically 
linked conditions listed in section 20.1.3.1 of Chapter 16b where the 
special needs individuals may have one or more of the conditions in the 
grouping or (2) a MAO-customized group of multiple co-morbid and 
clinically linked conditions where the special needs individuals served 
by the C-SNP have all of the specified conditions.
    In meeting its obligation under section 1859(f)(9)(A) of the Act to 
convene a panel of clinical advisors not later than December 31, 2020, 
to establish the list of conditions that meet the statutory criteria, 
CMS was committed to engaging the public--industry, advocates, 
beneficiaries, and medical professional societies--in the discussion 
about appropriate SNP- specific chronic conditions. Panel members were 
tasked with assessing the statutory criteria for reviewing the 
appropriateness of potential conditions as required by section 
1859(f)(9)(A) of the Act. The criteria are:
     The condition meets the definition of a severe or 
disabling chronic condition under section 1859(b)(6)(B)(iii)(II) of the 
Act on or after January 1, 2022; and
     Conditions that require prescription drugs, providers, and 
models of care that are unique to the special needs individuals with 
several or disabling chronic conditions as defined in subsection 
(b)(6)(B)(iii)(II) of section 1859 of the Act as of that date and:
    ++ As a result of access to, and enrollment in, such a specialized 
MA plan for special needs individuals, individuals with such condition 
would have a reasonable expectation of slowing or halting the 
progression of the disease, improving health outcomes and decreasing 
overall costs for individuals diagnosed with such condition compared to 
available options of care other than through such a specialized MA plan 
for special needs individuals; or
    ++ Have a low prevalence in the general population of beneficiaries 
under this title or a disproportionally high per-beneficiary cost under 
title XVIII of the Act. In addition, sections 1859(f)(9)(B) and (C) of 
the Act require that:
     The list of severe or disabling chronic conditions used 
for C-SNPs include: HIV/AIDS, end stage renal disease (ESRD), and 
chronic and disabling mental illness.
     The panel consider the availability of varied benefits, 
cost-sharing, and supplemental benefits under the Medicare Advantage 
Value-Based Insurance Design (VBID) model being tested by the Center 
for Medicare and Medicaid Innovation (CMMI).
    On August 8, 2019, CMS announced a Request for Information (RFI) 
related to the review of C-SNP specific chronic conditions as mandated 
by the BBA of 2018 to solicit comments from the public to assist the 
panel of advisors convened by CMS under section 1859(f)(9)(A) of the 
Act.\147\ The 2019 SNP Chronic Condition Panel met for three sessions 
between September 9 and September 23, 2019. CMS provided panelists with 
a summary of comments received in response to the RFI. The panelists 
reviewed and discussed the written public comments from 14 stakeholders 
representing the industry, advocacy groups, medical societies, and 
beneficiaries. The panelists also

[[Page 79562]]

examined the chronic conditions already covered by existing C-SNPs. 
They employed their collective national and international experience 
with chronic condition research and clinical practice to weigh 
inclusion of chronic conditions on the list. As in 2008, the panelists 
also considered the condition's prevalence in the Medicare population, 
a factor that would potentially affect the capacity of an MA 
organization to attract eligible enrollees and be viable in a given 
service area as well as being identified in section 
1959(f)(9)(A)(ii)(II) of the Act as a criterion to be considered. The 
panelists were sensitive to the reality that C-SNPs require sufficient 
disease prevalence and access to a specialized provider network within 
a marketable service area to manage risk under a capitated payment 
system (even with risk-adjustment of those capitated payments), and 
effectively and efficiently serve the targeted special needs 
beneficiaries. The panelists also reflected on the need for 
beneficiaries, health care practitioners, and the health care industry 
to recognize the SNP-specific chronic conditions and consider them 
appropriate for a specialized service delivery system in order to 
stimulate participation. While the Panel did consider a condition's 
prevalence in the Medicare population as required by section 
1859(f)(9)(A) of the Act, it was not charged with and did not make any 
additional judgments based on business considerations (that is, the 
potential profitability of the selected chronic conditions) as CMS 
expects interested MA organizations to reach their own conclusions 
about product offerings and markets in which they wish to operate.
---------------------------------------------------------------------------

    \147\ The full RFI can be found here: https://www.cms.gov/Medicare/Health-Plans/SpecialNeedsPlans/Downloads/RFI-Chronic-Condition-SNP-Panel.pdf.
---------------------------------------------------------------------------

    Upon review and deliberation, the Panel identified 22 chronic 
conditions as meeting the statutory criteria. The conditions identified 
are:
    1. Chronic alcohol use disorder and other substance use disorders;
    2. Autoimmune disorders:
     Polyarteritis nodosa,
     Polymyalgia rheumatica,
     Polymyositis,
     Dermatomyositis
     Rheumatoid arthritis,
     Systemic lupus erythematosus,
     Psoriatic arthritis, and
     Scleroderma;
    3. Cancer;
    4. Cardiovascular disorders:
     Cardiac arrhythmias,
     Coronary artery disease,
     Peripheral vascular disease, and
     Valvular heart disease;
    5. Chronic heart failure;
    6. Dementia;
    7. Diabetes mellitus;
    8. Overweight, Obesity, and Metabolic Syndrome;
    9. Chronic gastrointestinal disease:
     Chronic liver disease,
     Non-alcoholic fatty liver disease (NAFLD),
     Hepatitis B,
     Hepatitis C,
     Pancreatitis,
     Irritable bowel syndrome, and
     Inflammatory bowel disease;
    10. Chronic kidney disease (CKD):
     CKD requiring dialysis/End-stage renal disease (ESRD), and
     CKD not requiring dialysis;
    11. Severe hematologic disorders:
     Aplastic anemia,
     Hemophilia,
     Immune thrombocytopenic purpura,
     Myelodysplastic syndrome,
     Sickle-cell disease (excluding sickle-cell trait), and
     Chronic venous thromboembolic disorder;
    12. HIV/AIDS;
    13. Chronic lung disorders:
     Asthma,
     Chronic bronchitis,
     Cystic Fibrosis,
     Emphysema,
     Pulmonary fibrosis,
     Pulmonary hypertension, and
     Chronic Obstructive Pulmonary Disease (COPD);
    14. Chronic and disabling mental health conditions:
     Bipolar disorders,
     Major depressive disorders,
     Paranoid disorder,
     Schizophrenia,
     Schizoaffective disorder,
     Post-traumatic stress disorder (PTSD),
     Eating Disorders, and
     Anxiety disorders;
    15. Neurologic disorders:
     Amyotrophic lateral sclerosis (ALS),
     Epilepsy,
     Extensive paralysis (that is, hemiplegia, quadriplegia, 
paraplegia, monoplegia),
     Huntington's disease,
     Multiple sclerosis,
     Parkinson's disease,
     Polyneuropathy,
     Fibromyalgia,
     Chronic fatigue syndrome,
     Spinal cord injuries,
     Spinal stenosis, and
     Stroke-related neurologic deficit;
    16. Stroke;
    17. Post-organ transplantation care;
    18. Immunodeficiency and Immunosuppressive disorders;
    19. Conditions that may cause cognitive impairment:
     Alzheimer's disease,
     Intellectual and developmental disabilities,
     Traumatic brain injuries,
     Disabling mental illness associated with cognitive 
impairment, and
     Mild cognitive impairment;
    20. Conditions that may cause similar functional challenges and 
require similar services:
     Spinal cord injuries,
     Paralysis,
     Limb loss,
     Stroke, and
     Arthritis;
    21. Chronic conditions that impair vision, hearing (deafness), 
taste, touch, and smell;
    22. Conditions that require continued therapy services in order for 
individuals to maintain or retain functioning.
    The Panel recommended a number of changes to the list of chronic 
conditions that are currently used by CMS to approve C-SNPs. In this 
proposed rule, we are proposing to codify the list of chronic 
conditions created by the panel as part of the definition of severe and 
disabling chronic condition at Sec.  422.2. This proposal takes into 
account the changes recommended by the panel, as discussed in this 
section of this proposed rule. These changes include:
     Removed the term ``limited.'' The panel chose this 
revision so that unlisted chronic conditions will not disqualify the 
enrollee from plan eligibility even if the unlisted or another listed 
condition is not the targeted condition that qualifies the beneficiary 
for a specific C-SNP. In other words, the beneficiary could have other 
conditions beyond the index condition (which is required to be present) 
and still be permitted to enroll in a specific C-SNP. For example, a 
beneficiary with heart failure could also have psoriasis or epilepsy 
and not be excluded from the Chronic Heart Failure C-SNP. Because our 
proposal does not exclude a beneficiary from being a special needs 
individual or eligibility for an applicable C-SNP if the beneficiary 
has conditions in addition to a severe or disabling chronic condition, 
we are not proposing to use the word ``including'' in the proposed 
definition; our proposal is to codify the list of specific conditions 
(and subconditions) that have been identified as meeting the statutory 
criteria and avoid ambiguity regarding related but unlisted conditions;
     Renamed ``Chronic alcohol and other drug dependence'' to 
``Chronic alcohol use disorder and other substance use disorders;''
     Added dermatomyositis, psoriatic arthritis, and 
scleroderma to the

[[Page 79563]]

Autoimmune disorders chronic condition category;
     The panel recommended changing title of ``Cancer, 
excluding pre-cancer conditions or in-situ status'' to ``Cancer; 
``however; they did not recommend altering the current limitations to 
the chronic condition category, only a clerical change to the title;
     Added valvular heart disease to the Cardiovascular 
disorders chronic condition category;
     Added new chronic condition category, ``Overweight, 
Obesity, and Metabolic Syndrome;''
     Added new chronic condition category, ``Chronic 
gastrointestinal disease'' with the following conditions: chronic liver 
disease, non-alcoholic fatty liver disease (NAFLD), hepatitis B, 
hepatitis C, pancreatitis, irritable bowel syndrome, and inflammatory 
bowel disease;
     Renamed the ``End Stage Renal Disease (ESRD) requiring 
dialysis'' condition category to ``Chronic kidney disease (CKD)'' with 
the following conditions: CKD requiring dialysis/end-stage renal 
disease (ESRD), and CKD not requiring dialysis;
     Added Cystic Fibrosis and Chronic Obstructive Pulmonary 
Disease (COPD) to the Chronic lung disorders chronic condition 
category;
     Added post-traumatic stress disorder (PTSD), eating 
disorders, and anxiety disorders to the Chronic and disabling mental 
health conditions category;
     Added fibromyalgia, chronic fatigue syndrome, and spinal 
cord injuries to the Neurologic disorders conditions category;
     Added post-organ transplantation care and immunodeficiency 
and immunosuppressive disorders as new chronic condition categories;
     Created new chronic condition category ``Conditions that 
may cause cognitive impairment,'' including the following sub-
conditions: Alzheimer's disease, intellectual disabilities, 
developmental disabilities, traumatic brain injuries, disabling mental 
illness associated with cognitive impairment, and mild cognitive 
impairment;
     Created new chronic condition category ``Conditions that 
may cause similar functional challenges and require similar services,'' 
including the following sub-conditions: spinal cord injuries, 
paralysis, limb loss, stroke, arthritis, and chronic conditions that 
impair vision, hearing (deafness), taste, touch, and smell; and
     Created new chronic condition category ``Conditions that 
require continued therapy services in order for individuals to maintain 
or retain functioning.''
    As previously demonstrated in the last three bullets, the panel 
recommended the creation of several new chronic condition categories 
that differ from how the current list of severe or disabling chronic 
conditions uses categories as a single condition or set of related 
diseases. By including these new categories, we are proposing that C-
SNPs will be permitted to create benefit packages and care coordination 
services to address the needs of beneficiaries who share the same 
functional needs even if their specific disease or chronic condition 
may differ. For example, using the condition categories ``Conditions 
associated with cognitive impairment;'' ``Conditions associated with 
similar functional challenges and require similar services;'' ``Chronic 
conditions that impair vision, hearing (deafness), taste, touch, and 
smell;'' and ``Conditions that require continued therapy services in 
order for individuals to maintain or retain functioning;'' MA 
organizations would have the opportunity to propose C-SNPs that seek to 
ameliorate specific disease outcomes such as impaired vision without 
having to target one specific chronic condition. In another example, MA 
organizations would be permitted to create specific care coordination 
services and benefit packages to address the functional challenges 
facing beneficiaries with spinal cord injuries and those suffering 
paralysis from stroke. The challenge for SNPs would be to address the 
needs not of enrollees who share the same disease or chronic condition, 
but those diagnosed with different diseases and chronic conditions that 
share similar impacts on health and functionality. The proposed 
categories in this paragraph will apply the same statutory and 
regulatory considerations per the parameters of a severe and disabling 
chronic condition and as noted in Title XVIII of the Act and part 422. 
That is, by proposing to list these three categories that are focused 
on impacts on health and functionality rather than underlying disease 
or condition, we are not proposing to eliminate the need for the effect 
on the enrollee to meet the statutory criteria in section 1859(f)(9) of 
the Act. We believe this new approach to creating a C-SNP is in line 
with types of services and benefits required of current C-SNPs in 
operation, and beneficiaries facing similar challenges would benefit 
from coordination of care among multiple providers for services found 
in a variety of settings appropriate for the enrollee's health 
challenges.
    Under our proposal, this new definition of severe or disabling 
chronic condition will be applicable for plan years that begin on or 
after January 1, 2025. We believe the additional delay will allow plans 
and CMS to put in the place the necessary operational steps to permit 
transition between the current list of chronic conditions and the list 
in this proposal. If adopted in the final rule, several current chronic 
conditions would transition to new chronic condition categories, such 
as End Stage Renal Disease (ESRD) and End Stage Liver Disease. As of 
June 2022, there are 17 ESRD plans with a total enrollment of 4,529 
members. There are no C-SNPs that restrict enrollment to End Stage 
Liver Disease for CY 2022. However, if our proposal is finalized, MA 
organizations seeking to establish a plan covering End Stage Liver 
Disease would be able to do so under the proposed new category of 
Chronic Gastrointestinal Disease. Although this proposal would make 
changes to the list of conditions used by MA organizations to determine 
C-SNP plan offerings, we believe the impact of those changes will be 
minimal. In addition, we are proposing the delay implementing the new 
chronic condition list in order to give CMS time to collect data and 
information related to the structuring of the proposed CKD C-SNP plan 
bids. Per section 1853(a)(1)(H) of the Act, the capitation rates paid 
to MA plans for enrollees with ESRD are set separately from the 
capitation rates and bidding benchmarks applicable for other enrollees, 
which may complicate the transition to using this specific severe or 
disabling chronic condition category. Current ESRD C-SNPs plan bids are 
based on a distinct bidding methodology. CMS will provide additional 
bid pricing information to MAOs if this proposal is finalized. We 
solicit comment on the proposed updates to this definition. 
Specifically, we are soliciting comment on our proposal to limit the 
regulatory definition of severe or disabling chronic condition to the 
list the conditions on the list established by the panel. Also, we are 
seeking comment on the proposed list of chronic conditions recommended 
by the 2019 panel of clinical advisors. We would like to call 
particular attention to proposed condition numbers 19 through 22. Under 
these proposed conditions, the C-SNP would focus on specific and 
clinically appropriate therapeutic approaches that address multiple 
chronic disease types causing similar

[[Page 79564]]

health outcomes and functional limitations. We are seeking feedback on 
the potential clinical accomplishments that may be addressed through 
this type of plan design. We are also seeking comment on challenges 
that might exist both from a clinical and business standpoint. For 
example, we would be interested to know whether and the extent to which 
MA organizations require further guidance from CMS to identify chronic 
conditions or diseases that would fit into condition numbers 19 through 
22.
2. Chronic Condition Special Needs Plan Definition, Scope and 
Eligibility (Sec. Sec.  422.2, 422.4, and 422.52)
    A C-SNP must have specific attributes and meet certain standards 
that go beyond the provision of basic benefits (as defined in Sec.  
422.100(c)) and care coordination that is required of all coordinated 
care plans; such additional standards include the enrollment 
limitations and care management requirements set forth in section 
1859(f) of the Act and codified in the regulations at Sec. Sec.  
422.52(a) and (b), 422.101(f), and Sec.  422.152(g). While C-SNPs must 
generally meet requirements that are specified to all SNPs, we believe 
it is important to codify a definition of C-SNP that reflects how they 
are limited to serving special needs individuals who have a severe or 
disabling chronic condition, as defined in Sec.  422.2 (and which we 
are also proposing to revise). Adopting a definition of C-SNP in Sec.  
422.2 would be consistent with how we have previously adopted 
definitions for the term dual eligible special needs plan (D-SNP) and 
specific types of D-SNPs. We believe adopting a specific definition 
will help to clarify how C-SNP specific requirements and policies are 
distinguishable from requirements and policies for D-SNPs and I-SNPs as 
well as different from general MA coordinated care plans. Since the 
intent of the proposed definition is to provide clarification for MA 
organizations and providers regarding the meaning and scope of C-SNPs, 
we believe this codification will have little to no impact on MA 
enrollees nor accrue operational or other costs to MA organizations. 
Our proposal generally reflects current policy and practice, with a few 
modifications as discussed where applicable.
    As part of current C-SNP subregulatory guidance and during the MA 
plan application process, MAOs may apply to offer a C-SNP that targets 
any one of the following:
     A single CMS-approved chronic condition (selected from the 
list in section 20.1.2 of Chapter 16b);
     A CMS-approved group of commonly co-morbid and clinically-
linked conditions (described in section 20.1.3.1 of Chapter 16b); or
     An MA organization-customized group of multiple chronic 
conditions (described in section 20.1.3.2 of Chapter 16b).
    CMS recognizes that there is value for C-SNPs to use groupings of 
severe or disabling chronic conditions in identifying their focus and 
limiting enrollment, and our proposals reflect how the MA organizations 
that offer C-SNPs must choose a single chronic condition from the 
definition of severe or disabling chronic condition or choose from a 
list of permitted multiple chronic conditions found in in the new 
subparagraphs (A) and (B) under Sec.  422.4(a)(1)(iv).
    First, we are proposing, as part of the definition of C-SNP at 
Sec.  422.2 and in the description of special needs plans at Sec.  
422.4(a)(1)(iv), to codify current guidance regarding the ability of MA 
organizations to offer a C-SNP that focuses on single or multiple 
chronic conditions. The proposed definition of chronic condition 
special needs plan (C-SNP) provides that C-SNPs are SNPs that restrict 
enrollment to MA special needs eligible individuals who have a severe 
or disabling chronic condition as defined in Sec.  422.2 under this 
section. In other words, the chronic conditions on which a C-SNP may 
focus are limited to those conditions listed in the definition of 
severe or disabling chronic condition. When a C-SNP focuses on one 
chronic condition, enrollees must have that severe or disabling chronic 
condition in order to enroll in the C-SNP. In addition to single 
chronic condition category PBPs, CMS currently permits MA organizations 
to apply to offer a C-SNP that includes specific combinations of CMS-
approved group of commonly co-morbid and clinically linked conditions, 
as described in section 20.1.3.1 of Chapter 16b of the MMCM. We are 
proposing to codify how a C-SNP may focus on multiple chronic 
conditions in two ways. The proposed definition of C-SNP provides that 
the restricted enrollment to individuals with severe or disabling 
chronic conditions includes restricting enrollment based on the 
multiple commonly co-morbid and clinically-liked conditions groupings 
specified in Sec.  422.4(a)(1)(iv) of this chapter.
    Currently, CMS has identified five combinations of commonly co-
existing chronic conditions that may be the focus of a C-SNP based on 
our data analysis and recognized national guidelines. The current set 
of combinations include:
     Diabetes mellitus and chronic heart failure;
     Chronic heart failure and cardiovascular disorders;
     Diabetes mellitus and cardiovascular disorders;
     Diabetes mellitus, chronic heart failure, and 
cardiovascular disorders; and
     Stroke and cardiovascular disorders.
    As of March 2022, MA organizations offered 178 C-SNPs covering more 
than one chronic condition. A majority of these plans (151) represent a 
grouping of just three commonly co-morbid and clinically-linked 
conditions: cardiovascular disease, congestive heart failure (CHF), and 
diabetes mellitus. Another 21 plans represented a combination of 
cardiovascular disease and CHF. C-SNPs have tended to focus on 
combinations of these three specific conditions since this policy was 
implemented. Considering the established clinical connection between 
these conditions and the interest among plans and beneficiaries, we 
propose to maintain the current list. We are proposing to codify this 
current list of combinations of chronic conditions that may be used by 
a C-SNP at Sec.  422.4(a)(1)(iv)(A)(1) through (5).
    A C-SNP may not be structured around multiple commonly co-morbid 
conditions that are not clinically linked in their treatment because 
such an arrangement results in a general market product rather than one 
that is tailored for a particular population. As part of its review, 
the 2019 clinical advisor panel convened in accordance with section 
1859(f)(9)(A) of the Act recommended the continuation of the current 
Chapter 16b linked conditions plus three additional groups. The panel 
considered a number of relevant factors, including all statutory 
criteria required under the Act, when determining the appropriateness 
of additional pairings, including clinical considerations and the 
potential of these conditions to be successfully managed by a 
specialized provider network. The panel recommended the following 
additional groupings conditions were as follows:
     Anxiety associated with COPD.
     CKD and post-renal organ transplantation.
     Substance Use Disorder (SUD) and Chronic and disabling 
mental health conditions.
    In addition to our proposal to codify the current approved set of 
commonly co-morbid and clinically-linked conditions, we propose to add 
the three

[[Page 79565]]

recommended pairings as permissible groupings of severe or disabling 
chronic conditions that may be used by C-SNPs at new Sec.  
422.4(a)(1)(iv)(B)(6) through (8). Under this proposal, a C-SNP may 
focus on one of the commonly co-morbid and clinically-linked conditions 
specified in these eight specific combinations of co-morbid condition 
groupings upon CMS approval. We are also proposing to add a new 
paragraph (a)(1)(iv)(A) at Sec.  422.4 to clarify that enrollees need 
only have one of the qualifying conditions for enrollment listed in the 
approved groupings in proposed paragraph (a)(1)(iv)(B). This is 
consistent with current CMS operational practices regarding the current 
set of approved C-SNP groups. We are seeking comment on our proposal to 
codify the current list of five commonly co-morbid and clinically-
linked conditions. We are also seeking comment on the applicability of 
the proposed set of three new chronic condition pairs based on the 
chronic condition panel's recommendations. Second, we are also 
proposing to add at a new paragraph (g) at Sec.  422.52 that SNPs may 
enroll eligible beneficiaries into a C-SNP consisting of commonly co-
morbid and clinically-linked conditions if the beneficiary has only one 
of the qualifying conditions for enrollment.
    Lastly, CMS is not proposing to codify a C-SNP plan application 
option that is currently available under subregulatory guidance in 
section 20.1.3.2 of Chapter 16b of the MMCM. In effect, this will 
remove this approach as an option for C-SNPs beginning 2024. Under the 
current guidance, we permit MA organizations seeking to sponsor a C-SNP 
to apply for an MA organization-customized group of multiple chronic 
conditions. If a C-SNP uses such a customized group of conditions, 
enrollment in that C-SNP is limited to special needs individuals who 
have all of the severe or disabling conditions in the group. CMS has 
reviewed only a few SNP plan application proposals since the initial 
implementation of the C-SNP program and has not granted any 
applications either due to the lack of clinical connection between the 
proposed conditions or because the MA organization failed to meet other 
conditions of the application process. No C-SNPs of this type have been 
approved nor will be operational in CY 2023. We are proposing to remove 
this option from the C-SNP application process beginning in CY 2024. 
Given the historical lack of interest from MA organizations, 
beneficiaries, or patient advocacy groups, we believe there will be 
minimal impact on stakeholders associated with the elimination of this 
current flexibility. In addition, with the addition of three new 
groupings and the ability to establish a C-SNP that is based on 
functional limitations that we are proposing with paragraphs (20) 
through (21) of the proposed definition of severe or disabling chronic 
condition, we believe that there is adequate flexibility for MA 
organizations to develop C-SNPs that meet the needs of the Medicare 
population.
    In conclusion, we are proposing to define C-SNPs at Sec.  422.2 as 
SNPs that restrict enrollment to MA eligible individuals who have a 
severe or disabling chronic condition as defined under Sec.  422.2. We 
are proposing to amend Sec.  422.4(a)(1)(iv) to limit C-SNPs that focus 
on multiple chronic conditions to the list of CMS-approved group of 
commonly co-morbid and clinically linked conditions. And we are 
proposing to amend Sec.  422.52 to clarify that enrollees need only 
have one of the qualifying conditions for enrollment when a C-SNP 
focuses on multiple conditions in one of the groupings specified in 
proposed Sec.  422.4(a)(1)(iv)(B). This will provide greater clarity 
for MA organizations seeking to establish combination plans and for 
Medicare beneficiaries exploring potential MA plan options. We are 
seeking comment on these proposals.
    Many of the changes we are proposing in connection with C-SNPs, 
including the revision of the definition of severe and disabling 
chronic condition and the new definition of C-SNP, would unify and 
streamline existing requirements, which should reduce burden and are 
therefore not expected to have impact. The proposal regarding the 
definitions of severe or disabling chronic condition and C-SNP and the 
amendments to Sec. Sec.  422.4(a)(1)(iv) and 422.52 would be applicable 
beginning with plan year 2024. Together, these proposals would 
implement the new list of chronic conditions recommended by the panel 
of clinical advisors established by section 1859(f)(9)(A) of the Act. 
Our proposed update to the list would create new chronic condition 
categories, relabel several existing categories, and include several 
new sub-conditions ``under a number of chronic conditions. It is 
unclear how many MA organizations would create new C-SNPs based on the 
proposed new list of severe or disabling chronic conditions that meet 
the criteria in section 1859 of the Act. Historically, MA organizations 
have generally focused plan and benefit efforts around a few specific 
chronic conditions. As reflected on Table D-A 1, C-SNPs based on just 
three conditions make up 63 percent of all C-SNPs created since 2007: 
Cardiovascular Disorders, Chronic Heart Failure, and Diabetes 
Mellitus.\148\ Given this historical pattern, we expect that MA 
organizations may be slow or hesitant to create new C-SNP plan type 
options around the new set of chronic conditions.
---------------------------------------------------------------------------

    \148\ Table D-A 1 was created using data from CMS' SNP 
Comprehensive Report, found here: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Special-Needs-Plan-SNP-Data. Data was collected 
by sampling reports from May 2007 through January 2022. Data from 
reports was then coded and analyzed to create a distribution of C-
SNP plan types.
---------------------------------------------------------------------------

    We anticipate that changes from current plan and enrollment 
practices would most likely be seen in connection with chronic 
condition categories like ESRD, where the proposal would somewhat 
revise enrollment qualifications. Based on the proposal to use the 
condition category ``Chronic kidney disease (CKD)'' and to include ESRD 
as part of that condition category, we expect that current ESRD C-SNPs 
will be permitted to enroll, in addition to those with ESRD, 
beneficiaries with CKD Stages 1-4 once this proposal is finalized. As 
of July 2022, CMS contracts with 17 C-SNPs for ESRD. CMS estimates that 
just under 23 percent of Medicare beneficiaries qualify for one of the 
stages of CKD; however, this figure includes beneficiaries who may 
already qualify for an ESRD C-SNP in their area.\149\ However, we have 
no clear evidence to suggest how this will impact enrollment for 
current ESRD plans potentially impacted by this proposal or new C-SNPs 
that would be created because of it.
---------------------------------------------------------------------------

    \149\ This 2018 estimate is based on the CMS Office of 
Enterprise Data and Analytics analysis of chronic conditions 
identified using ICD-10 codes. Additional information can be found 
here: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Chronic-Conditions/CC_Main.
---------------------------------------------------------------------------

    Because MA organizations would be able to choose to create and 
submit a C-SNP under one of the new chronic condition categories 
starting in CY 2024 (with the exception CKD as proposed in section 
IV.A.1. of this proposed rule), we do not see this as a new burden. The 
burden associated with the MA application process is covered under PRA 
CMS-10237/OMB 0938-0935, while the burden associated with complying 
with the SNP MOC process is covered under PRA CMS-10565/OMB 0938-1296. 
The proposals here, if finalized, would add no additional burden for MA 
organizations sponsoring a C-SNP now or in the future. The proposed 
policy would allow MA organizations to select new C-SNP plan

[[Page 79566]]

type options, but it would not compel them to do so. However, we would 
monitor all C-SNP type applications for CY 2025 and future years to 
inform future implementation strategies and impact on the program.
[GRAPHIC] [TIFF OMITTED] TP27DE22.010

B. Defining Institutional Special Needs Plans and Codifying Beneficiary 
Protections (Sec.  422.2)

    Institutional Special Needs Plans (I-SNPs) are MA special needs 
plans (SNPs) that restrict enrollment to MA-eligible individuals who 
are institutionalized or institutionalized-equivalent as those terms 
are defined in Sec.  422.2. Institutionalized is defined, for the 
purposes of defining a special needs individual and for the open 
enrollment period for institutionalized individuals at Sec.  
422.62(a)(4), as 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: skilled nursing facility 
(SNF) as defined in section 1819 of the Act (Medicare); nursing 
facility (NF) as defined in section 1919 of the Act (Medicaid); 
intermediate care facility for individuals with intellectual and 
developmental disabilities as defined in section 1905(d) of the Act; 
psychiatric hospital or unit as defined in section 1861(f) of the Act; 
rehabilitation hospital or unit as defined in section 1886(d)(1)(B) of 
the Act; long-term care hospital as defined in section 1886(d)(1)(B) of 
the Act; hospital which has an agreement under section 1883 of the Act 
(a swing-bed hospital); and last, subject to CMS approval, a facility 
that is not listed as part of the definition of ``Institutionalized'' 
at Sec.  422.2 but meets both of the following: furnishes similar long-
term, healthcare services that are covered under Medicare Part A, 
Medicare Part B, or Medicaid; and whose residents have similar needs 
and healthcare status as residents of one or more facilities listed in 
the definition of ``Institutionalized'' at Sec.  422.2. We define, at 
Sec.  422.2, the term ``institutionalized-equivalent,'' for the purpose 
of identifying a special needs individual, as an MA eligible individual 
who is living in the community, but requires an institutional level of 
care; in addition, the definition of the term ``institutionalized 
equivalent'' includes specific limitations on how an assessment is made 
that an individual meets the definition.
    Per the Medicare Prescription Drug, Improvement, and Modernization 
Act of 2003 (Pub. L. 108-173), I-SNPs, along with C-SNPs and D-SNPs, 
are MA plans that are specifically designed to provide targeted care 
and limit enrollment to special needs individuals. Under section 
1859(b)(6)(B) and (f)(1) of

[[Page 79567]]

the Act, I-SNPs restrict enrollment to MA eligible individuals who meet 
the definitions of ``institutionalized'' or ``institutionalized-
equivalent'' in Sec.  422.2, which are based on section 
1859(b)(6)(B)(i) and (f)(2)(A) of the Act. As of February 2022, there 
are 87 I-SNP MA contracts with 186 plans serving 96,792 enrollees.\150\ 
CMS currently permits MA organizations to submit SNP applications that 
are restricted to institutionalized individuals only or 
institutionalized-equivalent individuals only, as defined in Sec.  
422.2 respectively, or to submit an application for a combination SNP 
that covers beneficiaries who qualify for either institutionalized or 
institutionalized-equivalent status, but are enrolled under the same 
plan.
---------------------------------------------------------------------------

    \150\ See ``SNP Comprehensive Report 2022 02,'' found here: 
https://www.cms.gov/research-statistics-data-and-systemsstatistics-trends-and-reportsmcradvpartdenroldataspecial-needs/snp-comprehensive-report-2022-02.
---------------------------------------------------------------------------

    We propose to add four definitions at Sec.  422.2: a definition of 
I-SNPs and three additional definitions for each of the current I-SNP 
types that correspond to CMS' current MA application process. In 
addition, we propose to codify, as part of the definitions for I-SNPs 
that enroll special needs individuals who are institutionalized, 
current policies that address the need for the I-SNP to contract with 
the institutions where such special needs individuals reside. We 
believe that adding these four definitions will help clarify the 
specific standards that are applicable to I-SNPs, as distinguished from 
other MA plans and from other MA SNPs. This proposal includes tying the 
definitions of institutionalized and institutionalized-equivalent in 
Sec.  422.2 and the list of eligible institutions set forth in that 
definition, to our proposed definition of I-SNP. This approach is 
consistent with how CMS has adopted regulatory definitions for D-SNPs, 
FIDE SNPs, and HIDE SNPs in Sec.  422.2. The proposed definitions 
clarify that MA organizations may offer SNPs that are: exclusive to 
beneficiaries meeting the definition of institutionalized under Sec.  
422.2; are exclusive to beneficiaries meeting the definition of 
institutionalized-equivalent under Sec.  422.2; or are exclusive to 
beneficiaries who meet either of those definitions. Our proposed 
language linking I-SNP enrollment to the definitions noted here matches 
current subregulatory guidance and practice used by CMS during the MA 
application process for I-SNPs.
    Lastly, we are proposing to amend Sec.  422.101(f)(2) to add a 
requirement that the models of care for I-SNPs ensure that contracts 
with long-term care institutions (listed in the definition of the term 
institutionalized in Sec.  422.2) contain requirements allowing I-SNP 
clinical and care coordination staff access to enrollees of the I-SNP 
who are institutionalized. This proposed new paragraph (f)(2)(vi) would 
codify longstanding subregulatory guidance in section 20.3 of Chapter 
16b of the MMCM that is designed to provide I-SNPs enrollees 
protections regarding access to care coordination and communication 
between providers and I-SNP staff. Under our proposal, I-SNP clinical 
and care coordination staff may be employed by the MA organization 
offering the I-SNP or under contract with the I-SNP to furnish 
healthcare, clinical or care coordination services. CMS has received 
feedback in the past that institutional providers sometimes fail to 
share relevant information regarding an I-SNP enrollee's health status 
or need for care or services with the I-SNP staff. We intend that 
codifying this requirement for I-SNP MOCs to ensure that the contracts 
between the I-SNP and these institutions where I-SNP enrollees reside 
include provisions allowing access for I-SNP staff will protect 
beneficiaries. Our proposal would leave the details of how access to I-
SNP enrollees would be assured for I-SNP staff but we intend the term 
``access'' to be interpreted broadly to encompass information sharing, 
admission to physical facilities to see enrollees, and other issues. We 
are seeking comment on whether the regulation text needs to more 
specifically address information sharing or other related issues. We 
believe that codifying this policy would improve transparency for 
stakeholders, improve care coordination and ensure the continuity of 
care for vulnerable beneficiaries. In the years since it was issued in 
2016, we have used the I-SNP guidance from section 20.3 of Chapter 16b 
to administer policies central to plan compliance and application 
review. In that time, I-SNP enrollment has grown from 54,643 enrollees 
under 37 contracts and 79 plans to 96,792 enrollees being served by 87 
I-SNP MA contracts with 186 plans.\151\ As of 2021, MedPAC shows that 
72 percent of Medicare beneficiaries have access to at least one I-SNP 
plan, up from 52 percent in 2017.\152\ As MedPAC noted in its March 
2013 report, I-SNPs perform better than other SNPs and other MA plans 
on the majority of available quality measures for SNPs. MedPAC also 
noted in the same report that I-SNPs had much lower than expected 
hospital readmission rates and scored just as well as D-SNPs and C-SNPs 
on other measures.\153\ From an administrative standpoint, CMS has 
found I-SNPs to be comparable to other SNPs when it comes to meeting 
compliance standards.
---------------------------------------------------------------------------

    \151\ See ``SNP Comprehensive Report 2016 01,'' found here: 
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Special-Needs-Plan-SNP-Data-
Items/SNP-Comprehensive-Report-2016-01; and ``SNP Comprehensive 
Report 2022 02,'' found here: https://www.cms.gov/research-statistics-data-and-systemsstatistics-trends-and-reportsmcradvpartdenroldataspecial-needs/snp-comprehensive-report-2022-02.
    \152\ See Chapter 12: The Medicare Advantage program: Status 
report (March 2021), found here: https://www.medpac.gov/wp-content/uploads/2021/10/mar21_medpac_report_ch12_sec.pdf.
    \153\ The full report, ``Chapter 14: Medicare Advantage special 
needs plans'' (March 2013), can be found here: https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/chapter-14-medicare-advantage-special-needs-plans-march-2013-report-.pdf.
---------------------------------------------------------------------------

    Section 1859(f) of the Act includes additional requirements for all 
types of specialized MA plans for special needs individuals and 
requirements specific to I-SNPs. Per the current definition of 
specialized MA plan for special needs individuals in Sec.  422.2, MA 
SNPs must all cover Part D benefits under part 423 for their enrollees. 
In addition, the definition of MA SNPs provides that these MA plans 
have been designated by CMS as meeting the requirements of an MA SNP as 
determined on a case-by-case basis using criteria that include the 
appropriateness of the target population, the existence of clinical 
programs or special expertise to serve the target population, and 
whether the proposal discriminates against sicker members of the target 
population. The proposed definition of the term ``institutional special 
needs plan (I-SNPs)'' uses the term ``specialized MA plan for special 
needs individuals'' and therefore incorporates the requirements and 
limitations on SNPs that are included in that definition in Sec.  
422.2. Accordingly, we are proposing to define I-SNPs as SNPs that 
restrict enrollment to MA eligible individuals who meet the definition 
of institutionalized and institutionalized-equivalent in this section. 
We are also proposing to include in our definition of I-SNP that there 
are the following types: I-SNP Institutionalized, I-SNP Equivalent, and 
I-SNP Hybrid. We believe this definition is consistent with our current 
guidance and operational practices involving I-SNPs and Medicare 
beneficiaries enrolled in those plans such that this proposal 
represents a continuation of I-SNP policies.
    We are also proposing to define three I-SNP types that are 
currently used by

[[Page 79568]]

CMS to operationalize MA applications and Medicare beneficiary 
enrollment into I-SNPs. The proposed definitions address both 
enrollment limitations used by these different types of I-SNPs and 
certain performance and contracting requirements that are specific to 
each type. Each new definition would be added to Sec.  422.2.
    Our first proposed definition is an I-SNP type that enrolls only 
Medicare beneficiaries who meet the definition of institutionalized in 
Sec.  422.2. We proposing to call these I-SNPs ``Facility-based 
Institutional Special Needs plans'' or FI-SNPs. In addition to the 
enrollment criteria noted in this paragraph, the proposed definition 
provides that FI-SNPs must own or have a contractual arrangement with 
at least one institution specified in the definition of 
institutionalized in Sec.  422.2 for each county within the plan's 
service area and with each institutionalized facility serving enrollees 
in their plan. The latter two requirements represent codifications of 
longstanding subregulatory guidance in section 20.3 of Chapter 16b of 
the MMCM.
    We are proposing a definition for a second I-SNP type called 
``Institutional-equivalent Special Needs Plan'' or IE-SNP. IE-SNPs are 
an I-SNP type that restricts enrollment to MA eligible individuals who 
meet the definition of institutionalized-equivalent in Sec.  422.2. 
Those special needs individuals are living in the community but require 
an institutional level of care, which is determined using assessment 
tools that meet requirement specified in the definition of the term 
institutionalized-equivalent. The determination that a Medicare 
beneficiary requires an institutional level of care (LOC) must be made 
using a State assessment tool from the State in which the individual 
resides and the LOC assessment must be conducted by an impartial party 
with the requisite knowledge and experience to accurately identify 
whether the beneficiary meets the institutional LOC criteria. CMS has 
interpreted the standard that the assessment be done by an impartial 
entity as requiring that the entity be other than the I-SNP and that 
the I-SNP cannot own or control the entity. CMS currently uses the IE-
SNP designation for operational purposes during the MA application 
review and approval process.
    We are proposing a definition for a third I-SNP type called 
``Hybrid Institutional Special Needs Plan.'' HI-SNPs are I-SNP type 
that restricts enrollment to both MA eligible individuals who meet the 
definition of institutionalized and MA eligible individuals who meet 
the definition of institutionalized-equivalent. For enrollees that meet 
the definition of institutionalized, the HI-SNP must own or contract 
with at least one institution, as determined under the definition of 
institutionalized in this section, for each county within the plan's 
county-based service area; and must own or have a contractual 
arrangement with each institutionalized facility serving enrollees. In 
other words, we are proposing that HI-SNPs meet the standards specified 
in the definitions of FI-SNPs and HE-SNPs since these hybrids serve 
both type of special needs individuals. CMS currently uses the HI-SNP 
designation for operational purposes during the MA application review 
process.
    CMS's current guidance for I-SNPs in section 20.3.4 of Chapter 16b 
of the MMCM addresses a number of requirements that the contract 
between the I-SNP and the LTC facility must include in order for an I-
SNP to meet CMS compliance in addition to the requirement, proposed to 
be added to Sec.  422.101(f)(2)(vi), that the I-SNP model of care 
ensure that contracts with long-term care institutions (listed in the 
definition of the term institutionalized in Sec.  422.2) contain 
requirements allowing I-SNP clinical and care coordination staff access 
to enrollees of the I-SNP who are institutionalized. Some of that 
guidance addressing an I-SNP's relationship with long-term care 
institutions is proposed to be included in the definitions for specific 
types of I-SNPs. We are not proposing to codify the remainder of the 
requirements listed in section 20.3.4 of Chapter 16b because they would 
duplicate requirements in other current MA regulations under part 422. 
Specifically, we believe the following standards described in section 
20.3 are addressed or required by current regulations:
     Section 20.3.4 states that facilities in a chain 
organization must be contracted to adhere to the I-SNP MOC. Currently, 
requirements for compliance with and implementation of the I-SNP's 
required model of care (MOC) by the LTC facilities and other providers 
that contract with the I-SNP to furnish services to the I-SNP's 
enrollees are addressed by Sec. Sec.  422.101(f)(2), 422.202 and 
422.504. Currently, all SNPs are required under Sec.  422.4(a)(1)(iv) 
to submit their model of care (MOC) to CMS for National Commission on 
Quality Assurance (NCQA) evaluation and approval. All SNPs (including 
I-SNPs) are required by Sec.  422.101(f)(2) to have appropriate 
employed, contracted, or non-contracted staff trained on the SNP plan 
MOC to coordinate and/or deliver all services and benefits; and in 
addition, SNPs must develop and implement model of care requirements to 
coordinate the delivery of care to their enrollees across healthcare 
settings, providers, and services to assure continuity of care. Per 
Sec.  422.202, MA organizations are required to provide information 
about the rules of participation in the organization's network of 
providers and to have a mechanism for consulting with and communicating 
practice guidelines and utilization management guidelines to contracted 
providers. Finally, Sec.  422.504(i) provides that MA organizations 
must include certain provisions and beneficiary protections in their 
contracts with first tier, downstream and related entities (which 
includes contracted providers), including compliance with Medicare laws 
and the MA organization's contractual obligations with CMS. Thus, we 
believe codifying this aspect of the existing guidance would be 
duplicative. We solicit comment from providers whether an additional 
regulation specific to this issue is necessary to further clarify the 
obligations of I-SNPs.
     Section 20.3.3 provides that an I-SNP must document that 
it is prepared to implement the approved MOC when an enrollee changes 
residence or LTC facility that furnishes services to the I-SNP's 
enrollees. If an I-SNP enrollee changes applicable facility status, the 
I-SNP must document that it is prepared to implement the approved MOC 
at the enrollee's new residence or in another I-SNP contracted LTC 
setting that provides an institutional level of care. Again, we believe 
a regulation that is specific to this issue would be duplicative of 
existing regulations. All SNPs, including I-SNPs, are required under 
Sec.  422.101(f)(2)(ii) to have contracted staff trained on the MOC. In 
addition, per Sec.  422.101(f)(1), SNPs must develop and implement 
individualized plans of care for enrollees and use interdisciplinary 
teams to manage and furnish care; we believe that in order to meet 
those obligations, an I-SNP would necessarily have to involve and 
coordinate services with the long-term care facility (LTCF) where an 
enrollee receives services.
     Section 20.3.4 of Chapter 16b also addresses how:
    ++ The I-SNP must provide protocols to all LTCFs for serving the I-
SNP's enrollees in accordance with the approved I-SNP MOC, and the 
contract with each LTCF must reference these protocols.
    ++ The I-SNP must clearly specify in its contract with the LTCF 
provider the services to be provided to I-SNP

[[Page 79569]]

enrollees by the LTCF and its staff, in accordance with the protocols 
and payment for the services provided by each LTCF. The I-SNP must 
include in its contract with the LTCF provider a training plan to 
ensure that LTC facility staff understands their responsibilities in 
accordance with the approved I-SNP MOC, protocols, and contract. If the 
training plan is a separate document, then the contract should 
reference it.
    Like the other issues previously discussed, these actions are 
required in order for an I-SNP to meet their obligations to coordinate 
and implement the approved MOCs and to maintain effective oversight 
over first tier, downstream and related entities involved in the 
furnishing of covered benefits to enrollees under Sec. Sec.  422.101(f) 
and 422.504. We believe additional regulations that are specific to how 
Sec. Sec.  422.101(f) and 422.504 work together in this context would 
be unnecessary and duplicative.
     Section 20.3.4 provides that I-SNPs must develop 
procedures for LTCFs to maintain a list of credentialed I-SNP clinical 
staff in accordance with the LTC facility's responsibilities under 
Medicare conditions of participation. Per Sec.  422.204(b)(2), MAOs 
must follow a documented process with respect to providers and 
suppliers who have signed contracts or participation agreements in 
meeting the initial credentialing and recredentialing requirements. In 
addition, per Sec.  422.204(b)(3), the I-SNP can only contract with a 
LTCF (which is a provider of services as that term is defined in 
section 1861(u) of the Act) for furnishing Part A and B benefits when 
the facility has a Medicare participation agreement, which would 
include the obligations to comply with conditions of participation in 
42 CFR part 483. We believe that an additional regulation that 
specifies that I-SNPs must include in their contracts with LTCFs that 
the LCTFs comply with their Medicare conditions of participation would 
be unnecessarily duplicative.
     Section 20.3.4 of Chapter 16b provides that I-SNPs must 
ensure that the contract between the I-SNP and the LTCF where enrollees 
of the I-SNP reside must specify the start and end date of the 
contract; the guidance also states that the contract should include the 
full CMS contract cycle, which begins on January 1 and ends on December 
31. The I-SNP may also contract with additional LTC facilities 
throughout the CMS contract cycle. To the extent that this guidance 
goes beyond requirements in Sec.  422.504(i), we do not believe that it 
is necessary to adopt a regulation to require these specific contract 
terms for I-SNPs and their contracted LTCFs. The proposed definitions 
for the I-SNPs that serve beneficiaries that are institutionalized 
would require those MA plans to have contracts with the LTCFs where 
enrollees reside and with LTCFs in the service area; in order to meet 
these requirements during the full term of the I-SNP's contract with 
CMS, those contracts would necessarily have to cover the full January 
through December time frame. We do not believe that a more detailed 
regulation governing the terms of contracts between I-SNPs and LTCFs on 
this point is necessary.
     Finally, section 20.3.4 of Chapter 16b provides that the 
contract between the I-SNP and the LTCF include a termination clause 
that clearly states any grounds for early termination of the contract 
and a clear plan for transitioning the enrollees to another facility 
where the I-SNP can furnish covered benefits should the I-SNP's 
contract with the LTC facility terminate. In addition, a transition 
plan would only be necessary if the beneficiary elects to continue 
enrollment with the I-SNP rather than elect enrollment in a different 
MA plan or Original Medicare. Further, we note that a beneficiary who 
remains in the terminated facility or who transfers to another non-
contracted facility would lose eligibility for enrollment in their 
current I-SNP. Section 422.504(i) requires MA organizations to include 
in their contracts with first tier, downstream and related entities 
provisions that address termination and scope of the activities to be 
performed by the contracted entity; this regulation applies to 
contracts between the MA plan and providers. In addition, SNPs are 
required to implement the MOC under Sec.  422.101(f) with appropriate 
networks of providers and specialists designed to meet the specialized 
needs of the plan's targeted enrollees and to have individualized plans 
of care for each enrollee; ensuring the continued delivery of services 
during a period of transition would necessarily have to be addressed in 
implementation of the MOC and plans of care. Therefore, we are not 
proposing an additional regulation to codify this aspect of our current 
guidance.
    The changes that we are proposing carry no burden. We are proposing 
definitions of I-SNP and I-SNP types under Sec.  422.2 to clarify 
existing policies that are specific to I-SNPs and not general policies 
impacting D-SNPs or C-SNPs. This proposal is also a codification of 
several specific longstanding subregulatory guidance in Chapter 16b of 
the MMCM. We believe there is no burden associated with either pieces 
of our proposal, as the creation of a definition will not engender 
operational or policy changes impacting MA organizations sponsoring I-
SNPs nor impact enrollees; likewise, we do not expect any burden 
associated with the continuation of existing guidance that was 
incorporated and implemented with the release of the 2016 update of 
Chapter 16b of the MMCM.
    We are seeking comment on the proposed codification of chapter 16b 
subregulatory guidance and the proposed new definition of I-SNP. In 
particular, we are seeking feedback on I-SNP operationalization of the 
current subregulatory guidance. We also seek feedback from commenters 
who have other suggestions for improving the care furnished to the 
special needs individuals enrolled in I-SNPs, many of whom are dually 
eligible for Medicare and Medicaid, based on parallels or lessons 
learned from other State or Federal programs administering services to 
long-term care residents or beneficiaries requiring a nursing home 
level of care.

C. Definition of Network-Based Plan (Sec. Sec.  422.2 and 422.114)

    This proposed revision would move the current definition of a 
network-based plan from Sec.  422.114(a)(3)(ii) to the definitions 
section in Sec.  422.2. This proposed change has no implications for 
other provisions in part 422 in which the definition or description of 
network plans play a role, for example, the network adequacy provisions 
at Sec.  422.116 and the plan contract crosswalk provisions at Sec.  
422.530. Currently, Sec.  422.116(a)(1)(i) references the current 
definition of network-based plan at Sec.  422.114(a)(3)(ii) in its 
specification of network adequacy requirements for the various plan 
types. We propose to make, however, a conforming change to Sec.  
422.116(a)(1)(i) consistent with our proposal to move the definition of 
network-based plan; this conforming change is to reference Sec.  422.2. 
The regulation at Sec.  422.530(a)(5) specifically addresses the types 
of plans to which it applies and when CMS considers a crosswalk to be 
to a plan of a different type, so we do not believe any amendment to 
Sec.  422.530 is necessary in connection with moving the definition of 
network based plan to Sec.  422.2.
    Private-fee-for-service (PFFS) plans were established by the 
Balanced Budget Act of 1997 and were originally not required to have 
networks. The Medicare Improvements for Patients and Providers Act of 
2008 (MIPPA) revised

[[Page 79570]]

the PFFS requirements to require that beginning contract year 2011 any 
PFFS plan operating in the same service area as two or more network-
based plans also have a network. For purposes of this requirement, 
section 1852(d)(5)(C) of the Act and Sec.  422.114(a)(3)(ii) define 
network-based plans as a coordinated care plan (as described in section 
1851(a)(2)(A) of the Act and Sec.  422.4(a)(1)(ii)), a network-based 
MSA plan, and a section 1876 reasonable cost plan. The statutory and 
regulatory definitions both specifically exclude an MA regional plan 
that meets access requirements substantially through means other than 
written contracts, per Sec.  422.112(a)(1)(ii).
    When codifying this requirement in the final rule that appeared in 
the Federal Register September 18, 2008 titled ``Medicare Program; 
Revisions to the Medicare Advantage and Prescription Drug Benefit 
Programs'', (73 FR 54226), we included the definition of network-based 
plan in the section of the regulations for PFFS plans, as the 
definition was integral to the new requirement for PFFS plans. (73 FR 
54230, 54249) A network-based plan, however, has meaning in contexts 
other than in addressing these specific requirements for MA PFFS plans 
and, in order to ensure that the definition is more readily accessible 
for those seeking requirements related to network-based plans, we are 
proposing to move it to the definitions section at Sec.  422.2. The 
PFFS section at Sec.  422.114(a)(3)(ii) would continue to include 
language specifying the network requirement, but the proposed 
conforming change to this section would refer to the definitions in 
Sec.  422.2 instead of including the definition in Sec.  
422.114(a)(3)(ii).

D. Required Notices for Involuntary Disenrollment for Loss of Special 
Needs Status (Sec.  422.74)

    Section 231 of the Medicare Modernization Act of 2003 (MMA) amended 
section 1851(a)(2)(A)(ii) of the Act to establish specialized MA plans 
for special needs individuals. Special needs plans (SNPs), defined at 
section 1859(b)(6)(A) of the Act, are plans with limited enrollment, 
specifically designed to provide targeted care to institutionalized 
individuals, dual eligible individuals, or individuals with severe or 
disabling chronic conditions, collectively known as a ``special needs 
individual'' as defined at section 1859(b)(6)(B) of the Act. Only those 
individuals who qualify as special needs may enroll, and remain 
enrolled, in a SNP. In the January 2005 MA final rule, we established 
regulations at Sec.  422.52 that provided that to be eligible to enroll 
in a SNP, an individual must meet the definition of a special needs 
individual, meet the eligibility requirements for that specific SNP, 
and be eligible to elect an MA plan. Sections 1859(b)(6)(B) and 
1894(c)(4) of the Act, and CMS's implementing regulation at Sec.  
422.52(d), allow individuals who lose special needs status, if, for 
example, they were to no longer have the level of Medicaid eligibility 
or other qualifying condition necessary to be eligible for the plan, to 
have a period of deemed continued eligibility if they are reasonably 
expected to regain special needs status within, at most, the succeeding 
6-month period. The period of deemed eligibility must be at least 30 
days but may not be longer than 6 months. In implementing regulations, 
we also established loss of special needs status (and of deemed 
continued eligibility if applicable) as a basis for required 
disenrollment at Sec.  422.74(b)(2)(iv).
    The January 2005 MA final rule served as the basis for our current 
sub-regulatory guidance in Chapter 2 of the Medicare Managed Care 
Manual, Section 50.2.5, which specifically provides that plans send 
certain notices prior to and following the effective date of 
involuntary disenrollment based on loss of special needs status. These 
policies are intended to ensure that beneficiaries are given adequate 
notice prior to being disenrolled from a SNP and provided an 
opportunity to prove that they are eligible to remain enrolled in the 
plan, if applicable. Providing these members at least 30 days advance 
notice of disenrollment, along with information about deemed continued 
eligibility and eligibility for an SEP to elect other coverage, gives 
beneficiaries ample time to prove they are still eligible for their SNP 
or to evaluate other coverage options.
    To provide stability and assurance about the requirements for MA 
organizations in these situations as well as transparency to 
stakeholders, we are proposing to codify current policy for MA plan 
notices prior to a member's disenrollment for loss of special needs 
status, as well as a final disenrollment notice. We intend that 
stakeholders will be able to rely on these regulations, and that these 
regulations would only be changed through a subsequent rulemaking, 
establishing the procedures that an MA organization must follow in the 
event that a SNP enrollee loses special needs status and is disenrolled 
from the SNP on that basis. Specifically, we are proposing to revise 
Sec.  422.74(d) by redesignating paragraph (d)(8) as paragraph (9) and 
adding new paragraph (8), to state that the plan would be required to 
provide the enrollee a minimum of 30 days advance notice of 
disenrollment, regardless of the date of the loss of special needs 
status. As proposed in new paragraphs (8)(i) and (ii), an advance 
notice would be provided to the enrollee within 10 calendar days of 
learning of the loss of special needs status, affording the enrollee an 
opportunity to prove that he or she is still eligible to remain in the 
plan. The advance notice would also include the disenrollment effective 
date, a description of SEP eligibility, as described in Sec.  
422.62(b)(11), and, if applicable, information regarding the period of 
deemed continued eligibility, the duration of the period of deemed 
continued eligibility, and the consequences of not regaining special 
needs status within the period of deemed continued eligibility. 
Additionally, as proposed in new paragraph (8)(iii), the plan would be 
required to provide the enrollee a final notice of involuntary 
disenrollment within 3 business days following the disenrollment 
effective date, which is either the last day of the period of deemed 
continued eligibility, if applicable or a minimum of 30 days after 
providing the advance notice of disenrollment, and must be sent before 
submission of the disenrollment to CMS. Lastly, we propose in new 
paragraph (8)(iv), that the final involuntary disenrollment notice must 
include an explanation of the individual's right to file a grievance 
under the MA organization's grievance procedures, which are required by 
Sec.  422.564.
    We are codifying longstanding guidance with these changes. Based on 
infrequent questions or complaints from MA organizations and enrollees 
on these notices, we believe that these notice requirements have been 
previously implemented and are currently being followed by plans. We do 
not believe the proposed changes to the regulatory text will adversely 
impact MA organizations or individuals enrolled in MA special needs 
plans who lose special needs status, other than the appropriate 
disenrollment from the plan due to the individual's loss of eligibility 
for the plan. Similarly, we do not believe the proposed changes would 
have any impact to the Medicare Trust Funds.

E. Involuntary Disenrollment for Individuals Enrolled in a MA Medical 
Savings Account (MSA) Plan (Sec.  422.74)

    Section 4001 of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-
33) added section 1851(a)(2) of the Act

[[Page 79571]]

establishing private health plan options available through Part C of 
the Medicare program known originally as ``Medicare + Choice'' and 
later as ``Medicare Advantage (MA).'' Under this program, eligible 
individuals may elect to receive Medicare benefits through enrollment 
in one of an array of private health plan choices beyond the original 
Medicare program. As enacted, section 1851(a)(2)(B) of the Act 
established the authority for an MA organization to offer a MA medical 
savings account (MSA) option which is, a combination of a high-
deductible MA plan, as defined in section 1859(b)(3) of the Act, with a 
contribution into a Medical Savings Account (MSA).
    In the interim final rule titled Medicare Program; Establishment of 
the Medicare+Choice Program,'' published in the Federal Register June 
26, 1998 (63 FR 34968), we established the conditions for MA 
organizations to enroll individuals in a MA MSA plan. The restrictions 
on enrollment in MA MSA plans were set forth under section 1851(b)(2) 
and (b)(3) of the Act and in implementing regulations at Sec.  422.56. 
Specifically, consistent with section 1851(b)(2) of the Act, Sec.  
422.56(b) provides that an individual who is enrolled in a Federal 
Employee Health Benefits Program (FEHB) plan, or is eligible for health 
care benefits through the Veterans Administration (VA) or the 
Department of Defense (DoD), may not enroll in a MA MSA plan. In 
addition, Sec.  422.56(c) incorporates the statutory prohibition under 
section 1851(b)(3) of the Act on enrollment in MA MSA plans by 
individuals who are eligible for Medicare cost-sharing under Medicaid 
State plans. Additional restrictions were set forth under section 
1852(a)(3)(B) of the Act and in implementing regulations at Sec.  
422.56(d) based on supplemental benefits under an MA MSA plan.
    The January 2005 MA final rule implemented section 233 of the 
Medicare Modernization Act, which lifted the time and enrollment limits 
on MSA plans imposed by the BBA of 1997. However, section 233 of the 
MMA did not alter the prohibitions in sections 1851(b)(2) and (b)(3) of 
the Act on enrollment into an MA MSA plan for individuals covered under 
other health programs, and likewise the January 2005 MA final rule did 
not alter the implementing regulations regarding these policies at 
Sec.  422.56.
    The current regulations do not specify whether the eligibility 
criteria described in Sec.  422.56, which preclude an individual with 
certain health care coverage from electing an MA MSA plan, are 
applicable to individuals who gain or become eligible for other 
coverage while enrolled in an MSA plan. In other words, the current 
regulations do not specify that an individual who ceases to satisfy the 
eligibility criteria described in Sec.  422.56 while already enrolled 
in an MA MSA plan must be involuntarily disenrolled from the MSA, 
regardless of the time of year. CMS has historically understood the 
eligibility criteria for an individual to be enrolled in an MSA plan in 
Sec.  422.56, coupled with the statutory prohibitions on enrolling in 
an MA MSA by individuals with Medicaid or coverage under other health 
benefits, to mean that an enrollee in an MSA plan is not able to remain 
a member of the MSA plan and must be disenrolled by the plan when the 
individual ceases to meet the statutory and regulatory criteria for 
eligibility. We also note that this policy is consistent with our 
general approach in section 50.2, Chapter 2 of the Medicare Managed 
Care Manual, in which an enrollee becomes ineligible due to a status 
change, such as the loss of entitlement to Medicare Part A or Part B or 
the inability to regain special needs status during the period of 
deemed continued eligibility and outlined in Sec.  422.74.
    To address more clearly the consequences of the general loss of 
eligibility in an MSA plan, we are proposing to amend Sec.  422.74 to 
add new paragraph (b)(2)(vi) to include the requirement that an MA MSA 
enrollee must be disenrolled, prospectively, due to the loss of 
eligibility. If an MA MSA enrollee does not provide assurances that he 
or she will reside in the United States for at least 183 days during 
the year the election is effective, is eligible for or begins receiving 
health benefits through Medicaid, FEHBP, DoD, or the VA or obtains 
other health coverage that covers all or part of the annual Medicare 
MSA deductible, that enrollee must be involuntarily disenrolled by the 
MSA plan effective the first day of the calendar month after the month 
in which notice by the MA organization is issued that the individual no 
longer meets the MA MSA's eligibility criteria, as proposed in Sec.  
422.74(d)(10). We are also proposing to revise Sec.  422.74(c) to 
require MA MSA plans to provide a written notice of the disenrollment 
with an explanation of why the MA organization is planning to disenroll 
the individual before the disenrollment transaction is submitted to 
CMS.
    Should an individual's coverage under an MA MSA plan end before the 
end of a calendar year, CMS recovers from the plan the amount of the 
lump-sum deposit attributable to the remaining months of that year. 
This requirement is codified at Sec.  422.314(c). In addition, the 
disenrolled beneficiary will owe a prorated portion of the current 
year's deposit amount back to the MA MSA plan. Plans will be able to 
reconcile and identify MSA deposit amounts for the Current Payment 
Month (CPM) at the beneficiary-level from the monthly generated MSA 
Deposit-Recovery Data file. We are proposing at Sec.  422.74(e)(1) that 
involuntarily disenrolled individuals will be defaulted to enrollment 
in Original Medicare, which will now pay claims incurred by the former 
MSA enrollees. Conversely, the former MSA enrollee also has the option 
to elect to join another MA plan during a valid enrollment period.

F. Codification of Special Needs Plan Model of Care Scoring and 
Approval Policy (Sec.  422.101)

    Congress first authorized special needs plans (SNPs) to exclusively 
or disproportionately serve individuals with special needs through 
passage of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (hereinafter referred to as the MMA) (Pub. L. 
108-173). The law authorized CMS to contract with Medicare Advantage 
(MA) coordinated care plans that are specifically designed to provide 
targeted care to individuals with special needs. Originally SNPs were 
statutorily authorized for a limited period, but after several 
extensions of that authority, section 50311(a) of the BBA of 2018 
permanently authorized SNPs. Under section 1859(f)(1) of the Act, SNPs 
are able to restrict enrollment to Medicare beneficiaries who are: (1) 
Institutionalized individuals, who are currently defined in Sec.  422.2 
as those residing or expecting to reside for 90 days or longer in a 
long-term care facility, and institutionalized equivalent individuals 
who reside in the community but need an institutional level of care 
when certain conditions are met; (2) individuals entitled to medical 
assistance under a State plan under Title XIX; or (3) other individuals 
with certain severe or disabling chronic conditions who would benefit 
from enrollment in a SNP. As of July 2022, 492 SNP contracts with 1,198 
SNP plans had at least 11 members. These figures included 307 Dual 
Eligible SNP contracts (D-SNPs) with 729 D-SNP plans with at least 11 
members, 87 Institutional SNP contracts (I-SNPs) with 186 I-SNP plans 
with at least 11 members, and 98 Chronic or Disabling Condition SNP 
contracts (C-SNPs) with 283 C-SNP plans with at least 11 members. SNPs 
as of June 2022 serve 4,897,054 MA enrollees, with D-SNPs enrolling 
4,385,315, C-SNPs with

[[Page 79572]]

409,931, and I-SNPs with 100,808 members.
    Section 164 of the Medicare Improvements for Patients and Providers 
Act (hereinafter referred to as MIPPA) (Pub. L. 110-275) added care 
management requirements for all SNPs effective January 1, 2010, which 
are in section 1859(f)(5)(A) of the Act. As a result, all SNPs are 
required to implement care management requirements which have two 
explicit components: an evidence-based model of care (MOC) and a series 
of care management services. For more discussion of the history of 
SNPs, please see Chapter 16b of the Medicare Managed Care Manual 
(MMCM).
    This proposed rule would codify certain subregulatory guidance from 
Chapters 5 and 16b of the MMCM about current SNP MOC scoring protocols; 
annual C-SNP MOC submissions as required by the BBA of 2018; and 
processes for amending SNP MOCs after National Committee for Quality 
Assurance (NCQA) approval.
1. Codification of Model of Care (MOC) Scoring Requirements for Special 
Needs Plans (SNPs) (Sec.  422.101)
    Section 3205 of the Patient Protection and Affordable Care Act of 
2010 (hereinafter referred to as the Affordable Care Act) (Pub. L. 111-
148) amended section 1859(f) of the Act to require that, starting in 
2012, all SNPs be approved by NCQA based on standards developed by the 
Secretary. As provided under Sec. Sec.  422.4(a)(iv), 422.101(f), and 
422.152(g), the NCQA approval process is based on evaluation and 
approval of the SNP MOC. In the final rule titled 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, which appeared in the Federal Register 
on January 12, 2021 (hereinafter referred to as the January 2021 final 
rule), we adopted several regulatory amendments to implement 
requirements for the SNP MOC that were enacted as part of the BBA of 
2018 and our extension of some C-SNP-specific standards to all SNP 
MOCs.
    All SNPs must submit their MOCs to CMS for NCQA evaluation. An MA 
organization sponsoring multiple SNPs must develop a separate MOC to 
meet the needs of the targeted population for each SNP type it offers. 
MA organizations that wish to offer a SNP must submit an application 
(under part 422, subpart K) to demonstrate that they meet SNP specific 
requirements, including the requirement in Sec.  422.101(f) that MA 
organizations offering a SNP implement an evidence-based MOC to be 
evaluated by the NCQA; the requirement in Sec.  422.107 that D-SNPs 
have a contract with the State Medicaid agencies in the states in which 
they operate; and the requirement in Sec.  422.152(g) that SNPs conduct 
quality improvement programs. SNP applicants follow the same process in 
accordance with the same timeline as applicants seeking to contract 
with CMS to offer other MA plans. Most recently, in the January 2021 
final rule, CMS revised and amended Sec.  422.101(f) to improve plan 
implementation of enrollee care management practices and to strengthen 
the review process by establishing a minimum benchmark score of 50 
percent for each element of a plan's MOC (Sec.  422.101(f)(3)(iii)).
    Since the beginning of the MOC approval process, CMS has developed 
and issued guidance on the MOC to improve plan performance and 
beneficiary care. CMS provided guidance and instructions in the CY 2010 
Final Call Letter issued March 30, 2009, in a section titled, ``Model 
of Care Reporting for New Applicants and Existing SNPs,'' in order to 
more clearly establish and clarify delivery of care standards for 
SNPs.\154\ In May, 2008, CMS proposed that SNPs 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 frailty or 
disability, and those near the end of life based on appropriate 
protocols. (73 FR 28555, 28559) Section 164 of the MIPPA subsequently 
added care management requirements for all SNPs in an amendment to 
section 1859(f)(5) of the Act, outlining new requirements for an 
evidence-based model of care that include--(1) an appropriate network 
of providers and specialists to meet the specialized needs of the SNP 
target population; (2) a comprehensive initial health risk assessment 
(HRA) and annual reassessments; (3) an individualized plan of care 
containing goals and measurable outcomes; and (4) an interdisciplinary 
team to manage care. The MIPPA amendments to section 1859(f)(5) of the 
Act laid a statutory foundation for much of our regulatory standards 
for the model of care. In the September 2008 interim final rule with 
comment (73 FR 54226, 54228) and the January 2009 final rule (74 FR 
1493, 1498), we finalized standards for the required model of care at 
Sec.  422.101(f).
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    \154\ The full 2010 Call Letter can be found here: https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/2010finalcallletter_03.30.09_59.pdf.
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    MOCs are a vital quality improvement tool and integral component 
for ensuring that the unique needs of each beneficiary enrolled in a 
SNP are identified and addressed. As we noted in the May 2008 proposed 
rule, CMS deliberately structured its guidance toward the conceptual 
framework of a MOC without being prescriptive about the specific staff 
structure, provider network, clinical protocols, performance 
improvement, and communication systems. We expected SNPs to develop a 
MOC structure that allowed plans to develop care plans that addressed 
differing needs among members of the plan. For example, a C-SNP 
targeting diabetes mellitus may enroll a member with diabetic 
complications who is near the end of life and might require assisted 
living or institutional services for which the SNP would develop 
different goals, expanded specialty services and facilities in their 
provider network, different performance measures, and additional 
protocols that would inappropriate for enrollees in the C-SNP who have 
less severe health complications.
    In addition to the requirements in Sec.  422.107(f) for the MOC, 
CMS has issued guidance over the years, for both NCQA's use in 
reviewing and approving MOCs and SNPs' use in developing and 
implementing their MOCs. We believe that, in practice, MOCs are 
consistent with the existing guidance. The MOC is organized to promote 
clarity and enhance the focus on care coordination, care transition, 
care needs and activities. It is a vital quality improvement tool and 
integral component for ensuring that the unique needs of each enrollee 
are identified by the SNP and addressed through the plan's care 
management practices. The NCQA review and approval process is based on 
scoring each of the clinical and non-clinical elements of the MOC. Each 
element is comprised of a set of required subcomponents, or factors, 
such as an identification and comprehensive description of the SNP-
specific population. These subcomponents are reviewed and scored by 
NCQA and contribute to the overall score for that element. A full list 
of elements and factors is in Chapter 5 of the MMCM. CMS also includes 
the list of elements as part of attachment A (or the MOC Matrix) of the 
``Initial and Renewal Model of Care Submissions and Off-cycle 
Submission of Model of Care Changes'' PRA package (CMS-

[[Page 79573]]

10565).\155\ This MOC Matrix is released for public comment prior to 
the expiration of the PRA package. We are proposing here to codify the 
SNP MOC scoring protocols by amending Sec.  422.101(f)(3)(iii) to 
include the current subregulatory scoring protocols. This proposal, and 
these scoring protocols, align with the minimum benchmark for each 
element of the SNP MOC of a plan that is currently reflected at Sec.  
422.101(f)(3)(iii), as added by the January 2021 final rule. Our 
adoption of these scoring standards is authorized by section 1859(f)(7) 
of the Act for NCQA review and approval to be based on standards 
established by the Secretary and our authority in section 1856(b) of 
the Act to establish standards to carry out the MA program.
---------------------------------------------------------------------------

    \155\ The full MOC PRA package can be found here: https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS-10565.
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    First, we are proposing to amend Sec.  422.101(f)(3)(iii) to add 
the minimum overall score requirement for approval of a SNP's MOC, 
using the term aggregate minimum benchmark; we are proposing to use the 
same minimum standard for the aggregate minimum benchmark as is 
currently used by NCQA in reviewing and approving MOCs. Currently, SNP 
MOCs are approved for 1, 2, or 3-year periods. Each element of the 
SNP's submitted MOC is reviewed and scored. As provided in Sec.  
422.101(f)(3)(iii), the minimum benchmark for each element is 50 
percent. The MOC is scored by NCQA based on the review of four 
elements: Description of the SNP Population; Care Coordination; SNP 
Provider Network; and MOC Quality Measurement & Performance 
Improvement. Each of these four elements has a number of sub-elements 
and factors to address the necessary scope and detail of the MOCs. 
Currently, each of the four SNP model of care elements is valued at 16 
points. The aggregate total of all possible points across all elements 
equals 64, which is then converted to percentage scores based on the 
number of total points received. CMS provides additional information 
regarding MOC scoring criteria in Section 20.2.2 of Chapter 5 of the 
MMCM. In addition to the current element-level minimum benchmark 
regulatory requirement at Sec.  422.101(f)(3)(iii), SNPs are also 
required to meet a minimum benchmark score for the aggregate total--
otherwise known as the aggregate minimum benchmark. Currently, the 
aggregate minimum benchmark is 70 percent of the total 64 points. We 
are proposing to codify this current practice by amending Sec.  
422.101(f)(3)(iii) to add that, in addition to the current requirement 
that all SNPs must meet a minimum benchmark score of 50 percent on each 
element, each SNP's MOC must meet an aggregate minimum benchmark of 70 
percent. As reflected in the proposed revision to paragraph 
(f)(3)(iii), a SNP's model of care will only be approved if each 
element of the model of care meets the minimum benchmark and the entire 
model of care meets the aggregate minimum benchmark.
    Second, we are proposing regulation text to address the period of 
approval for the MOCs that meet the aggregate minimum benchmark. We are 
proposing to codify at Sec.  422.107(f)(3)(iii)(A) the requirement, 
from section 1859(f)(5)(B) of the Act, that C-SNP MOCs are annually 
reviewed and evaluated. Beginning in 2020, under the MOC review 
process, C-SNPs are only eligible to receive a MOC approval for 1-year 
and therefore are subject to annual review and approval processes. 
Specifically, we are proposing at paragraph (f)(3)(iii)(A) to codify 
that an MOC for a C-SNP that receives a passing score is approved for 1 
year. We do not propose to apply the requirement for annual review and 
approval to the MOCs of all D-SNPs and I-SNPs. Instead, we are 
proposing, at new paragraph (f)(3)(iii)(B), to codify different 
approval permits for the MOCs of I-SNPs and D-SNPs that is based on the 
final score of the MOC on the aggregate minimum benchmark. We are 
proposing that: (1) an MOC for an I-SNP or D-SNP that receives an 
aggregate minimum benchmark score of 85 percent or greater is approved 
for 3 years; (2) an MOC for an I-SNP or D-SNP that receives a score of 
75 percent to 84 percent is approved for 2 years; and (3) an MOC for an 
I-SNP or D-SNP that receives a score of 70 percent to 74 percent is 
approved for 1 year. This proposed scoring process matches the current 
process NCQA uses to score initial and annual MOCs. We believe it is 
prudent to maintain the current scoring process as it has worked well 
to incentivize improvements in MOCs and strikes a balance with respect 
to the burden associated with reviews and approvals for all 
stakeholders by allowing higher scoring MOCs remain in place longer.
    Third, we are proposing a new paragraph (f)(3)(iii)(C) to provide 
an opportunity for a SNP to cure deficiencies in its MOC if the MOC 
fails to meet the minimum element benchmark or the aggregate minimum 
benchmark when reviewed and scored by NCQA. Currently, the review and 
evaluation process includes a second opportunity to submit an initial 
or renewal MOC, known as ``the cure process.'' Regardless of the final 
score by NCQA of an MOC resubmitted using the cure process (provided 
the MOC has the minimum scores to be approved), SNPs that need to use 
the cure process to reach a passing aggregate minimum and/or minimum 
element benchmark score will receive only a 1-year approval under this 
proposal. This policy provides added incentive for SNPs to develop and 
submit comprehensive and carefully considered MOCs for initial NCQA 
approval and rewards those SNPs that have demonstrated ability to 
develop quality MOCs without requiring additional time. We are 
proposing that the opportunity to cure deficiencies in the MOC is only 
available once per scoring cycle for each MOC. Under this proposal, a 
MA organization that fails to meet either the minimum element benchmark 
for any MOC element or the aggregate minimum benchmark for the entire 
MOC after having an opportunity to cure deficiencies will not have its 
MOC approved. MOCs that do not receive NCQA approval after the cure 
review will not have a third opportunity for review. As a result, the 
SNP(s) that use that MOC would need to be nonrenewed by the MA 
organization or terminated by CMS for failure to meet a necessary 
qualification for SNPs.
    We reiterate that this proposal would maintain the current scoring 
criteria and review process. We believe this proposal creates no 
additional burden to SNPs, as current MOCs are evaluated based on this 
criterion already. We welcome comment on the codification of existing 
MOC scoring requirements for SNPs. These new regulations would be 
applicable for MOCs reviewed for contract year 2024 and we will 
continue our current practice pending a final rule.
2. Amending SNP MOCs After NCQA Approval
    CMS is proposing to codify current policies and procedures for an 
MA organizations to amend its MOCs after NCQA approval. CMS has labeled 
this the ``off-cycle MOC submission process.'' CMS has acknowledged in 
the past that in order to more effectively address the specific needs 
of its enrollees, a SNP may need to modify its processes and strategies 
for providing care during the course of its approved MOC timeframe; CMS 
announced a process for SNPs to submit MOC changes for review in the CY 
2016 Final

[[Page 79574]]

Call Letter.\156\ Currently, a D-SNP or I-SNP that decides to make 
substantive revisions to their existing approved MOC may submit a 
summary of their off-cycle MOC changes, along with the red-lined MOC, 
in the Model of Care module in HPMS for NCQA review and approval. 
Substantive revisions are those that have a significant impact on care 
management approaches, enrollee benefits, and/or SNP operations. MOC 
changes are at the discretion of the applicable MA organization 
offering the SNP and it is the responsibility of the MA organization to 
notify CMS of substantive changes and electronically submit their 
summary of changes to their MOC in HPMS. Beginning with CY 2020, C-SNPs 
are required to submit MOCs annually, and thus, their MOCs receive 
approvals for a period of one-year. Upon implementation the annual 
review and approval of C-SNP MOCs, C-SNPs were not permitted to submit 
a revised MOC through an off-cycle submission.
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    \156\ See https://www.cms.gov/medicare/health-plans/medicareadvtgspecratestats/downloads/announcement2016.pdf.
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    At the time of the CY 2016 Final Call Letter, based on our previous 
experience with the small number of SNPs seeking to amend their MOCs, 
we expected that mid-cycle amendments to MOCs would be relatively rare 
and CMS did not anticipate that the off-cycle process would result in a 
higher incidence of such MOC changes. We believed that only relatively 
unusual circumstances would require SNPs to make changes to their MOCs 
that are so significant that notification to CMS and review of the 
changes to the MOC would be warranted. However, CMS and NCQA have seen 
the number of off-cycle MOC submissions steadily rise over the past 
four years and plans have expressed frustration and confusion over what 
plan changes merit or require submission to NCQA for an off-cycle 
approval. This proposed rule is intended to address stakeholder 
feedback regarding the off-cycle review process and to mitigate the SNP 
community's concerns regarding continued plan burden in this area.
    In general, CMS intends the MOC review and approval process to 
include an MA organization's submission of a MOC only in the following 
scenarios: the MA organization seeks to offer a new SNP; the MA 
organization's SNP's MOC approval period ends; or CMS deems revision 
and resubmission of the MOC necessary to ensure compliance with the 
applicable standards and requirements, such as a change in applicable 
law or when CMS discovers a violation. For the last scenario, an off-
cycle MOC submission may be necessary if during an audit, it appears 
that the MOC (including in practice as the SNP applied the MOC) is not 
meeting applicable standards, then CMS may ask the SNP to correct and 
resubmit the MOC. Other examples include regulatory changes or when a 
State Medicaid agency requires changes to the MOC of a D-SNP to meet 
State-specific requirements. In order to ensure a stable care 
management process and to ensure appropriate oversight by CMS of SNPs 
and their operation, SNPs may not implement any changes to a MOC until 
NCQA has approved the changes. Based on our experience, additional 
situations may justify the submission of a revised MOC for review and 
approval. This proposal would establish when an MA organization may 
submit updates and corrections to its approved MOC.
    First, we are proposing to codify the off-cycle process at Sec.  
422.101(f)(3)(iv). We propose that MA organizations offering SNPs that 
need to revise their MOC mid-cycle during their MOC approval period may 
submit the revised MOC for review by NCQA at specific times. CMS has 
historically restricted the period that SNPs can submit an off-cycle 
submission from June 1st to November 30th of any contract year, which 
is meant to allow for the efficient and prudent administration of the 
annual initial and review MOC process--with the exception of C-SNPs who 
are prohibited from submitting off-cycle submissions because of the 
requirement that plans submit their MOC annually. However, CMS has also 
allowed SNPs to submit off-cycle MOCs outside of this window when CMS 
deems it necessary to ensure the SNP or its MOC was meeting statutory 
or regulatory requirements, guarantee the safety of enrollees, or meet 
State Medicaid requirements. We propose to maintain this process and 
codify it at Sec.  422.101(f)(3)(iv)(A). We propose that SNPs may 
submit updates and corrections to their NCQA-approved MOC between June 
1st and November 30th of each calendar year or when CMS deems it 
necessary to ensure compliance with applicable standards and 
requirements. We intend the phrase ``applicable standards and 
requirements'' to encompass the situations described here in the 
preamble or similar situations where a potential or existing violation 
needs to be addressed. To ensure consistent application of this 
standard and demonstrate our intent that these be limited situations 
where a revision is truly necessary, the proposed regulation text is 
clear that CMS will make this determination and provide directions to 
the MA organization. If an MA organization believes that this standard 
in which revision is necessary to ensure compliance by the SNP and its 
MOC, we anticipate that the MA organization will contact CMS for 
guidance and approval to submit a revision.
    Since the beginning of the off-cycle submission process, CMS has 
attempted to provide guidance clarifying which MOC changes require 
submission to CMS and how SNPs should submit their MOC changes to CMS. 
We have said in the past that SNPs that make significant changes to 
their MOCs must submit (in HPMS) a summary of the pertinent 
modifications to the approved MOC and a redlined version of the 
approved MOC with the revisions highlighted. Given the level of 
questions we have received over the years regarding what constitutes a 
significant change, we are proposing to codify a list of reasons for 
when a SNP must use an off-cycle submission of a revised MOC for review 
and approval. Proposed Sec.  422.101(f)(3)(iv)(B) provides that an MA 
organization must submit updates or corrections to a SNP's MOC to 
reflect the following:
     Changes in policies or procedures pertinent to:
    ++ The health risk assessment (HRA) process;
    ++ Revising processes to develop and update the Individualized Care 
Plan (ICP);
    ++ The integrated care team process;
    ++ Risk stratification methodology; or
    ++ Care transition protocols;
     Target population changes that warrant modifications to 
care management approaches or changes in benefits. For example, we 
intend this to include situations like adding Diabetes to a 
Cardiovascular Disease and Congestive Heart Failure C-SNP;
     Changes in a SNP's plan benefit package between 
consecutive contract years that can considerably impact critical 
functions necessary to maintain member well-being and are related SNP 
operations. For example, changes in Medicaid services covered by a HIDE 
SNP or FIDE SNP through its companion Medicaid managed care plan or 
changes in Medicaid policy (such as benefits or eligibility) that 
require changes to an ICP for coordinating Medicare and supplemental 
benefits with the new Medicaid policy;
     Changes in level of authority or oversight for conducting 
care coordination activities (for example, medical provider to non-
medical provider, clinical vs. non-clinical personnel);

[[Page 79575]]

     Changes to quality metrics used to measure performance.
    The proposed regulation text does not include immaterial examples 
of the type and scope of MOC policy changes that may be made by an MA 
organization to the SNP's approved MOC without any review or approval 
by CMS or NCQA. Changes that do not need to be submitted through HPMS 
include:
     Changes in legal entity, parent organization, and 
oversight (novation/mergers, changes to corporate structure);
     Changes to delegated providers and agreements;
     Changes in administrative staff, types/level of staff that 
do not affect the level of authority or oversight for personnel 
conducting care coordination activities;
     Updates on demographic data about the target population;
     Updates to quality improvement metric results and 
technical quality measure specification updates;
     Additions/deletions of specific named providers;
     Grammatical and/or non-substantive language changes; and
     For D-SNPs, minor changes to Medicaid benefits.
    Under this proposal, we are adding a requirement to a new 
subparagraph D under Sec.  422.101(f)(3)(iv) that SNPs may not 
implement any changes to a MOC until NCQA has approved the changes. In 
addition, NCQA will continue to review the summary of changes and a 
redlined copy of the revised MOC submitted in HPMS to verify that the 
revisions are consistent with the previously detailed list of 
applicable submissions and in line with acceptable, high-quality 
standards, as included in the original, approved MOC. The revised MOCs 
will not be rescored. Further, the MOC's original approval period (that 
is, 1-year or multi-year) will not be modified as a result of NCQA's 
approval of the changes. We propose to codify this policy at Sec.  
422.101(f)(3)(iv)(E), which provides that the successful revision of 
the MOC under proposed (f)(3)(iv) does not change the MOC's original 
period of approval by NCQA. Therefore, changes made to MOC cannot be 
used to improve a low score. We anticipate that the current procedures 
and documentation processes will continue; such procedures and 
operational practices do not need to be in regulation text. CMS may 
change procedures as necessary (for example, use of HPMS as the system 
for submission, the mechanism for providing notice to MA organizations 
of the review of the MOC initially or any revisions, etc.). We intend 
that the current procedures will continue for NCQA reviewers to 
designate the summary as ``Acceptable'' or ``Non-Acceptable,'' and 
enter the findings in the HPMS character text box. Similarly, we will 
continue the current process in which a system-generated email is sent 
to the designated SNP Application Contact and the MA Quality Contact, 
as well as to the individual who submitted the revised MOC summary. 
Lastly, we are proposing under Sec.  422.101(f)(3)(iv)(F) to codify 
existing operational practices with respect to off-cycle submissions by 
C-SNPs. Currently, C-SNPs are prohibited from submitting off-cycle MOC 
submissions, as all C-SNPs submit MOCs annually as required under 
section 1859(f)(5)(B)(iv) of the Act. We are proposing to codify that 
C-SNPs are prohibited from submitting an off-cycle MOC submission 
except when CMS requires an off-cycle submission to ensure compliance 
with the applicable regulations. C-SNPs must wait until the annual MOC 
submission period to make changes to their MOC.
    SNPs have one opportunity to correct (``cure'') deficiencies, as 
noted in our proposed rule Sec.  422.101(f)(3)(iii)(C) to confirm that 
the revised MOC is consistent with the standards outlined in the 
original MOC. If NCQA determines that revisions to an initial or 
renewal MOC, as delineated in the MOC summary, do not reflect the 
quality standards as demonstrated by the original MOC and its 
associated score/approval period, the SNP will be notified via email 
with a ``Non-Acceptable'' determination and a list of all deficiencies. 
If the summary and redlined version is not acceptable after the second 
review, the SNP must continue implementing its approved MOC without any 
revisions for the remainder of its MOC approval period. The proposed 
MOC off-cycle cure process at Sec.  422.101(f)(3)(iv) differs from the 
review and scoring process being codified Sec.  422.101(f)(3)(iii). The 
review process employed under Sec.  422.101(f)(3)(iii) provides a one-
time cure process. Likewise, the cure process proposed (and under 
current operational use by NCQA) would allow D-SNPs and I-SNPs to 
resubmit a single revised off-cycle submission or cure until the end of 
the Off-cycle submission period to an Off-cycle MOC that was deemed 
unacceptable during the off-cycle review process. We are proposing to 
codify this policy of a single cure opportunity during the off-cycle 
time period under a new paragraph at Sec.  422.101(f)(3)(iv)(G)
    We have also found that SNPs have sought to modify an initial or 
renewal MOC shortly after NCQA approval and before the MOC has gone 
into effect. We have generally rejected these submissions because the 
MOC has yet to go into effect. We will continue to prohibit an off-
cycle submission until the approved MOC has gone into effect. For 
example, if NCQA approved a SNP's MOC on April 1, 2022, the plan would 
be prohibited from submitting an off-cycle submission until the 
effective date of the MOC, which would be January 1, 2023.
    In order clarify this process, we are proposing to codify this 
guidance at Sec.  422.101(f)(3)(iv)(C). We propose that NCQA will only 
review off-cycle submissions after the start of the effective date of 
the current MOC unless it is deemed necessary to ensure compliance with 
the applicable regulations or State Medicaid agency requirements for D-
SNPs. Finally, we reiterate that we still believe that off-cycle 
submissions to substantively revise an MOC should be a rare occurrence 
rather than an eventuality. We believe that these proposed processes 
and procedures will make certain that CMS and NCQA are apprised of up-
to-date information regarding the MOC; strengthen our ability to 
adequately monitor the approved MOCs; and guarantee that SNPs continue 
to provide high quality care to enrollees. We seek comment on the 
codification of the current off-cycle MOC submission process.
    The proposed regulations described here reflect and would codify 
current policy and procedures. While this proposed rule as a whole is 
generally intended to be applicable beginning with contract year 2024, 
we intend to continue our current policy as reflected here. We also 
believe the following proposed changes carry no burden. This proposal 
is a codification of previously issued subregulatory guidance in 
Chapter 5 and other CMS transmittals to impacted MA organizations. More 
importantly, the current proposed codification is already captured 
under the PRA package ``Initial and Renewal Model of Care Submissions, 
and Off-cycle Submission of Summaries of Model of Care Changes (CMS-
10565, OMB 0938-1296). As part of the PRA approval package, CMS reviews 
public comments directed towards the initial and renewal MOC process, 
MOC trainings, and the off-cycle MOC submission system. Again, the 
burden effort associated with this proposed rule covering the latter 
items is captured in the currently approved MOC PRA.
    Based on our experience monitoring SNPs and engaging in the process 
for review and approval of MOCs, we believe plans are following the our

[[Page 79576]]

current subregulatory guidance and therefore no further burden is 
imposed by codifying these standards.

G. Clinical Trial-Related Provisions (Sec. Sec.  422.101 and 422.109)

    MA plans must cover Medicare Part A and Part B benefits, excluding 
hospice, kidney acquisitions for transplant, and certain changes in 
benefits due to a National Coverage Determination (NCD) or a 
legislative change. We are proposing to adopt regulations regarding MA 
coverage of clinical trials covered by Medicare to ensure clarity on 
these coverage rules for MA plans. These coverage rules implement 
section 1852 of the Act and are within our rulemaking authority for the 
MA program. These proposals generally codify guidance currently 
specified in section 10.7 of Chapter 4 of the Medicare Managed Care 
Manual for clinical trials covered under National Coverage 
Determination (NCD) 310.1; A and B investigational device trials (A-B 
IDE); and National Coverage Determinations with coverage with evidence 
development (NCD-CED).
1. Clinical Trials Under National Coverage Determination 310.1
    Clinical trials may include some items and services that would not 
be covered by Medicare, absent the trial. For clinical trials covered 
under the Clinical Trials National Coverage Determination 310.1 (NCD) 
(NCD manual, Pub. 100-03, Part 4, section 310), longstanding CMS policy 
has been that traditional Medicare (that is, the Medicare FFS program) 
covers the routine costs of qualifying clinical trials for all Medicare 
enrollees who volunteer to participate in the approved trial, including 
those enrolled in MA plans. CMS has discussed this policy in several 
Advance Notices and Rate Announcements, including the advance notices 
of methodological changes in Part C payments issued for 2004, 2007, 
2008, 2009, 2011, 2017, and 2019, and in the announcements of 
capitation rates and payment policies for Part C in 2009, 2011, 2012, 
and 2017. NCD 310.1 is the current statement of the Medicare coverage 
of routine costs associated with clinical trial participation. As 
specified in the NCD, routine costs associated with a clinical trial 
include:
     Items or services that are typically provided by Medicare 
absent a clinical trial (for example, conventional care);
     Items or services required solely for the provision of the 
investigational item or service (for example, administration of a 
noncovered chemotherapeutic agent), the clinically appropriate 
monitoring of the effects of the item or service, or the prevention of 
complications; and
     Items or services needed for reasonable and necessary care 
arising from the provision of an investigational item or service in 
particular, for the diagnosis or treatment of complications.
    Although MA plans must follow all NCDs, section 1852(a)(5) of the 
Act, which CMS has implemented in Sec.  422.109(b), provides that if an 
NCD or new legislative benefit introduced in the middle of a plan year 
is considered a significant cost as determined by the Office of the 
Actuary, MA plans are not responsible for coverage until the cost to 
provide the new benefit is calculated into the plan's payment rate. CMS 
has previously determined, as discussed in the CY 2019 Advance 
Notice,\157\ that the multiple clinical trials covered under NCD 310.1 
trigger the significant cost threshold. Therefore, traditional Medicare 
has covered the Medicare-covered routine costs of clinical trials that 
are covered under NCD 310.1 for MA enrollees. To ensure continued 
clarity and transparency for this longstanding policy, discussed in 
section 10.7.1 of Chapter 4 of the Medicare Managed Care Manual, we are 
proposing to codify this policy by adding new Sec.  422.109(e). In 
Sec.  422.109(e)(1), we propose to codify that traditional Medicare is 
responsible for coverage of routine costs of qualifying clinical trials 
for MA enrollees for clinical trials covered under the Clinical Trials 
National Coverage Determination 310.1 and all reasonable and necessary 
items and services used to diagnose and treat complications from 
participating in clinical trials.
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    \157\ The Advance Notice of Methodological Changes for Calendar 
Year (CY) 2019 for Medicare Advantage (MA) Capitation Rates, Part C 
and Part D Payment Policies and 2019 draft Call Letter discusses the 
clinical trial coverage policy for the MA program on pages 23-23 and 
is available at this link: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2019Part2.pdf.
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Deductibles and MA Responsibility for Differences in Cost-Sharing
    Traditional Medicare pays for all routine costs of clinical trials 
for MA enrollees and, as explained in the CY 2011 Rate 
Announcement,\158\ MA enrollees do not pay the traditional Medicare 
Part A and B deductibles when the traditional Medicare pays the 
Medicare-covered costs associated with the clinical trial.\159\ In 
Sec.  422.109(e)(2), we propose to codify this policy that MA enrollees 
participating in clinical trials are not subject to Part A and B 
deductibles.
---------------------------------------------------------------------------

    \158\ The Announcement of Calendar Year (CY) 2011 Medicare 
Advantage Capitation Rates and Medicare Advantage and Part D Payment 
Policies and Final Call Letter addresses this in a response to a 
comment on page 20-21 and is available at the following link: 
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2011.pdf.
    \159\ In addition, the See page 31 of the MA Payment Guide for 
Out of Network Payments, page 31, addresses this topic. The guide is 
available at the following link: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/downloads/oonpayments.pdf.
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    MA plans are responsible for paying the difference between 
traditional Medicare cost-sharing incurred for qualifying clinical 
trial items and services and the MA plan's in-network cost-sharing for 
the same category of items and services. We propose to codify this 
requirement for MA plans to pay the difference between traditional 
Medicare and plan's cost sharing in Sec.  422.109(e)(3). We also 
propose in Sec.  422.109(e)(4) to codify that the enrollee's in-network 
cost-sharing portion must be included in the plan's maximum out-of-
pocket (MOOP) calculation. As the clinical trial costs within the scope 
of NCD 310.1 are covered by Part A and/or Part B, these are basic 
benefits within the scope of the MOOP requirements in Sec. Sec.  
422.100(f)(4) and (5) and 422.101(d)(2) and (3) but for clarity we are 
proposing to codify at Sec.  422.109(e)(4) the requirement that the 
enrollee's in-network cost-sharing must be included in the plan's MOOP 
calculation. In requiring MA organizations to provide in-network cost 
sharing for clinical trial services, CMS is requiring that MA plan 
members have coverage for clinical trial services that is consistent 
with coverage they have for all other Medicare Part A and Part B 
services. In paragraph (e)(5), consistent with our guidance in section 
10.7.1 of Chapter 4 of the Medicare Managed Care Manual, we would 
specify that MA plans may not require prior authorization for 
participation in a Medicare-qualified clinical trial not sponsored by 
the plan, nor may it create impediments to an enrollee's participation 
in a non-plan-sponsored clinical trial under NCD 310.1. This protection 
is necessary in order to ensure that MA enrollees have access to and 
coverage of clinical trials within the scope of NCD 310.1 to the same 
extent as Medicare beneficiaries enrolled in the traditional Medicare 
program. While MA plans are responsible for covering any differences in 
cost-sharing between traditional Medicare and MA plan in-network costs 
for services in the same category, traditional Medicare, through the 
MACs, is responsible for all other costs included in clinical trials 
within

[[Page 79577]]

the scope of NCD 310.1. Finally, in accordance with Sec.  
422.109(c)(2), CMS requires MA organizations to provide coverage for: 
1) services to diagnose conditions covered by clinical trial services; 
2) most services furnished as follow-up care to clinical trial 
services; and 3) services already covered by the MA organization. 
Because Sec.  422.109(c) adequately addresses how MA organizations are 
required to cover certain benefits and costs even when the traditional 
Medicare program pays for changes in benefits as a result of an NCD or 
legislative change, we do not believe that additional regulation text 
is necessary to apply those rules in the context of NCD 310.1.
2. A-B Investigational Device Exemption Trials
    The regulation at Sec.  405.211 specifies Medicare coverage of 
Category A and B investigational device exemption (IDE) studies. 
Providers of device trials must submit approval for the devices from 
the FDA, as part of their application to CMS for approval of a trial. 
Once a trial has been approved by CMS, it is listed on the CMS website. 
In addition to including assessment of devices, IDE trials differ from 
clinical trials under NCD 310.1, as they are not covered as a result of 
an NCD nor are they subject to a significant cost assessment. As a 
result, MA organizations are responsible for payment of claims related 
to enrollees' participation in both Category A and B IDE studies that 
are covered under traditional Medicare. This is part of the MA 
organization's obligation to cover the items and services (other than 
hospice care or coverage for organ acquisitions for kidney transplants) 
for which benefits are available under Parts A and B for their 
enrollees under section 1852 of the Act.
    MA plans are responsible for payment of routine care items and 
services in CMS-approved Category A and Category B IDE studies. An MA 
plan is also responsible for coverage of CMS-approved Category B 
devices. While CMS will cover routine care items and services, it will 
not approve coverage of Category A devices themselves because they are 
considered experimental and excluded from coverage under Sec.  
405.211(a). As with other benefits for which it is responsible for 
coverage, an MA plan may apply utilization management, including prior 
authorization, consistent with Sec.  422.4(a)(1)(ii).
    Section 10.7.2 of Chapter 4 of the Medicare Managed Care Manual 
addresses this policy. In order to clarify this scope of required 
coverage for MA plans and avoid any inadvertent confusion between the 
coverage requirements associated with clinical trials under NCD 310.1, 
we propose to add Sec.  422.109(f) to specify MA plan coverage of the 
routine items and services, including the Category B IDE device and 
related items and services in the context of a Category A and B IDE 
studies, that are covered by Medicare under Sec. Sec.  405.211(a) and 
(b).
3. National Coverage Determinations With Coverage With Evidence 
Development
    Section 1852(a)(1) of the Act requires MA plans to cover all 
Medicare Part A and Part B benefits, subject to limited exclusions. One 
of those exclusions relates to new NCDs that result in significant cost 
increases, making it clear that benefits covered under an NCD are 
included in what MA plans must cover. In addition, Sec.  422.101(b)(1) 
explicitly requires MA plans to cover NCDs. (See section III. E. of 
this document, Utilization Management Requirements, for more 
information on CMS' proposal to address MA plan coverage obligations.) 
NCDs generally provide guidance about coverage of new benefits, update 
an existing benefit or, in some cases, specify that a procedure or 
service is not covered. As with other Part A and B benefits (aside from 
hospice and the cost of kidney acquisition for transplant), MA plans 
must cover NCDs. This is true for NCDs that also have a trial or 
registry component that is required as part of the coverage, which is 
explained in section 10.7.3 of Chapter 4 of the Medicare Managed Care 
Manual. This is referred to as ``coverage with evidence development'' 
(CED), as authorized under the statute at 1862(a)(1)(E). CED is a 
paradigm whereby Medicare covers items and services on the condition 
that they are furnished in the context of CMS approved clinical studies 
or with the collection of additional clinical data (for example, 
registry). A list of NCD-CEDs with the coverage protocol for each is 
available at: https://www.cms.gov/Medicare/Coverage/Coverage-with-Evidence-Development.
    We are merely reiterating here that MA plans must cover NCDs with 
CED and are not proposing a change in policy. We solicit comment 
whether additional regulations are needed to address NCDs with CED; we 
believe that Sec.  422.101(b) is sufficient that these NCDs are within 
the scope of the traditional Medicare benefits that MA plans must cover 
and that additional regulations are unnecessary. MA plans may apply 
utilization management, including prior authorization, to the Medicare 
benefits covered under these NCDs, consistent with Sec.  
422.4(a)(1)(ii) of the MA program regulations.
Significant Cost
    In cases of a new NCD or legislative change in benefits, CMS 
determines, consistent with Sec.  422.109(b), whether the benefit or 
service is a significant cost to MA plans. CMS is including this 
discussion here to make clear that significant cost requirements apply 
to all new NCDs, that is, that the significant cost assessment includes 
NCDs with CED. The thresholds for significant cost are specified in 
Sec. Sec.  422.109(a)(1) and (a)(2). The assessment generally applies 
to each NCD or legislative change in benefits that occurs after the 
rate announcement for a contract year such that the change in costs was 
not incorporated into the capitation rates for the contract year. Costs 
are estimated for a particular NCD or legislative change in benefits so 
the thresholds specified in Sec. Sec.  422.109(a)(1) and (a)(2) apply 
to each NCD or legislative change in benefits rather than to the 
aggregate number of such changes over the course of a contract year.

H. Required Notice for Reinstatements Based on Beneficiary Cancellation 
of New Enrollment (Sec. Sec.  422.60 and 423.32)

    Sections 1851(c)(1) and 1860D-1(b)(1) of the Act establish the 
enrollment, disenrollment, termination, and change in coverage 
processes for MA and PDP plans. In the June 1998 interim final rule, we 
established the M+C (now MA) enrollment process (63 FR 34968). These 
requirements are codified in regulation at Sec.  422.60. In the January 
2005 Part D final rule, we established the PDP enrollment process (70 
FR 4193). These requirements are codified in regulation at Sec.  
423.32.
    Section 1851(g)(3)(B)(i) of the Act provides that MA plans may 
terminate the enrollment of individuals who fail to pay basic and 
supplemental premiums on a timely basis; likewise, section 1860D-
1(b)(1)(B)(v) of the Act directs the Secretary to use rules similar to 
(and coordinated with) the rules for an Medicare Advantage plan 
established under section 1851(g) of the Act. CMS has previously 
codified this process of optional disenrollment from an MA plan or PDP 
for failure to pay monthly premiums at Sec. Sec.  422.74(d) and 
423.44(d), as well as requirements for mandatory disenrollment for 
individuals who fail to pay the Part D Income Related Monthly 
Adjustment Amount (Part D-IRMAA), where applicable, at Sec.  423.44(e). 
In addition, CMS has previously codified the ability for MAOs and PDP 
sponsors to reinstate for good cause an individual who is disenrolled

[[Page 79578]]

for failure to pay plan premiums (at Sec. Sec.  422.74(d)(1)(v) and 
423.44(d)(1)(vi)) or the Part D-IRMAA (at Sec.  423.44(e)(3)).
    However, an individual's enrollment can also be reinstated if their 
enrollment in another plan is subsequently canceled within timeframes 
established by CMS. We established at Sec.  422.66(b)(1) that an 
individual is disenrolled from their MA plan when they elect a 
different MA plan; likewise, at Sec.  423.36(a), an individual is 
disenrolled from their PDP plan when they enroll in a different PDP 
plan. Sub-regulatory guidance requires MA and PDP plans to provide 
notification of enrollment reinstatement based on a beneficiary's 
cancellation of a new enrollment in a different plan. This guidance is 
currently outlined in the Part C and Part D sub-regulatory guidance 
found in section 60.3.2 of Chapter 2 of the Medicare Managed Care 
Manual and section 60.2.2 of Chapter 3 of the Medicare Prescription 
Drug Benefit Manual, respectively.
    To provide transparency and stability for stakeholders, we are 
proposing at new Sec. Sec.  422.60(h) and 423.32(h) to require that MA 
and PDP plans must notify an individual when the individual's 
enrollment is reinstated due to the individual's cancellation of 
enrollment in a different plan. A reinstatement is generally not 
allowed if the individual intentionally initiated a disenrollment and 
did not cancel the disenrollment prior to the disenrollment effective 
date. However, when a beneficiary is automatically disenrolled from 
their plan because of enrollment in a new plan but then cancels the 
request to enroll in the new plan within established timeframes, the 
associated automatic disenrollment from the previous plan becomes 
invalid. Therefore, the beneficiary's enrollment in the previous plan 
needs to be reinstated and CMS systems will attempt to automatically 
reinstate enrollment in the previous plan. Consistent with notification 
requirements in similar enrollment scenarios, we propose that the 
organization from which the individual was disenrolled send the member 
notification of the enrollment reinstatement within 10 days of receipt 
of Daily Transaction Reply Report (DTRR) confirmation of the 
individual's reinstatement. The reinstatement notice would include 
confirmation of the individual's enrollment in the previous plan with 
no break in coverage, plan-specific information as needed, and plan 
contact information.
    These proposed changes represent the codification of longstanding 
guidance. Based on infrequent complaints and questions from plans and 
beneficiaries related to current requirements, we conclude that the 
requirements have been previously implemented and are currently being 
followed by plans. There is also no impact to the Medicare Trust Fund.

I. Part D Plan Failure To Submit Disenrollment Timely (Sec.  423.36)

    Section 1860D-1(b) of the Act establishes the disenrollment process 
for Part D eligible individuals in prescription drug plans. This 
section of the Act grants the Secretary the authority to establish a 
process for the enrollment, disenrollment, termination, and change of 
enrollment of Part D eligible individuals in prescription drug plans. 
In 2005, the implementing regulations at 70 FR 4525 established the 
voluntary disenrollment process for Part D prescription drug plans. 
These requirements are codified in regulation at Sec.  423.36 and 
require the Part D sponsor to ``submit a disenrollment notice to CMS 
within timeframes CMS specifies.''
    As previously noted, section 1860D-1(b)(1)(B) of the Act directs 
the Secretary to adopt enrollment rules ``similar to (and coordinated 
with)'' the rules established under Part C. In 1998 implementing 
regulations for Part C, CMS provided that if a ``Medicare + Choice'' 
(M+C) organization, later known as an MA organization, fails to submit 
the correct and complete notice of disenrollment, the M+C organization 
must reimburse the Health Care Finance Administration (the predecessor 
to CMS), for any capitation payments received after the month in which 
payment would have ceased if the requirement had been met timely (63 FR 
35071). This requirement was codified at Sec.  422.66(b)(4) and has 
remained in place for MA organizations. Current Part D regulations do 
not impose requirements for Part D sponsors that fail to submit the 
transaction notice to CMS timely. However, longstanding CMS policy has 
provided that the PDP sponsor must submit disenrollment transactions to 
CMS in a timely manner, as described in section 50.4.1 of Chapter 3 of 
the Medicare Prescription Drug Benefit Manual. When a valid request for 
disenrollment has not been communicated to CMS successfully within the 
required timeframes, a retroactive disenrollment can be submitted to 
CMS. If the retroactive disenrollment request is approved, the PDP 
sponsor must return any premium paid by the member for any month for 
which CMS processed a retroactive disenrollment, and CMS will retrieve 
any capitation payment for the retroactive period for an approved 
request for retroactive disenrollment, as described in section 60.4 of 
Chapter 3 of the Medicare Prescription Drug Benefit Manual. To provide 
transparency and consistency for stakeholders, and align the Part D 
regulation with the requirements for MA organizations, we propose to 
codify CMS's longstanding sub-regulatory guidance by amending Sec.  
423.36 to add a new paragraph (f) to reflect that if the Part D sponsor 
fails to submit a disenrollment notice to CMS timely as required by 
Sec.  423.36(b)(1), such that the Part D sponsor receives additional 
capitation payments from CMS, the Part D sponsor must reimburse CMS for 
any capitation payments received after the month in which payment would 
have ceased if the requirement had been met timely.
    This proposal is a codification of longstanding Part D sub-
regulatory guidance and there is no impact to the Medicare Trust Fund. 
As these policies have been previously implemented and are currently 
being followed by plans, we conclude that there is no additional 
paperwork burden. All information impacts related to our collection of 
disenrollment requests have already been accounted for under OMB 
control number 0938-0964 (CMS-10141).

J. Codify Existing Policy ``Incomplete Disenrollment Requests'' 
(Sec. Sec.  422.66 and 423.36)

    Section 1851(c)(2)(B) of the Act provides that an individual who 
elects an MA plan and then chooses to terminate such election can do so 
by submitting a request to the MA organization. In addition, section 
1860D-1(b)(1)(B)(ii) of the Act specifies that in establishing a 
process for Part D enrollment, disenrollment, termination, and change 
of enrollment of Part D eligible individuals in prescription drug 
plans, the Secretary shall use rules similar to (and coordinated with) 
the rules for an Medicare Advantage (MA)--formerly M+C--plan 
established under section 1851(c) of the Act.
    The June 1998 final regulation established the process for 
individuals to voluntarily disenroll from an MA plan. This process is 
codified at Sec.  422.66(b). Specifically, at Sec.  422.66(b)(2) we 
provide that a disenrollment request is considered to have been made on 
the date the disenrollment request is received by the MA organization. 
Once received, the MA organization is required to send the 
disenrollment notice to CMS and a copy to the enrollee which informed 
the enrollee of any lock-in requirements of the plan that apply until 
the effective date of disenrollment. This process is

[[Page 79579]]

codified at Sec.  422.66(b)(3), including the requirement that the MA 
plan must file and retain the disenrollment request as specified in CMS 
instructions.
    In 2005, CMS issued implementing regulations establishing 
disenrollment procedures for Part D plans, whereby an individual elects 
to voluntarily disenroll from the Part D plan, and also established the 
requirements imposed upon the Part D sponsor as a result of that 
disenrollment request (63 FR 35071). These requirements were codified 
at Sec.  423.36.
    However, Sec. Sec.  422.66(b) and 423.36 do not address what plans 
should do in the event that they receive incomplete disenrollment 
requests. CMS has historically provided the procedural steps for plans 
to address incomplete disenrollment requests, in section 50.4.2, 
Chapter 2 of the Medicare Managed Care Manual and section 50.4.2, 
Chapter 3 of the Medicare Prescription Drug Benefit Manual, including 
providing that when the disenrollment request is incomplete, plans must 
document its efforts to obtain information to complete the request; and 
if any additional information needed to make the disenrollment request 
``complete'' is not received within prescribed timeframes, the plan 
must deny the disenrollment request.
    To provide transparency and stability for stakeholders about the MA 
and Part D programs and about the requirements applicable to requests 
for voluntary disenrollment from MA and Part D plans, we are proposing 
to codify CMS's longstanding policies in this area at new paragraphs 
Sec.  422.66(b)(6) and 423.36(d) that a disenrollment request is 
considered to be incomplete if the required but missing information is 
not received by the MA plan or Part D sponsor within the specified 
timeframes in proposed Sec. Sec.  422.66(b)(3)(v)(C) and 
423.36(b)(4)(iii), as described in this rule. We are also proposing at 
new paragraphs Sec. Sec.  422.66(b)(3)(v) and 423.36(b)(4) that if the 
disenrollment request is incomplete, the plan must document its efforts 
to obtain information to complete the election. Plans would be required 
to notify the individual (in writing or verbally) within 10 calendar 
days of receipt of the disenrollment request. For incomplete 
disenrollment requests received by plan sponsors during the annual 
election period (AEP), we are proposing information to complete the 
request must be received by December 7, or within 21 calendar days of 
the plan sponsor's request for additional information, whichever is 
later. For all other election periods, we are proposing that required 
information must be received by the end of the month in which the 
disenrollment request was initially received, or within 21 calendar 
days of the request for additional information, whichever is later. 
Finally, we are proposing that if any additional information needed to 
make the disenrollment request complete is not received within these 
timeframes, the disenrollment request must be denied.
    We are codifying longstanding guidance with these changes. All 
information impacts related to the procedural steps plans must take to 
address incomplete disenrollment requests have already been accounted 
for under OMB control numbers 0938-0753 (CMS-R-267) for Part C and 
0938-0964 (CMS-10141) for Part D. Based on infrequent questions from MA 
organizations and Part D plan sponsors as these requirements have been 
previously implemented and are currently being followed by plans, we 
conclude that these updates do not add to the existing disenrollment 
process and we do not believe there is any additional paperwork burden.

K. Reinstatement of Enrollment for Good Cause (Sec. Sec.  417.460, 
422.74 and 423.44)

    As previously noted, sections 1851(g)(3)(B)(i) and 1860D-
1(b)(1)(B)(v) of the Act provide that MA and Part D plans may terminate 
the enrollment of individuals who fail to pay basic and supplemental 
premiums on a timely basis. In addition, section 1860D-13(a)(7) of the 
Act mandates that individuals with higher incomes pay an additional 
premium, the Part D IRMAA, for the months in which they are enrolled in 
Part D coverage.
    Consistent with these sections of the Act, the MA and Part D 
subpart B regulations set forth our requirements with respect to 
involuntary disenrollment procedures under Sec. Sec.  422.74 and 
423.44, respectively. Pursuant to Sec. Sec.  422.74(d)(1)(i) and 
423.44(d)(1), an MA or Part D plan that chooses to disenroll 
beneficiaries for failure to pay premiums must be able to demonstrate 
to CMS that it made a reasonable effort to collect the unpaid amounts 
by notifying the beneficiary of the delinquency, providing the 
beneficiary a period of no less than two months in which to resolve the 
delinquency, and advising the beneficiary of the termination of 
coverage if the amounts owed are not paid by the end of the grace 
period. Further, as outlined in Sec.  423.44(e), CMS involuntarily 
disenrolls individuals from their Part D coverage for failure to pay 
Part D-IRMAA following an initial grace period of 3 months.
    Current regulations at Sec.  417.460(c) specify that an HMO or 
competitive medical plan (cost plan) may disenroll a member who fails 
to pay premiums or other charges imposed by the plan for deductible and 
coinsurance amounts. While there is not a grace period parallel to the 
grace period required by the MA and Part D regulations, the 
requirements for cost plans are otherwise similar. The cost plan must 
demonstrate that it made reasonable efforts to collect the unpaid 
amount and send the enrollee written notice of the disenrollment prior 
to transmitting the disenrollment to CMS.
    The final rule, titled ``Medicare Program; Changes to the Medicare 
Advantage and the Medicare Prescription Drug Benefit Programs for 
Contract Year 2012 and Other Changes'' which appeared in the Federal 
Register on April 15, 2011 (76 FR 21431) amended both the Parts C and D 
regulations at Sec. Sec.  422.74(d)(1)(v), 423.44(d)(1), and 
423.44(e)(3) regarding involuntary disenrollment for non-payment of 
premiums or Part D-IRMAA to allow for reinstatement of the 
beneficiary's enrollment into the plan for good cause. The good cause 
provision established that CMS can reinstate enrollment of a 
disenrolled individual's coverage in certain circumstances where the 
non-payment of premiums was due to a circumstance that the individual 
could not reasonably foresee and could not control, such as an extended 
period of hospitalization. In the final rule titled ``Medicare Program; 
Changes to the Medicare Advantage and the Medicare Prescription Drug 
Benefit Programs for Contract Year 2013 and Other Changes'' which 
appeared in the Federal Register on April 12, 2012 (77 FR 22071), we 
extended the policy of reinstatement for good cause to include 
beneficiaries enrolled in cost plans in Sec.  417.460(c)(3), thus 
aligning the cost plan reinstatement provision with the MA and Part D 
plan provisions. In the final rule titled ``Medicare Program; Contract 
Year 2016 Policy and Technical Changes to the Medicare Advantage and 
the Medicare Prescription Drug Benefit Programs'' which appeared in the 
Federal Register on February 12, 2015 (80 FR 7911), we amended Sec.  
417.460(c)(3), Sec.  422.74(d)(1)(v), and Sec.  423.44(d)(1)(vi) to 
permit an entity acting on behalf of CMS, such as an MA organization, 
Part D sponsor, or entity offering a cost plan, to effectuate 
reinstatements for beneficiaries disenrolled for nonpayment of plan 
premium when good cause criteria are met.

[[Page 79580]]

    To provide transparency to stakeholders, we are proposing to codify 
our current policy for MA organizations, Part D sponsors, or entities 
offering cost plans, as set out in sub-regulatory guidance in section 
60.3.4 of Chapter 2, Medicare Managed Care Manual, section 60.2.4 of 
Chapter 3, Medicare Prescription Drug Benefit Manual and section 60.6.3 
of Chapter 17-D, Medicare Managed Care Manual, that reinstatement for 
good cause, pursuant to Sec. Sec.  417.460(c)(3), 422.74(d)(1)(v), and 
423.44(d)(1)(vi), will occur only when the individual requests 
reinstatement within 60 calendar days of the disenrollment effective 
date and that an individual may make only one reinstatement request for 
good cause in this 60-day period. Specifically, CMS is proposing to 
amend Sec. Sec.  417.460(c)(3), 422.74(d)(1)(v), and 423.44(d)(1)(vi) 
to provide that the disenrolled individual must request reinstatement 
within 60 calendar days of the disenrollment effective date and has not 
previously requested reinstatement for good cause during the same 60 
day period following the involuntary disenrollment. These proposed 
changes represent the codification of longstanding guidance. Based on 
infrequent questions or complaints from plan sponsors and 
beneficiaries, and a lack of reported instances of noncompliance 
regarding the 60-day timeframe, as these requirements have been 
previously implemented and are currently being followed by plan 
sponsors, we conclude that the proposed changes to the regulatory text 
will not adversely impact plan sponsors or individuals disenrolled for 
nonpayment of plan premium who choose to request reinstatement for good 
cause, nor would the proposed changes have any impact to the Medicare 
Trust Funds or result in a paperwork burden.

L. Required Notices for Involuntary Disenrollment for Disruptive 
Behavior (Sec. Sec.  417.460, 422.74 and 423.44)

    Section 1851(g)(3)(B)(ii) of the Act authorizes an MA organization 
to disenroll individuals that engage in disruptive behavior. Section 
1860D-1(b)(1)(B)(v) of the Act generally directs us to establish rules 
related to enrollment, disenrollment, and termination for Part D plan 
sponsors that are similar to those established for MA organizations 
under section 1851(g) of the Act. Section 1876 of the Act sets forth 
the rules for Medicare cost plan contracts with HMOs and competitive 
medical plans (CMPs). In implementing regulations which appeared in the 
Federal Register on September 1, 1995 (60 FR 45678), we established at 
Sec.  417.460(e) the basis for HMOs and CMPs to disenroll individuals 
for disruptive, unruly, abusive, or uncooperative behavior. In 
implementing regulations which appeared in the Federal Register on June 
26, 1998 (63 FR 35071), we established at Sec.  422.74 the conditions 
for MA organizations (referred to M+C organizations at the time) to 
disenroll individuals for disruptive behavior. Additionally, the 
regulations established the requirement for a final notice to the 
beneficiary of the submission of the disenrollment, which applies to 
disruptive behavior disenrollments, at Sec.  422.74(c). The optional 
basis for disenrollment for disruptive behavior was established at 
Sec.  422.74(b)(1)(ii). The general standards defining disruptiveness 
were established in Sec.  422.74(d)(2).
    In January 2005, we published a final rule that revised the 
definition for disruptive behavior at Sec.  422.74(d)(2) (70 FR 4718), 
with the purpose of creating an objective definition that did not use 
the previously subjective terms such as ``unruly'' or ``abrasive.'' The 
current, objective definition from the January 2005 MA final rule both 
defines disruptive behavior and establishes the required process for an 
MA plan to request disenrollment of a disruptive individual. In January 
2005 we also published the Part D implementing regulation (70 FR 4525), 
where we established the conditions for a PDP sponsor to disenroll an 
individual for disruptive behavior. We established the basis for 
optional disenrollment for disruptive behavior at Sec.  
423.44(b)(1)(ii). We also established the definition of disruptive 
behavior and disenrollment process as it exists currently at Sec.  
423.44(d)(2). In the January 2005 Part D final rule, we also 
established the requirement for a final notice of the submission of the 
disenrollment transaction, which applies to disruptive behavior 
disenrollments, at Sec.  423.44(c).
    Under CMS's current MA and Part D regulations, disruptive behavior 
is defined as behavior by the plan enrollee that substantially impairs 
the plan's ability to arrange for or provide services for the 
individual or other plan members (Sec. Sec.  417.460(e)(1); 
422.74(d)(2)(i); 423.44(d)(2)(i)). The process for disenrolling an 
enrollee for disruptive behavior requires approval by CMS before the 
disenrollment may be submitted (Sec. Sec.  417.460(e)(5); 
422.74(d)(2)(v); 423.44(d)(2)(v)). MA organizations, Part D sponsors, 
and cost plans must make serious efforts to resolve the problem 
considering any extenuating circumstances; for MA organizations, cost 
plans, and Part D sponsors this includes providing reasonable 
accommodations for those beneficiaries with mental or cognitive 
conditions (Sec. Sec.  417.460(e)(2) and (3); 422.74(d)(2)(iii); 
423.44(d)(2)(iii)). MA organizations, Part D sponsors, and cost plans 
must also document the beneficiary's behavior and the plan's own 
efforts to resolve the issue, and this record must be submitted to CMS 
before disenrollment can be approved (Sec. Sec.  417.460(e)(4) and (5); 
422.74(d)(2)(iv) and (v); 423.44(d)(2)(iv) and (v)). The current 
definition of disruptive behavior in Sec. Sec.  417.460(e)(1), 
422.74(d)(2), and 423.44(d)(2) served as the basis for CMS's current 
sub-regulatory guidance found in Chapter 2, section 50.3.2, of the 
Medicare Managed Care Manual and Chapter 3, section 50.3.2, of the 
Medicare Prescription Drug Benefit Manual and Chapter 17D, section 
50.3.3, of the Medicare Managed Care Manual. In guidance, we outline 
member notices that an MA organization, Part D sponsor, and cost plans 
must send before requesting permission from CMS to involuntarily 
disenroll the member.
    To provide transparency to stakeholders and stability as to the 
operation of the program, we are proposing to codify current policy for 
MA, Part D, and cost plan notices during the disenrollment for 
disruptive behavior process. These notices provide the beneficiary with 
a warning of the potential consequences of continued disruptive 
behavior. In a new proposed paragraph, a Sec.  422.74(d)(2)(vii), we 
propose to codify existing policy currently set out in sub-regulatory 
guidance regarding MA plan notices prior to a member disenrollment for 
disruptive behavior. To request approval of a disenrollment for 
disruptive behavior, an MA organization would be required to provide 
two notices: (1) an advance notice, informing the plan member that 
continued disruptive behavior could lead to involuntary disenrollment; 
and (2) a notice of the plan's intent to request CMS permission to 
disenroll the member, sent at least 30 days after the advance notice to 
give the member an opportunity to cease the behavior. These notices are 
in addition to the disenrollment submission notice currently required 
under Sec.  422.74(c). We are also proposing to revise the existing 
requirement at Sec.  422.74(d)(2)(iii) that plans inform the individual 
of the right to use the plan's grievance procedures, to clarify that 
this information should be conveyed as part of the notices described in 
new paragraph (d)(2)(vii). Additionally, as proposed in additions to 
Sec.  422.74(d)(2)(iv), the plan would be

[[Page 79581]]

required to submit dated copies of these required notices to CMS along 
with the other documentation regarding enrollee behavior and the plan's 
efforts to resolve the issues.
    At new paragraph Sec.  423.44(d)(2)(viii), we propose to codify 
existing policy currently set out in subregulatory guidance regarding 
PDP sponsor notices prior to a member disenrollment for disruptive 
behavior. To request approval of a disenrollment for disruptive 
behavior, a PDP sponsor would be required to provide two notices: (1) 
an advance notice, informing the plan member that continued disruptive 
behavior could lead to involuntary disenrollment; (2) a notice of 
intent to request CMS permission to disenroll the member, sent at least 
30 days after the advance notice to give the member an opportunity to 
cease the behavior. These notices are in addition to the disenrollment 
submission notice currently required under Sec.  423.44(c). We are also 
proposing to revise the existing requirement at Sec.  423.44(d)(2)(iii) 
that plans inform the individual of the right to use the plan's 
grievance procedures, to clarify that this information should be 
conveyed as part of the notices described in new paragraph 
(2)(d)(viii). Additionally, as proposed in additions to Sec.  
423.44(d)(2)(iv), the plan would be required to submit dated copies of 
these required notices to CMS along with the other documentation 
regarding enrollee behavior and the plan's efforts to resolve the 
issues.
    At Sec.  417.460(e)(7) we propose to codify existing policy 
guidance currently set out in subregulatory guidance regarding cost 
plan notices prior to an enrollee disenrollment for cause (disruptive 
behavior). Current guidance is found in Chapter 17D of the Medicare 
Managed Care Manual, section 50.3.3. To request approval of a 
disenrollment for disruptive behavior, an HMO or CMP would be required 
to provide two notices: (1) an advance notice, informing the enrollee 
that continued disruptive behavior could lead to involuntary 
disenrollment; (2) a notice of intent to request CMS permission to 
disenroll the enrollee, sent at least 30 days after the advance notice 
to give the member an opportunity to cease the behavior. These notices 
are in addition to the disenrollment submission notice currently 
required under Sec.  417.460(e)(6). We are also proposing to revise the 
existing requirement at Sec.  417.460(e)(2) that plans inform the 
individual of the right to use the plan's grievance procedures, to 
clarify that this information should be conveyed as part of the notices 
described in new paragraph (e)(7). Additionally we are proposing in 
Sec.  417.460(e)(2) that, as part of its efforts to resolve the problem 
presented by the enrollee, a HMO or CMP must provide reasonable 
accommodations for individuals with mental or cognitive conditions, 
including mental illness and developmental disabilities, similar to the 
existing requirement in the MA and Part D regulations at Sec. Sec.  
422.74(d)(2)(iii); 423.44(d)(2)(iii)). As proposed in Sec.  
417.460(e)(4), cost plans would be required to submit dated copies of 
these required notices to CMS along with other documentation regarding 
enrollee behavior and the plan's efforts to resolve the issues.
    We are codifying longstanding guidance with these changes. All 
information impacts related to the involuntary disenrollment by the 
plan for disruptive behavior have already been accounted for under OMB 
control numbers 0938-0753 (CMS-R-267) for Part C and 0938-0964 (CMS-
10141) for Part D. Based on infrequent questions from MA organizations, 
Part D, and cost plan sponsors on these notices, as these notice 
requirements have been previously implemented and are currently being 
followed by plans, we conclude that these updates do not add to the 
existing disenrollment process and we do not believe there is any 
additional paperwork burden.

M. Codification of the Part D Optional Disenrollment for Fraud and 
Abuse Policy (Sec.  423.44)

    As noted previously, section 1851(g)(3)(B)(ii) of the Act provides 
that an MA organization may disenroll individuals that engage in 
disruptive behavior. In 1998, the Part C implementing regulations at 63 
FR 35075 separately referred to a different kind of ``disruption'' or 
``failure to cooperate'', namely, fraud or abuse on the part of the 
individual on the enrollment form, or by misuse of the individual's 
enrollment card. This basis for termination, that is, if the individual 
provides fraudulent information on his or her election form or permits 
abuse of his or her enrollment card, which was also based on section 
1851(g)(3)(B)(ii) of the Act, was codified as a separate paragraph at 
Sec.  422.74(b)(1)(iii) (63 FR 35075). Regulations also provided a 
process for disenrollment on this basis, whereby, an M+C organization 
may disenroll an individual that knowingly provides, on the election 
form, fraudulent information that materially affects the individual's 
eligibility to enroll in the M+C plan, or intentionally permits others 
to use his or her enrollment card to obtain services under the M+C 
plan, as long as a notice of disenrollment is provided as outlined in 
Federal law. The M+C organization was also required to report the 
disenrollment to Medicare. This process for disenrollment based on 
fraud or abuse on the part of the individual was codified at Sec.  
422.74(d)(3) (63 FR 35075). Fraud and abuse by the enrollee are treated 
in the same manner as other forms of disruptive behavior, with the 
individual being disenrolled into the original Medicare program.
    The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA) (Pub. L. 108-173) enacted the Medicare Advantage program, 
which replaced the M+C program established under title XVIII of the 
Act, and amended title XVIII of the Act to add a new part D (Voluntary 
Prescription Drug Benefit Program). Section 1860D-1(b)(1)(B)(v) of the 
Act specifies that in establishing a process for Part D enrollment, 
disenrollment, termination, and change of enrollment of Part D eligible 
individuals in prescription drug plans, the Secretary shall use rules 
similar to (and coordinated with) the rules for an MA-PD plan 
established under section 1851(g) of the Act. In 2005, CMS finalized 
implementing regulations, at Sec. Sec.  423.44 (b)(1)(ii) and (d)(2), 
providing that PDP sponsors may disenroll an individual who engages in 
disruptive behavior and defining the process for disenrollment on this 
basis (70 FR 4530). However, CMS's 2005 implementing regulations did 
not include provisions allowing PDP sponsors the ability to disenroll 
individuals on the basis of fraud or abuse on the part of the 
individual on the enrollment form, or by misuse of the individual's 
enrollment card, equivalent to the MA regulations at Sec. Sec.  
422.74(b)(1)(iii) and (d)(3).
    Although CMS has adopted and implemented this same basis for 
optional disenrollment from a Part D plan in sub-regulatory guidance, 
we are now proposing to codify the policy for optional disenrollment 
from a Part D plan based on an individual providing fraudulent 
information on his or her election form or permitting abuse of his or 
her enrollment card. Our intent is to codify the current policy, as 
reflected in section 50.3.3 of Chapter 3 of the Medicare Prescription 
Drug Benefit Manual. These proposed regulations would also align the 
rules for Part D plans with the current rules for MA plans for optional 
disenrollment for an individual who commits fraud or permits abuse of 
their enrollment card, as provided in the MA regulations at

[[Page 79582]]

Sec.  422.74. Codifying our existing policy will provide transparency 
and stability for stakeholders about the Part D program.
    We are proposing to add a new Sec.  423.44(b)(1)(iii) to codify 
that if an individual provides fraudulent information on his or her 
election form or permits abuse of his or her enrollment card as 
specified in new paragraph (d)(9) of this section, the Part D plan has 
the option to involuntarily disenroll the individual. Further, we are 
proposing to add a new Sec.  423.44(d)(9) to establish the process for 
optional disenrollment for an individual who commits fraud or permits 
abuse of their enrollment card. We are proposing to add a new Sec.  
423.44(d)(9)(i) to establish a basis for disenrollment for an 
individual who commits fraud or permits abuse of their enrollment card 
as provided in Sec. Sec.  423.44(d)(9)(i)(A) and 423.44(d)(9)(i)(B). We 
are proposing to establish in Sec.  423.44(d)(9)(i)(A) that a Part D 
plan may disenroll an individual who knowingly provides, on the 
election form, fraudulent information that materially affects the 
individual's eligibility to enroll in the Part D plan. We are proposing 
to establish in Sec.  423.44(d)(9)(i)(B) that a Part D plan may 
disenroll an individual who intentionally permits others to use his or 
her enrollment card to obtain drugs under the Part D plan.
    We are further proposing to add a new Sec.  423.44(d)(9)(ii) to 
establish that a Part D plan who opts to disenroll an individual who 
commits fraud or permits abuse of their enrollment card must provide 
the individual a written notice of the disenrollment that meets the 
notice requirements set forth in Sec.  423.44(c) of this section. We 
are also proposing to add a new Sec.  423.44(d)(9)(iii) to establish 
that a Part D plan must report to CMS any disenrollment based on fraud 
or abuse by the individual.
    With regard to our Part D optional involuntary disenrollment for 
fraud and abuse policy, the following change will be submitted to OMB 
for review under control number OMB 0938-0964 (CMS-10141). We estimate 
that it will take a Part D plan three hours to capture and retain the 
required documentation for each occurrence of disenrollment for fraud 
and abuse. In part, the burden associated with this requirement is the 
time and effort necessary for a Part D plan to document and retain the 
documentation that meets the requirements set forth in this section. 
Based on actual experience, since 2012, there have only been five 
disenrollments for fraud and abuse. Three of those disenrollments were 
from MA/MAPD plans, one was from the Limited Income Newly Eligible 
Transition (LI NET) plan, and one was from a standalone Part D plan. 
Thus, the burden to Part D plans is negligible and per 5 CFR 1320.3(c) 
not subject to PRA because it involves less than 10 entities per year. 
Nonetheless, we will still add this information to the information 
collection currently approved under OMB control number 0938-0964. In 
addition, based on this data, we do not expect any future impact to the 
Medicare Trust Fund.
    We are further proposing in Sec.  423.44(d)(9)(ii) that the Part D 
plan must provide a written notice of disenrollment to the member to 
advise them of the plan's intent to disenroll, as required under Sec.  
423.44(c) of this subpart. Lastly, we are proposing in Sec.  
423.44(d)(9)(iii) that the Part D plan must report to CMS any 
disenrollment based on fraud or abuse by the member. All information 
impacts related to providing a written notice to the member and 
notifying CMS of the disenrollment have already been accounted for 
under OMB control numbers 0938-0964 (CMS-10141).

N. SPAP or Other Payer Exception for Disenrollment for Failure To Pay 
(Sec.  423.44)

    Section 1851(g)(3)(B)(i) of the Act allows MA plans to disenroll 
members who fail to pay premiums on a timely basis. Section 1860D-
1(b)(1)(B)(v) of the Act directs us to adopt Part D disenrollment rules 
similar to the MA provisions in section 1851(g) of the Act. 
Additionally, section 1860D-1(b)(3)(A)(iii) of the Act states that 
disenrollment in a plan for failure to pay premiums will be considered 
a voluntary disenrollment action. In Part D implementing regulations 
(70 FR 4525), we established the basis for an optional involuntary 
disenrollment for failure to pay premiums as well as the disenrollment 
process. The basis for disenrollment for failure to pay premiums was 
established at Sec.  423.44(b)(1)(i). The disenrollment process for 
failure to pay premiums was established at Sec.  423.44(d)(1). In 2009, 
we added an exception to this disenrollment provision which prohibited 
plans from disenrolling individuals who are in premium withhold status 
(74 FR 1543). The premium withhold status exception was established at 
Sec.  423.44(d)(1)(iv) and later renumbered to paragraph (v) in 2010 
when we added the grace period requirement at Sec.  423.44(d)(1)(iii) 
(75 FR 19816).
    Section 1860D-23 of the Act directed the Secretary to establish 
coordination rules between State Pharmaceutical Assistance Programs 
(SPAPs) and Part D plan sponsors regarding the payment of premiums for 
Part D eligible individuals. SPAPs, and other third-party payer 
assistance programs, have the option to cover Part D premiums for 
individuals. Implementing regulation (70 FR 4525) established the 
requirement that Part D plan sponsors must permit SPAPs, and other 
entities, to coordinate benefits with the plan, including paying for 
premiums, at Sec.  423.464(a).
    To protect beneficiaries who have SPAPs, or other payers, cover 
their premiums, we propose to codify current policy that excepts 
certain prescription drug plan (PDP) members from being disenrolled for 
failure to pay plan premiums, at Sec.  423.44(d)(1)(v). This policy is 
currently set out in sub-regulatory guidance, specifically section 
50.3.1 of Chapter 3 of the Medicare Prescription Drug Benefit Manual, 
that Part D plan sponsors have previously implemented and are currently 
following. We propose, at revised Sec.  423.44(d)(1)(v), a 
disenrollment exception if the sponsor has been notified that an SPAP, 
or other payer, is paying the Part D portion of the premium, and the 
sponsor has not yet coordinated receipt of the premium payments with 
the SPAP or other payer. Sponsors would not be able to initiate the 
disenrollment process or disenroll members who qualify for this 
exception.
    In addition, we are taking this opportunity to propose a technical 
correction to revise an erroneous cross reference in Sec.  
423.44(d)(1). Instead of referring to paragraph (d)(1)(iv), the 
language should refer to paragraph (d)(1)(v).
    We are codifying longstanding guidance with these changes. All 
information impacts related to the involuntary disenrollment by the 
plan for failure to pay Part D plan premiums have already been 
accounted for under OMB control 0938-0964 (CMS-10141). Based on 
infrequent questions or complaints from Part D sponsors on these 
notices, we believe that these disenrollment requirements have been 
previously implemented and are currently being followed by sponsors. 
These updates do not add to the existing disenrollment process, so we 
do not believe there is any additional paperwork burden.

O. Possible End Dates for the SEP for Government Entity-Declared 
Disaster or Other Emergency (Sec. Sec.  422.62 and 423.38)

    Section 1851(e)(4)(D) of the Act authorizes the Secretary to 
establish MA special enrollment periods (SEP) for

[[Page 79583]]

Medicare-eligible individuals to elect a plan or change the 
individual's plan election when the individual meets an exceptional 
condition, as determined by the Secretary. Section 1860D-1(b)(3)(C) of 
the Act authorizes the Secretary to establish SEPs for exceptional 
circumstances for Medicare-eligible individuals to make Part D 
elections.
    The SEPs for exceptional circumstances were historically included 
in our sub-regulatory guidance rather than in regulation. In 2020, we 
codified and amended a number of SEPs that had been adopted and 
implemented through sub-regulatory guidance as exceptional 
circumstances SEPs, including the SEP for Government Entity-Declared 
Disaster or Other Emergency (85 FR 33901, 33909). This SEP, as codified 
at Sec.  422.62(b)(18) for enrollment in an MA or MA-PD plan and Sec.  
423.38(c)(23) for enrollment in a Part D-only plan, allows individuals 
who are or have been affected by an emergency or major disaster 
declared by a Federal, State, or local government entity, and did not 
make an election during another period of eligibility as a result of 
the disaster/emergency, to make an MA and/or Part D enrollment or 
disenrollment action. Although CMS originally proposed that this SEP 
would only apply to FEMA-declared disasters or emergencies, as 
finalized in 2020, the regulations also include State and local 
emergency or major disaster declarations (85 FR 33868). This SEP begins 
the date the disaster/emergency declaration is made, the incident start 
date or, if different, the start date identified in the declaration, 
whichever is earlier. This SEP ends 2 full calendar months following 
the end date identified in the declaration or, if different, the date 
the end of the incident is announced, whichever is later.
    In order to clarify the length of this SEP, we are proposing to 
revise the end date(s) for the SEP for Government Entity-Declared 
Disaster or Other Emergency. We are proposing two changes in Sec. Sec.  
422.62(b)(18) and 423.38(c)(23) regarding this SEP.
    First, we are proposing that for State or local emergencies/
disasters, the end date for the SEP may also be based on an emergency/
disaster order automatically expiring pursuant to a State or local law, 
if such a law exists. Applicable State or local law could be statutes, 
regulations, local or municipal ordinance or code regarding the 
automatic expiration date of State or local emergency orders. If the 
announced incident period end date is different than the expiration 
date specified in State or local law, the announced incident end date 
controls the SEP end date. Under this proposal, the SEP ends based on 
the end of the emergency/disaster period, regardless of whether that 
period ends based on an announcement by the applicable authority or 
expires based on applicable State or local law.
    Second, we are proposing an automatic incident end date which will 
apply if no end date for the period of disaster/emergency is otherwise 
identified within 1 year of the start of the SEP. This automatic 
incident end date will fall 1 year after the SEP start date, meaning 
that if no end date is otherwise identified, the SEP will be 14 full 
calendar months in length. For example, under our proposed changes, if 
no incident end date was identified in the declaration, or announced 
later, and there is no applicable expiration date provided by State or 
local law, CMS would consider the incident end date to be 1 year after 
the SEP start date and the SEP would end 2 full calendar months after 
that incident end date, which would result in a 14-month maximum SEP. 
We are seeking public comment on this automatic 1-year incident end 
date to determine if the 14-month maximum eligibility period for this 
SEP is sufficient. We propose that if the emergency/disaster 
declaration is extended, then the automatic 1-year incident end date 
would be from the date of the extension. This would address situations 
where a declaration of emergency or major disaster is renewed or 
extended (perhaps multiple times) so that the state of emergency or 
major disaster lasts for a year or more. These proposed changes will 
provide clear end dates for this SEP and should allow stakeholders to 
more easily calculate SEP length and determine beneficiary eligibility 
for the SEP.
    Because an individual may elect a Medicare Advantage or Part D plan 
only during an election period, Medicare Advantage organizations and 
Part D sponsors already have procedures in place to determine the 
election period(s) for which an applicant is eligible. Our proposal 
would not add to existing enrollment processes, so we believe any 
burden associated with this aspect of enrollment processing would 
remain unchanged from the current practice, and would not impose any 
new requirements or burden. All information impacts of this provision 
have already been accounted for under OMB control numbers 0938-0753 
(CMS-R-267), 0938-1378 (CMS-10718), and 0938-0964 (CMS-10141). In 
addition, Medicare Advantage organizations and Part D sponsors have 
previously implemented and are currently following the process to 
determine applicant eligibility for this SEP. We believe that changing 
the possible end date for this SEP will make a negligible impact, if 
any. We do not believe the proposed changes will adversely impact 
individuals requesting enrollment in Medicare plans, the plans 
themselves, or their current enrollees. Similarly, we do not believe 
the proposed changes would have any impact to the Medicare Trust Funds.

P. Updating MA and Part D SEPs for Changes in Residence and Codifying 
Procedures for Developing Addresses for Members Whose Mail Is Returned 
as Undeliverable (Sec. Sec.  422.62, 422.74, 423.38 and 423.44)

    Section 1851(b)(1)(A) of the Act provides that an individual is 
eligible to elect a Medicare+Choice (M+C), later known as Medicare 
Advantage (MA), plan only if the plan serves the geographic area in 
which the individual resides. Section 1851(b)(1)(B) of the Act provides 
for a continuation of enrollment option under which an MA organization 
offering an MA local plan may offer its enrollees the option to 
continue enrollment in the plan when they move out of the plan service 
area and into a continuation area, so long as the organization provides 
or arranges for coverage of all Medicare-covered benefits. In the June 
1998 IFC, we adopted regulations to address the residency and 
continuation area requirements, at Sec. Sec.  422.50(a)(3) and 422.54, 
respectively, as well as a regulation, at Sec.  422.74(b)(2)(i), 
requiring that an MA organization must disenroll an individual who no 
longer resides in the plan service area.
    Section 1860D-1(b)(1)(B)(i) of the Act generally directs CMS to use 
rules related to enrollment, disenrollment, and termination for Part D 
sponsors that are similar to those established for MA organizations 
under section 1851(b)(1)(A) of the Act. In addition, section 1860D-
1(b)(3) of the Act provides CMS additional SEP authority, including the 
authority at 1860D-1(b)(3)(C) for the Secretary to establish special 
enrollment periods ``[i]n the case of part D eligible individuals who 
meet such exceptional conditions (in addition to those conditions 
applied under paragraph (1)(B)(iii)) as the Secretary may provide.''
    In January 2005, we published a final rule (70 FR 4194) to 
establish at Sec.  423.30(a) that an individual must reside in a Part D 
plan service area in order to be eligible to enroll in the plan and at 
Sec.  423.44(b)(2) that a Part D plan sponsor is required to disenroll 
an

[[Page 79584]]

individual who no longer resides in the plan service area.
    Section 1851(e)(4)(B) of the Act establishes that an individual who 
is no longer eligible to elect an MA plan because of a change in the 
individual's place of residence is eligible for a special election 
period (SEP) during which the individual may disenroll from the current 
plan or elect another plan. In the June 1998 interim final rule with 
comment period (63 FR 35073), we established at Sec.  422.62(b)(2) an 
SEP for an individual who is not eligible to remain enrolled in an MA 
plan because of a change in his or her place of residence to a location 
out of the service area or continuation area. Likewise, in the January 
2005 Part D final rule (70 FR 4194), we established at Sec.  
423.38(c)(7) an SEP for an individual who is no longer eligible for the 
PDP because of a change in his or her place of residence to a location 
outside of the PDP region(s) where the PDP is offered are eligible for 
an SEP.
    Current sub-regulatory guidance for these SEPs that are codified at 
Sec. Sec.  422.62(b)(2) and 423.38(c)(7), as reflected in section 
30.4.1 of Chapter 2 of the Medicare Managed Care Manual for MA and in 
section 30.3.1 of Chapter 3 of the Medicare Prescription Drug Benefit 
Manual, provide that these SEPs are available not only to individuals 
who become ineligible for their current plan due to a move out of the 
service area of their current plan, but also to those who move within 
the service area of their current plan and have new plan options 
available to them, as well as to those who are not currently enrolled 
in a Medicare health or drug plan who move and have new plan options 
available to them. We propose to address the wider scope of these SEPs, 
as they are currently set out in sub-regulatory guidance, by amending 
Sec. Sec.  422.62(b)(2) and 423.38(c)(7) to include individuals who 
move within the service area of their current plan and have new 
Medicare health or drug plan options available to them, as well as to 
those who are not currently enrolled in a Medicare health or drug plan 
who move and have new plan options available to them.
    The intent of our proposal is to codify current policy as reflected 
in CMS's existing subregulatory guidance and that is being carried out 
currently by MA organizations and Part D plan sponsors. Codifying our 
current policy for these SEPs will provide transparency and stability 
for stakeholders about the MA and Part D programs and about the nature 
and scope of these SEPs.
    Separate from, but related to, the aforementioned policy for 
disenrolling individuals who report that they no longer reside in the 
plan service area are the current regulations at Sec.  422.74(d)(4)(ii) 
that require that MA organizations disenroll individuals who are absent 
from the service area for more than six months. However, Sec.  
422.74(d)(4)(iii) provides an exception for individuals enrolled in MA 
plans that offer a visitor/traveler benefit are permitted an absence 
from the service area for up to 12 months; such individuals are 
disenrolled if their absence from the service area exceeds 12 months 
(or the length of the visitor/traveler program if less than 12 months). 
As outlined at Sec.  423.44(d)(5)(ii), PDP sponsors must disenroll PDP 
enrollees who are absent from the plan service area for more than 12 
months.
    In the event that member materials are returned to plan sponsors as 
undeliverable and a forwarding address is not specified, current sub-
regulatory guidance directs the plan sponsor to document the return, 
retain the returned material and continue to send future correspondence 
to that same address, as a forwarding address may become available at a 
later date. See Sec.  50.2.1.4 of Chapter 2 of the Medicare Managed 
Care Manual for MA and Sec.  50.2.1.5 of Chapter 3 of the Medicare 
Prescription Drug Benefit Manual for Part D. In sub-regulatory 
guidance, we state that plan sponsors are to consider returned mail as 
an indication of a possible change in residence that warrants further 
investigation. As such, we encourage the plan sponsor to attempt to 
locate the member using any available resources, including CMS systems, 
to identify new address information for the member. We describe how 
plans should attempt to research a member's change of address at Sec.  
50.2.1.4 of Chapter 2 of the Medicare Managed Care Manual for MA and 
Sec.  50.2.1.5 of Chapter 3 of the Medicare Prescription Drug Benefit 
Manual for Part D. Plan sponsors that are unable to contact the member 
or obtain current address information will disenroll the member upon 
expiration of the 6- or 12-month period of permitted temporary absence 
from the plan service area, as previously discussed.
    Current MA guidance in Sec.  50.2.1.4 of Chapter 2 of the Medicare 
Managed Care Manual regarding research of potential changes in address 
is consistent with the MA regulation at Sec.  422.74(d)(4)(i) providing 
that ``the MA organization must disenroll an individual if the MA 
organization establishes, on the basis of a written statement from the 
individual or other evidence acceptable to CMS, that the individual has 
permanently moved.'' The analogous Part D regulation at Sec.  
423.44(d)(5)(i) requires that the ``PDP must disenroll an individual if 
the individual notifies the PDP that he or she has permanently moved 
out of the PDP service area,'' but the Part D regulation does not 
provide a basis similar to the MA regulation for when PDPs may start 
the process of researching and acting on a change of address that the 
plan learns about from a source other than the member. Although current 
Part D guidance in Sec.  50.2.1.5 of Chapter 3 of the Medicare 
Prescription Drug Benefit Manual allows PDPs to use information they 
receive from sources other than the member, specifically from either 
CMS or the USPS, as an indicator that a beneficiary may no longer 
reside in the service area, this is not codified in the Part D 
regulation. Therefore, we propose to align the Part D regulation with 
MA regulation by amending Sec.  423.44(d)(5)(i) to state that a PDP 
must disenroll an individual if the PDP establishes, on the basis of a 
written statement from the individual or other evidence acceptable to 
CMS, that the individual has permanently moved out of the PDP service 
area.
    Current sub-regulatory guidance does not identify returned mail as 
a basis for involuntary disenrollment. Materials plans send to members 
that include protected health information (PHI) and/or personal 
identifying information (PII), as well as materials intended to inform 
members of plan-specific information, such as premiums, benefits, cost-
sharing, network and network changes and plan rules, have the potential 
for greater adverse impact on individual members, if returned as 
undeliverable, than materials such as newsletters, flyers and other 
items covering general health and wellness. To provide additional 
clarity to plan sponsors in their efforts to ascertain the residency 
status of members when there is an indication of a possible temporary 
or permanent absence from the service area, we are proposing to amend 
Sec.  422.74 by adding paragraphs (d)(4)(ii)(A) and (d)(4)(iii)(F) for 
MA and to amend Sec.  423.44 by revising paragraph (d)(5)(ii) for Part 
D to state that an individual is considered to be temporarily absent 
from the plan service area when any one or more of the required 
materials and content referenced in Sec. Sec.  422.2267(e) and 
423.2267(e), if provided by mail, is returned to the plan sponsor by 
the US Postal Service as undeliverable and a forwarding address is not 
provided. Codifying current sub-regulatory guidance regarding the use 
of returned mail as a basis for considering a member potentially out of 
area would provide a

[[Page 79585]]

regulatory basis for plan sponsors to apply the 6- and 12-month 
timeframes as previously described, as well as the current practice of 
disenrolling individuals when the plan sponsor is unable to communicate 
with them using the residence address provided by the individual to the 
plan sponsor. Since plan sponsors are required by regulation to 
continue to mail certain materials to enrollees until the point at 
which the individual is no longer enrolled in the plan, we believe that 
it is important to codify the basis on which plan sponsors are to 
consider an individual to be temporarily out of the plan service area 
and able to be disenrolled, after an appropriate period of time, thus 
bringing about the cessation of any additional member material 
mailings.
    Codifying our current policy for temporary absences from the plan 
service area, the sources of information on which plan sponsors may 
make related eligibility determinations, and the implications for 
disenrollment will provide transparency and stability for stakeholders 
about the MA and Part D programs and about plan service area 
requirements for the MA and Part D programs.
    These proposals are a codification of longstanding MA and Part D 
sub-regulatory guidance and there is no impact to the Medicare Trust 
Fund. Because an individual may elect an MA or Part D plan only during 
an election period and may continue enrollment in an MA or Part D plan 
only if the individual resides in the plan service area, or for some MA 
plans, the plan continuation area, MA organizations and Part D plan 
sponsors already have procedures in place to determine the election 
period(s) for which an applicant is eligible and to determine the point 
at which an enrollee is no longer eligible for the plan and must be 
disenrolled. Our proposal would not add to existing enrollment and 
disenrollment processes, so we believe any burden associated with these 
aspects of enrollment and disenrollment processing would remain 
unchanged from the current practices, and would not impose any new 
requirements or burden. All information impacts related to the 
determination of eligibility for an election period and to the 
disenrollment of individuals who become ineligible for an MA or Part D 
plan based on the residency requirements have already been accounted 
for under OMB control numbers 0938-0753 (CMS-R-267) for Part C and 
0938-0964 (CMS-10141) for Part D.

Q. Codify the Term ``Whole Calendar Months'' (Sec. Sec.  422.74 and 
423.44)

    Section 1851(g)(3)(B)(i) of the Act provides that an MA 
organization may involuntarily terminate an individual's election in a 
MA plan if monthly basic and supplemental beneficiary premiums are not 
paid timely, and provides for a grace period for payment of such 
premiums. Consistent with this section of the Act, the Part C 
regulations set forth our requirements with respect to optional 
involuntary disenrollment procedures under Sec.  422.74.
    The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA) (Pub. L. 108-173) enacted the Medicare Advantage (MA) 
program, which replaced the M+C program established under title XVIII 
of the Act, and amended title XVIII of the Act to add a new Part D 
(Voluntary Prescription Drug Benefit Program). Section 1860D-
1(b)(1)(B)(v) of the Act specifies that in establishing a process for 
Part D enrollment, disenrollment, termination, and change of enrollment 
of Part D eligible individuals in prescription drug plans, the 
Secretary shall use rules similar to (and coordinated with) the rules 
for an MA plan established under section 1851(g) (other than paragraph 
(2) of such section and clause (i) and the second sentence of clause 
(ii) of paragraph (3)(C) of such section) of the Act. Consistent with 
these sections of the Act, the Part D regulations set forth our 
requirements with respect to optional involuntary disenrollment 
procedures under Sec.  423.44.
    In 2010, CMS amended the Part C and Part D regulations regarding 
optional involuntary disenrollment for nonpayment of premiums to 
require a minimum grace period of 2 months before any disenrollment 
occurs. This timeframe was established to provide adequate time for 
organizations to respond to instances in which individuals fail to pay 
their premiums, and for affected enrollees to take steps to remedy the 
situation and avoid disenrollment. These requirements were codified at 
Sec.  422.74(d)(1)(i)(B)(1) (75 FR 19804) and Sec.  
423.44(d)(1)(iii)(A) (75 FR 19816). CMS also revised these regulations 
to include the requirement that the grace period begin on the first day 
of the month for which the premium is unpaid or the first day of the 
month following the date on which premium payment is requested, 
whichever is later. These regulations were codified at Sec.  
422.74(d)(1)(i)(B)(2) (75 FR 19804) and Sec.  423.44(d)(1)(iii)(B) (75 
FR 19816).
    In subsequent subregulatory guidance in section 50.3.1, Chapter 2 
of the Medicare Managed Care Manual and section 50.3.1, Chapter 3 of 
the Medicare Prescription Drug Benefit Manual we defined the grace 
period for nonpayment of plan premium as a whole number of calendar 
months, not fractions of months. As the term ``whole calendar months'' 
is not specifically mentioned in the Part C and Part D regulations, we 
are proposing to revise Sec. Sec.  422.74(d)(1)(i)(B)(1) and 
423.44(d)(1)(iii)(A) to include the requirement that the grace period 
be at least 2 whole calendar months, to begin on the first day of the 
month for which the premium is unpaid or the first day of the month 
following the date on which premium payment is requested, whichever is 
later. To illustrate this proposal, we provide the following example.
    An MA or Part D plan has a 2-month grace period for premium 
payment. The grace period cannot begin until the individual has been 
notified of (billed for) the actual premium amount due, with such 
notice/bill specifying the due date for that amount and providing an 
opportunity to pay. On January 10th, a member is billed for his or her 
premium which is due on February 1. The member does not pay this 
premium and on February 7th, the sponsor sends the notice required by 
Sec.  422.74(d)(1)(ii) or Sec.  423.44(d)(1)(ii). The member does not 
act in response to this notice or any subsequent premium bills and 
payments are not made for February or March. The grace period is the 
months of February and March. If the member does not pay the unpaid 
plan premiums before the end of March, the individual would be 
disenrolled as of April 1.
    Codifying this policy that a plan must provide a grace period of at 
least 2 whole calendar months will provide transparency and stability 
for stakeholders, and align with longstanding sub-regulatory guidance 
described in section 50.3.1, Chapter 2 of the Medicare Managed Care 
Manual and section 50.3.1, Chapter 3 of the Medicare Prescription Drug 
Benefit Manual regarding timeframes for disenrollment, which establish 
that the grace period must be a whole number of calendar months and 
cannot include fractions of months.
    Plan sponsors that have chosen to disenroll individuals based on 
unpaid premiums already have procedures in place to implement a grace 
period that is a minimum of 2 months in length. Based on infrequent 
complaints or questions from sponsors, we believe that plan sponsors 
are complying with this guidance, and we are not proposing any

[[Page 79586]]

changes to the requirements or process for involuntary disenrollment 
that plan sponsors have previously implemented and are currently 
following. All burden impacts of these provisions have already been 
accounted for under OMB control number 0938-0753 (CMS-R-267) for Part C 
and OMB control number 0938-0964 (CMS-10141). There is also no impact 
to the Medicare Trust Fund.

R. Researching and Acting on a Change of Address (Sec. Sec.  422.74 and 
423.44)

    As discussed in our proposal for Developing Addresses for Members 
Whose Mail is Returned as Undeliverable and SEP for Changes in 
Residence (Sec. Sec.  422.62, 422.74, 423.38, 423.44), section 
1851(b)(1)(A) of the Act provides that an individual is eligible to 
elect an MA plan only if the plan serves the geographic area in which 
the individual resides, and section 1860D-1(b)(1)(B) of the Act 
generally directs CMS to use rules related to enrollment, 
disenrollment, and termination for Part D sponsors that are similar to 
those established for MA organizations under section 1851(b)(1)(A) of 
the Act.
    Pursuant to regulations at Sec.  422.74(c) for MA and Sec.  
423.44(c) for Part D, MA organizations and Part D plan sponsors are 
currently required to issue a disenrollment notice when an enrollee is 
disenrolled for not residing in the plan service area. Existing sub-
regulatory guidance includes a requirement that MA organizations and 
Part D plan sponsors issue the disenrollment notice within 10 days of 
the plan learning of the permanent move. See Sec.  50.2.1.5 of Chapter 
2 of the Medicare Managed Care Manual for MA and Sec.  50.2.1.6 of 
Chapter 3 of the Medicare Prescription Drug Benefit Manual, 
respectively. In the case of MA plan enrollees who are disenrolled 
because they are absent from the service area for more than six months, 
the disenrollment notice must be provided within the first ten calendar 
days of the sixth month. Individuals enrolled in MA plans that offer a 
visitor/traveler benefit are permitted an absence from the service area 
for up to 12 months; such individuals are disenrolled if their absence 
from the service area exceeds 12 months (or the length of the visitor/
traveler program if less than 12 months). In this scenario, the MA 
organization must provide notification of the upcoming disenrollment to 
the enrollee during the first ten calendar days of the 12th month (or 
the last month of the allowable absence, per the visitor/traveler 
program). PDP enrollees are disenrolled if they are absent from the 
plan service area for more than 12 months. For these cases, the 
disenrollment notice must be provided within the first 10 calendar days 
of the 12th month. For instances in which a plan learns of an 
individual's absence from the service area after the expiration of the 
period of time allowed under the applicable regulation, the plan would 
provide the disenrollment notice within 10 calendar days of learning of 
the absence.
    Although we have previously codified the requirement to issue a 
disenrollment notice when an individual is disenrolled due to an 
extended absence from the plan service area, or a change in residence 
to a location outside the service area, the 10-day timeframe for 
issuing that notice is reflected only in sub-regulatory guidance. We 
propose to amend the MA and Part D plan disenrollment notification 
requirements to include the 10-day timeframe that is currently 
reflected in sub-regulatory guidance. Specifically, we are proposing to 
codify at Sec.  422.74(d)(4)(iv) and at Sec.  423.44(d)(5)(i) and 
(d)(5)(ii) a timeliness requirement of 10 calendar days for issuing 
notices for disenrollment's based on the residency requirements. 
Separate from the disenrollment notification requirements described in 
the preceding paragraphs is a documentation retention requirement 
currently reflected in Sec.  50.2.1.3 of Chapter 2 of the Medicare 
Managed Care Manual for MA and in Sec.  50.2.1.3 of Chapter 3 of the 
Medicare Prescription Drug Benefit Manual. It has been CMS policy that 
MA organizations and Part D plan sponsors document their efforts to 
determine whether an enrollee has relocated out of the plan service 
area or has been absent from the service for a period of time in excess 
of what is allowed; however, our expectation that plans document their 
research efforts, although outlined in sub-regulatory guidance, is not 
codified. As such, we propose to amend the MA and Part D regulations to 
include the requirement that plans document their efforts to determine 
an enrollee's residency status.
    We are proposing to codify at Sec.  422.74(d)(4)(i) and at Sec.  
423.44(d)(5)(i) and (d)(5)(ii) that MA organizations and Part D plan 
sponsors must document the basis for involuntary disenrollment actions 
that are based on the residency requirements.
    The intent of our proposal is to codify current disenrollment 
notice policy, as reflected in Sec.  50.2.1.5 of Chapter 2 of the 
Medicare Managed Care Manual for MA and in Sec.  50.2.1.6 of Chapter 3 
of the Medicare Prescription Drug Benefit Manual, and also codify the 
current documentation policy that is currently reflected in Sec.  
50.2.1.3 of Chapter 2 of the Medicare Managed Care Manual for MA and in 
Sec.  50.2.1.3 of Chapter 3 of the Medicare Prescription Drug Benefit 
Manual, all of which are policies that are being carried out currently 
by MA organizations and Part D plan sponsors. Codifying our current 
policies regarding notification of disenrollment and document retention 
will provide transparency and stability for stakeholders about the MA 
and Part D programs and about the nature and scope of these 
notification and retention policies.
    These proposals are a codification of longstanding MA and Part D 
sub-regulatory guidance and there is no impact to the Medicare Trust 
Fund. MA organizations and Part D plan sponsors already have procedures 
in place to provide disenrollment notifications and to retain 
documentation related to such disenrollments. Our proposal would not 
add to existing processes, so any burden associated with this aspect of 
disenrollment processing and document retention would remain unchanged 
from current practices and would not impose any new requirements or 
burden. All information impacts related to these existing practices 
have already been accounted for under OMB control numbers 0938-0753 
(CMS-R-267) for Part C and 0938-0964 (CMS-10141) for Part D.

S. Part D Retroactive Transactions for Employer/Union Group Health Plan 
(EGHP) Members (Sec. Sec.  423.32 and 423.36)

    Section 1860D-1(b) of the Act establishes the enrollment and 
disenrollment process for Part D eligible individuals in prescription 
drug plans. This section of the Act grants the Secretary the authority 
to establish a process for the enrollment, disenrollment, termination, 
and change of enrollment of Part D eligible individuals in prescription 
drug plans. In January 2005, the Part D implementing regulations 
established the enrollment and disenrollment processes for Part D 
prescription drug plans. The enrollment and disenrollment processes for 
prescription drug plans are codified in regulation at Sec. Sec.  423.32 
and 423.36, respectively (70 FR 4525).
    Section 1860D-1(b)(1)(B) of the Act directs the Secretary to adopt 
Part D enrollment rules ``similar to'' and coordinated with those under 
Part C. In 1998, Part C implementing regulations (and subsequent 
correcting regulations) added the requirement that allowed an exception 
for employer/union group health plan (EGHP) sponsors to process 
election forms for Medicare-entitled group members (63 FR 52612, 63 FR

[[Page 79587]]

35071). These requirements were codified in the Part C regulations but 
were not codified in the Part D regulations.
    We are proposing to codify this existing policy to provide 
transparency and ensure consistency between the Part C and Part D 
programs. Specifically, we are proposing at new Sec. Sec.  423.32(i) 
and 423.36(e) to permit a Part D plan sponsor that has a contract with 
an employer or union group to arrange for the employer or union to 
process enrollment and disenrollment elections for Medicare-entitled 
group members who wish to enroll in or disenroll from an employer or 
union sponsored Part D plan. As outlined in sections 60.5.1 and 60.5.2 
of Chapter 3 of the Medicare Prescription Drug Benefit Manual, 
retroactive enrollments and disenrollments are permitted for up to 90 
days to conform to the payment adjustments described under Sec. Sec.  
422.308(f)(2) and 423.343(a). In addition, to obtain the retroactive 
effective date of the election, the individual must certify receipt of 
the group enrollment notice materials that include the summary of 
benefits offered under the PDP, as provided in sections 40.1.6 and 60.5 
of Chapter 3 of the Medicare Prescription Drug Benefit Manual. Once the 
enrollment or disenrollment election is received from the employer, the 
Part D plan sponsor must submit the disenrollment to CMS within the 
specified timeframes described in section 60.5 of Chapter 3 of the 
Medicare Prescription Drug Benefit Manual.
    Our intent is to align the Part D regulation with the requirements 
that MA organizations follow in existing Part C regulations at 
Sec. Sec.  422.60(f) and 422.66(f) and codify existing policies in the 
sub-regulatory guidance in Chapter 3 of the Medicare Prescription Drug 
Benefit Manual. Under section 60.5 of Chapter 3 of the Medicare 
Prescription Drug Benefit Manual, retroactive transactions may be 
necessary and are permitted if a delay exists between the time the 
individual completes the enrollment or disenrollment request through 
the employer's election process and when the request is received by the 
Part D plan sponsor. Further, we state in current sub-regulatory 
guidance at section 60.5.1 of Chapter 3 of the Medicare Prescription 
Drug Benefit Manual that the option to submit limited EGHP retroactive 
enrollment and disenrollment transactions is to be used only for the 
purpose of submitting a retroactive enrollment into an EGHP made 
necessary due to the employer's delay in forwarding the completed 
enrollment request to the Part D plan sponsor.
    This proposal is a codification of existing Part D sub-regulatory 
guidance and there is no impact to the Medicare Trust Fund. Based on 
infrequent complaints and questions from plans and beneficiaries 
related to current policies, which have been previously implemented and 
are currently being followed by plans, we conclude that there is no 
additional paperwork burden. All information impacts related to this 
provision have already been accounted for under OMB control numbers 
0938-1378 (CMS-10718) for Part D enrollment requests and 0938-0964 
(CMS-10141) for Part D disenrollment requests.

T. Single-Tier Benefit Requirement for Defined Standard Coverage 
(Sec. Sec.  423.100, 423.120, 423.2267)

    We propose to codify our longstanding subregulatory policy, as 
described in the Final Coverage Year (CY) 2015 Part D Call Letter 
(hereinafter referred to as the ``Final CY 2015 Part D Call Letter,'' 
and available at https://www.cms.gov/medicare/health-plans/medicareadvtgspecratestats/downloads/announcement2015.pdf), that a plan 
offering Defined Standard coverage apply a single-tier benefit 
structure to drugs on its formulary (if it uses a formulary, as defined 
at Sec.  423.4). In addition, we propose to codify our longstanding 
subregulatory policy that all communications and marketing materials 
(as these terms are defined at Sec.  423.2260) for a plan offering 
Defined Standard coverage must reflect a single-tier benefit structure.
    Under sections 1854(a)(1)(A) and 1860D-11(b) of the Act, initial 
bid submissions for all MA plans, MA-PD plans, and PDPs must be in a 
form and manner specified by the Secretary. To facilitate Part D 
sponsors' submission of their bids, we provided guidance regarding 
Incomplete and Inaccurate Bid Submissions on page 163 of the Final CY 
2020 Part D Call Letter (hereinafter referred to as the ``Final CY 2020 
Part D Call Letter,'' and available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf) 
that a formulary crosswalk is one of the constituent components of a 
complete bid submission for a Part D sponsor that is offering a Part D 
plan with a formulary. Additionally, in the February 3, 2022 HPMS memo 
titled, ``Contract Year (CY) 2023 Final Part D Bidding Instructions'' 
(available at https://www.cms.gov/files/document/2023partdbiddinginstructions.pdf), we referenced the Final CY 2020 Part 
D Call Letter policy on Incomplete and Inaccurate Bid Submissions as 
applicable for CY 2023. Further, the Bid Submission User Manual for 
Contract Year 2023, Chapter 10, Bid Submission Pre-Upload Requirements 
and Uploads (hereinafter referred to as ``Chapter 10'' and available in 
the HPMS via the following path: Plan Bids/Bid Submission/CY 2023/View 
Documentation/Bid Submission User Manual/Chapter 10), provides detailed 
information about the formulary crosswalk.
    Chapter 10 instructs all contracts that submitted a formulary 
through HPMS to submit a formulary crosswalk. Additionally, in order 
for the Formulary Crosswalk to be considered complete, Part D sponsors 
are also instructed to: (1) assign a formulary to all plans that offer 
Part D and are a part of the contract that submitted the formulary; and 
(2) assign all formularies submitted for an organization to at least 
one plan. Further, Chapter 10 provides that one formulary may be mapped 
to one or more plans. The ability for plans to assign a given formulary 
to multiple plans reduces Part D sponsor and CMS administrative burden 
by reducing the number of formularies that CMS must review and Part D 
sponsors must maintain.
    Since the beginning of the Part D program, we have interpreted 
section 1860D-2(b) of the Act to provide two distinct types of standard 
prescription drug coverage--``Defined Standard coverage'' and 
``actuarially equivalent standard coverage.'' Section 1860D-
2(b)(2)(A)(ii) of the Act provides that Part D sponsors offering 
actuarially equivalent standard coverage will be permitted to 
substitute cost-sharing requirements (including multi-tier benefit 
structures tied to Part D plan formularies and particular pharmacies in 
a Part D plan's network) for costs above the annual deductible and up 
to the catastrophic coverage limit, provided that those alternative 
cost-sharing requirements are actuarially equivalent to an average 
expected coinsurance of 25 percent for costs above the annual 
deductible and up to catastrophic coverage. Also, since the beginning 
of the Part D program, we have interpreted this provision to permit 
multi-tier benefit structures for actuarially equivalent standard 
coverage but not for Defined Standard coverage (70 FR 4237).
    As is noted on page 55 of the Final CY 2015 Part D Call Letter, for 
a plan using a formulary (as defined at Sec.  423.4), we expect that 
the formulary structure submitted for a plan offering Defined

[[Page 79588]]

Standard coverage will be consistent with a plan benefit package (PBP) 
submission that does not include a multi-tier benefit structure. 
Similarly, we have stated in our Formulary Submission Module and 
Reports Technical Manual (available at https://www.cms.gov/files/document/cy2022formularyplanmanual5.pdf) that formularies that will 
only be associated with plans offering Defined Standard coverage must 
be submitted as having a single-tier benefit structure. We made an 
exception to this policy such that if a plan offering Defined Standard 
coverage uses a formulary that is linked (via the Formulary Crosswalk) 
to at least one other plan with a multi-tier benefit structure (that 
is, a plan offering Actuarial Equivalent Standard, Basic Alternative, 
or Enhanced Alternative coverage). In other words, a given formulary 
(as defined in Sec.  423.4) applies to all plans to which such 
formulary has been assigned, but any submitted multi-tier benefit 
structures are plan-specific and only apply to the individual plans 
that offer coverage other than Defined Standard.
    The Final CY 2015 Part D Call Letter also instructed that all 
marketing materials for plans offering Defined Standard coverage 
reflect a single-tier benefit structure regardless of whether such plan 
offering Defined Standard coverage uses a formulary that is associated 
with other plans that offer multi-tier benefit structures.
    Because we continue to receive questions from Part D sponsors about 
our policy that a plan offering Defined Standard coverage have a 
single-tier benefit structure, we are taking this opportunity to 
clarify a common point of confusion by proposing to codify this 
longstanding subregulatory policy, as summarized below. Additionally, 
with regard to the formulary crosswalk policy, we have previously used 
the terms ``associated,'' ``mapped,'' ``linked,'' and ``assigned'' 
synonymously, but in order to minimize confusion, we have chosen to use 
the term ``assign'' in our proposed regulatory requirements.
    First, we propose to define the term ``formulary crosswalk'' at 
Sec.  423.100 as the process during bid submission by which a formulary 
(as defined at Sec.  423.4) is assigned to one or more Part D plans 
with single- or multi-tier benefit structures.
    Second, we propose to add new paragraph Sec.  423.120(b)(9) to 
codify that a Part D plan offering Defined Standard coverage may not 
apply multi-tier benefit structures to the formulary (as defined at 
Sec.  423.4) to which it has been assigned via the formulary crosswalk 
(as defined at Sec.  423.100) as part of the bid submission process. We 
also propose to codify an exception in the case that such formulary has 
also been assigned to one or more other Part D plans that use multi-
tier benefit structures such that the multi-tier benefit structures 
used by the other Part D plans offering coverage other than Defined 
Standard coverage would not apply to the plan offering Defined Standard 
coverage.
    Finally, because various required marketing and communications 
materials, including (but not limited to) the formulary document, have 
been redesignated as communications materials, as defined at Sec.  
423.2260, we propose to codify our subregulatory policy that a plan 
offering Defined Standard coverage display a single-tier benefit 
structure in all relevant marketing and communications materials. 
Specifically, at new Sec.  423.2267(e)(42), we propose to require that, 
when discussing the Part D plan's formulary, a plan offering Defined 
Standard coverage convey that all covered drugs have a single-tier 
benefit structure. This would be model content included in all relevant 
communications and marketing materials (as defined at Sec.  423.2260) 
that pertain to the formulary or preferential status of the covered 
Part D drugs--including the complete and abridged formulary, Summary of 
Benefits, Evidence of Coverage, and other materials, as applicable.
    We have been monitoring compliance with this policy via our annual 
formulary review and approval process, consistent with the requirements 
at Sec.  423.120(b). Since this review is already being performed and 
plans are already in compliance, there is no additional paperwork 
burden associated with codifying this longstanding subregulatory 
policy.
    We solicit comment on these proposals.

U. Shortages of Formulary Drug Products During a Plan Year (Sec.  
423.120)

    Drug shortages and their impact on the healthcare system have been 
a concern for decades. FDA reports that drug shortages peaked in 2011 
with 251 new shortages, but have since declined to 43 in 2020.\160\ 
Despite this progress, drug shortages received renewed attention as a 
result of supply chain disruptions during the Coronavirus Disease 2019 
(COVID-19) pandemic. As part of the Coronavirus Aid, Relief, and 
Economic Security (CARES) Act of 2020, Congress commissioned the 
National Academies of Sciences, Engineering, and Medicine to examine 
and report on vulnerabilities in the U.S. medical supply chain.\161\ 
While other government agencies pursue strategies to track and mitigate 
drug shortages, in this proposed rule, we propose to codify existing 
subregulatory guidance, first released in the July 21, 2009 Health Plan 
Management System (HPMS) memorandum titled ``Shortages of Formulary 
Drug Products During a Plan Year'' \162\ and subsequently incorporated 
into chapter 5 of the Prescription Drug Benefit Manual,\163\ describing 
expectations of Part D sponsors when shortages impact drugs on their 
Part D plan formulary. We also propose to broaden the scope of 
requirements beyond current guidance to reflect the availability of 
interchangeable biological products.
---------------------------------------------------------------------------

    \160\ U.S. Food and Drug Administration. Eighth Annual Report on 
Drug Shortages for Calendar Year 2020. Available from: https://www.fda.gov/media/150409/download.
    \161\ National Academies of Sciences, Engineering, and Medicine. 
2022. Building Resilience into the Nation's Medical Product Supply 
Chains. Washington, DC: The National Academies Press. https://doi.org/10.17226/26420.
    \162\ https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/HPMS-Guidance-History-Items/CMS1224655.
    \163\ https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/PartDManuals.
---------------------------------------------------------------------------

    Section 1860D-11(e)(2)(D)(i) of the Act requires CMS to approve 
Part D plans only if CMS does not find that the design of the plan and 
its benefits, including any formulary, are likely to substantially 
discourage enrollment by certain Part D eligible individuals under the 
plan. Accordingly, CMS' annual formulary review and approval process 
includes extensive checks to ensure adequate representation of all 
necessary Part D drug categories or classes for the Medicare 
population. These checks have been previously described in CMS' January 
10, 2014 proposed rule titled ``Medicare Program; Contract Year 2015 
Policy and Technical Changes to the Medicare Advantage and the Medicare 
Prescription Drug Benefit Programs'' (79 FR 2019). Such formulary 
requirements are a beneficiary protection counterbalancing CMS' 
statutory prohibition against requiring a particular formulary or 
interfering with negotiations between Part D sponsors, manufacturers, 
and pharmacies, consistent with section 1860D-11(i) of the Act. Because 
Part D drug shortages have the potential to undermine the formulary 
approval process and interrupt beneficiary therapy, CMS is proposing to 
codify requirements for Part D sponsors relating to formulary drug 
shortages to mitigate potential disruption.

[[Page 79589]]

    Existing guidance names FDA as the definitive source of drug 
shortage information. We are therefore proposing to add a new paragraph 
(g) to Sec.  423.120 to specify that our proposed drug shortage 
requirements would apply in the case of shortages listed on the FDA 
website at https://www.fda.gov/drugs/drug-safety-and-availability/drug-shortages and corresponding database at https://www.accessdata.fda.gov/scripts/drugshortages/default.cfm. If a shortage becomes market 
withdrawal and therefore the product is no longer listed on the FDA 
drug shortage website, then the proposed requirements would no longer 
apply.
    In order to minimize unnecessary changes in therapy resulting from 
temporary shortages of multiple-source formulary drug and biological 
products, we propose at new paragraph Sec.  423.120(g)(1) to require 
Part D sponsors to permit enrollees affected by a shortage to obtain 
coverage for a therapeutically equivalent drug or an interchangeable 
biological product, if any, for at least the duration of the shortage. 
As proposed at Sec.  423.120(g)(1)(i), Part D sponsors would be 
required to permit enrollees affected by a shortage to obtain coverage 
for a therapeutically equivalent or interchangeable non-formulary 
alternative without requiring those enrollees to meet formulary 
exception requirements at Sec.  423.578(b). In the case where a 
therapeutically equivalent or interchangeable alternative is on the 
formulary but requires prior authorization or step therapy, as proposed 
at Sec.  423.120(g)(1)(ii), Part D sponsors would be required to permit 
enrollees affected by a shortage to obtain coverage for the formulary 
alternative without requiring those enrollees to satisfy prior 
authorization or step therapy requirements.
    When applicable, Part D sponsors should allow pharmacies to utilize 
a value of ``8'' (Substitution Allowed--Generic Drug Not Available in 
Marketplace) in field 408-D8 (Dispense as Written/Product Selection 
Code) of the National Council for Prescription Drug Programs (NCPDP) 
version D.0 Telecommunication standard (or the applicable value and 
version at the time) to specify that an equivalent brand product is 
being dispensed due to the unavailability of any generic formulary 
products. Nothing in this proposal supersedes State pharmacy laws, 
which determine a pharmacist's authority to automatically substitute 
therapeutically equivalent drugs or interchangeable biological products 
for the reference product, or vice versa. A new prescription for the 
alternative product may be required.
    We are also proposing, at new paragraph (g)(2), to specify that the 
Part D sponsor would not be required to charge the cost sharing that 
applies to the unavailable formulary product for the alternative 
product and may charge the applicable sharing that would apply to the 
alternative therapeutically equivalent or interchangeable product's 
formulary status and the plan benefit design. That is, if the 
alternative product is on the formulary, the enrollee would be expected 
to pay the cost sharing that would normally apply based on the plan 
benefit design and if the alternative product is non-formulary, then 
the enrollee would be expected to pay the cost sharing associated with 
formulary exceptions. This policy would not preclude an enrollee 
affected by a shortage from seeking a formulary exception consistent 
with Sec.  423.578(b) to obtain access to a non-formulary product or to 
a formulary product requiring prior authorization or step therapy 
beyond the duration of the shortage; nor would this policy preclude 
enrollees affected by a shortage from seeking a tiering exception, 
consistent with Sec.  423.578(a), to obtain access to the alternative 
formulary product at a more favorable cost sharing.
    Under the current proposal, Part D sponsors would be required to 
cover a therapeutically equivalent drug or interchangeable biological 
product as an alternative to the formulary product subject to shortage 
if there is claim submitted for the alternative. However, Part D 
sponsors may work with enrollees and providers to determine appropriate 
alternative drugs since suitable options may vary based on clinical 
needs, costs, or other factors. For example, if a generic formulary 
drug is unavailable but the therapeutically equivalent brand name 
product is available and on the formulary, an enrollee may prefer to 
switch to an alternative generic product rather than pay the associated 
brand cost sharing or pursue a tiering exception for the brand product.
    The requirements we are proposing at Sec.  423.120(g) would not 
require changes to the Part D sponsor's formulary; rather, they would 
require, for the duration of a shortage, coverage of alternative 
therapeutically equivalent products in lieu of the product in shortage. 
If a Part D sponsor decides to remove a product from its formulary due 
to long-term shortage or if the shortage becomes a market withdrawal, 
the requirements currently codified at Sec.  423.120(b)(5), which we 
are proposing to revise as discussed in section III.Q. of this proposed 
rule, would apply.
    We solicit comment on this proposal.

V. Validity of DEA Registration Numbers for Controlled Substances 
(Sec.  423.120(c))

    In this section, we propose to amend Sec.  423.120(c) to codify in 
regulation our current policy that Part D sponsors must confirm the 
validity of a prescriber's Drug Enforcement Administration (DEA) 
registration number for a controlled substance, if the number is on the 
drug claim. Or, if the prescriber's DEA registration number is not on 
the Part D claim, the sponsor must use prescriber identifier data 
sources to cross-reference the prescriber's individual National 
Provider Identifier (NPI) number, which is required on all Part D drug 
claims,\164\ to the prescriber's DEA registration number for 
validation. Under Sec.  423.104(h), a Part D sponsor may provide 
benefits only for Part D drugs that require a prescription if those 
drugs are dispensed upon a valid prescription. A ``valid prescription'' 
is defined in Sec.  423.100 as a prescription that complies with all 
applicable State law requirements constituting a valid prescription.
---------------------------------------------------------------------------

    \164\ 42 CFR 423.120(c)(5)(i).
---------------------------------------------------------------------------

    Prescriptions are regulated under State laws which may incorporate 
Federal law and regulations. An example of such incorporation is the 
Drug Control Act of Virginia, Va. Code Sec.  54.1-3408.01A, 
``Requirement for Prescriptions,'' which states that a prescription for 
a controlled substance other than one controlled in Schedule VI ``shall 
also contain the Federal controlled substances registration number 
assigned to the prescriber.'' \165\
---------------------------------------------------------------------------

    \165\ DEA regulations also address requirements regarding 
prescriptions for a controlled substance. See 21 CFR 1306.
---------------------------------------------------------------------------

    While compliance with applicable Federal and State laws related to 
dispensing of prescription drugs is primarily the responsibility of 
pharmacists, since plan year 2012, CMS has had a policy on DEA 
registration numbers in the Part D Prescription Drug Benefit Manual, 
Chapter 5: Benefits and Beneficiary Protections, Section 90.2.4 
``Controlled Substances'' (hereinafter referred to as ``Manual Chapter 
5''). The purpose of this policy is to support, as feasible, these 
frontline pharmacists' efforts to comply with State and DEA 
requirements with respect to controlled substances. We propose to 
codify this policy by requiring that Part D sponsors confirm the 
validity of DEA registration numbers on Schedule II-V drug claims or, 
if the prescriber's DEA registration

[[Page 79590]]

number is not on the Part D claim, the sponsor must use prescriber 
identifier data sources to cross-reference the prescriber's Type 1 NPIs 
on these claims to the prescriber's DEA registration number for 
validation. In addition, we propose that sponsors be required to 
confirm that the controlled substance prescribed is consistent with the 
prescriber's DEA Schedule registration.
    Type 1 NPIs are obtained by individual health care providers. (With 
respect to Part D claims, we refer to them in this section as 
``prescriber NPIs''). Type 2 NPIs are obtained by organization health 
care providers and organizational health care providers are discussed 
further below.\166\
---------------------------------------------------------------------------

    \166\ MLN Booklet, ``NPI:What You Need to Know'' (March 2022), 
https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/NPI-What-You-Need-To-Know.pdf.
---------------------------------------------------------------------------

    Section 90.2 of Manual Chapter 5 notes that sources of State and 
Federal data on providers, in addition to prescriber identifier 
validation services from commercial vendors, are available to support 
sponsor efforts at such validation. This means that sponsors can use 
public and private data when cross-referencing prescriber NPIs to DEA 
registration numbers, if the prescriber has a DEA registration number. 
It is our understanding that this is indeed what Part D sponsors and 
their pharmacy benefit managers (PBMs) currently do--that is, they use 
databases to cross-reference prescriber NPIs to DEA registration 
numbers when they receive a Part D claim for a controlled substance.
    We further propose that if a Part D sponsor finds a valid and 
active DEA registration number for the prescriber of a controlled 
substance, and an associated schedule that is appropriate for the drug, 
then the sponsor must process the claim under the other coverage 
parameters of applicable Part D plan. If the sponsor finds a DEA 
registration number, but it is not valid or active, or the associated 
schedule for the drug is not appropriate, the sponsor must reject the 
claim and send the pharmacy an electronic code with the reason for the 
rejection.
    We note that in rejecting the claim, the sponsor should not return 
the designated code to trigger the delivery of the standardized 
pharmacy notice to the enrollee, as the claim has been rejected because 
it does not contain all necessary data elements for adjudication. (See 
section 40.12.3 -Part D Coverage Determination Notices--in the Parts 
C&D Enrollee Grievances, Organization/Coverage Determinations, and 
Appeals Guidance).\167\ With respect to written member requests for 
reimbursement, we propose that if the Part D sponsor determines that 
the DEA registration number of the prescriber was not valid or not 
active or there was not an associated schedule that was consistent with 
the drug for which the member requested reimbursement, then the Part D 
sponsor not only must deny the member request for reimbursement, but 
must also provide the beneficiary with a written notice explaining the 
coverage determination consistent with the notice requirements at Sec.  
423.568(g).
---------------------------------------------------------------------------

    \167\ See https://www.cms.gov/Medicare/Appeals-and-Grievances/MMCAG/Downloads/Parts-C-and-D-Enrollee-Grievances-Organization-Coverage-Determinations-and-Appeals-Guidance.pdf.
---------------------------------------------------------------------------

    It is our understanding that some prescribers, such as hospital 
residents, prescribe controlled substances under an organizational 
health care provider's DEA registration number. We received reports in 
the past that sponsors were rejecting claims for controlled substances 
when a prescriber was prescribing under a hospital's or institution's 
DEA registration number, and the prescriber did not have an individual 
DEA registration number. We expressed concern at the time through 
guidance \168\ that such rejections may interfere with beneficiary 
access to needed medications and result from a misinterpretation of our 
guidance. We also stated that we did not believe that sponsors have 
reasonable access to the information necessary to research the 
relationship of individual prescribers to hospitals' or institutions' 
DEA registration numbers for every claim, and we noted in our guidance 
that this is not expected. Therefore, consistent with our current 
guidance, we propose that if there is no individual prescriber DEA 
registration number found to validate, a Part D sponsor is not required 
to take any further action when processing a claim for a controlled 
substance in terms of validating a DEA registration number. In other 
words, we are proposing that the sponsor must check the validity of the 
DEA registration number only when there is an individual prescriber DEA 
registration number associated with the Type I NPI on the Part D claim.
---------------------------------------------------------------------------

    \168\ ``HPMS Memo,'' Clarification of Chapter 5 of the 
Prescription Drug Benefit Manual, Section 90.2.4--Controlled 
Substances'' (May 21, 2013).
---------------------------------------------------------------------------

    Although this proposal would codify our current policy, we 
understand that at least some sponsors reject all claims for controlled 
substances for which they cannot validate the prescriber's DEA 
registration number and schedule. We speculate that these sponsors want 
to have an electronic record of the pharmacist using an override code 
to validate that the prescriber is lawfully prescribing controlled 
substances. We solicit comment on whether we should require sponsors to 
reject all claims for controlled substances for which they cannot 
validate the DEA registration number and schedule, and what impact this 
adjustment in policy would have on beneficiary access to controlled 
substances covered by Part D, if any.
    We propose to codify our existing DEA registration number policy at 
Sec.  423.120 by updating the header for paragraph (c) and by adding a 
new paragraph (7) as follows:
     The header of paragraph (c) would be changed to ``Use of 
standardized technology and identifiers.''
     New paragraph (c)(7)(i) would establish that a D sponsor 
must attempt to confirm the validity of a prescriber DEA registration 
number for a pharmacy claim for a Schedule II, III, IV or V drug, and 
that if the DEA registration number is not on the claim, the sponsor 
must cross-reference the prescriber's Type 1 NPI on the claim to any 
associated individual prescriber DEA number.
     New paragraphs (c)(7)(ii)(A) and (B) would specify that if 
the DEA registration number is not valid or active or the DEA 
registration number does not have an associated Schedule that is 
consistent with the drug for which a claim was submitted, the Part D 
sponsor must reject the claim and provide the pharmacy with the 
electronic reason code when rejecting the claim.
     New paragraph (7)(iii) would specify that if the pharmacy 
confirms the validity of the DEA registration number via electronic 
override code, or the sponsor is not able to cross-reference the Type 1 
NPI to a prescriber DEA registration number, the sponsor must process 
the claim under the applicable benefit plan rules.
     New paragraph (c)(7)(iv) would specify that, with respect 
to written member requests for reimbursement, the Part D sponsor must 
determine whether the DEA registration number of the prescriber was 
valid and active for the date of service, and if the DEA registration 
number had an associated Schedule that was consistent with the drug for 
which the member request for reimbursement was submitted for the date 
of service. Consistent with proposed new paragraphs (7)(iv)(A) and (B), 
if the DEA number was not valid or active, or there was not an 
associated Schedule that was consistent with the drug, the Part D 
sponsor would be required to deny the member request for reimbursement 
and provide the

[[Page 79591]]

beneficiary with a written notice consistent with Sec.  423.568(g).
    As is the case with our current subregulatory policy, the purpose 
of our proposal is to ensure, to the extent feasible, that covered Part 
D drugs are dispensed upon valid prescriptions. We solicit comment on 
this proposal. Also, given the interactions we have had with Part D 
sponsors about our current controlled substances policy, we assume all 
sponsors are currently complying. Therefore, we conclude that there 
would be no additional paperwork burden for sponsors resulting from 
this proposal.

W. Codifying Current Part D Transition and Continuity of Care Policies 
(Sec. Sec.  423.100 and Sec.  423.120)

1. Overview and Summary
    Under Sec.  423.120(b)(3), Part D sponsors must provide certain 
enrollees a transition fill to avoid interruption in drug therapy when 
a drug is non-formulary, or on-formulary but subject to utilization 
management (UM) restrictions, so that the enrollee has time to switch 
to a therapeutic alternative drug or complete an exception request to 
maintain coverage of an existing drug based on medical necessity 
reasons. Thus, the purpose of providing a transition supply is to 
promote continuity of care and avoid interruptions in drug 
therapy.\169\ Sponsors must also send enrollees a notice when they 
provide a transition fill.
---------------------------------------------------------------------------

    \169\ See also Medicare Prescription Drug Benefit Manual, 
Chapter 6, Section 30.4--Part D Drugs and Formulary Requirements.
---------------------------------------------------------------------------

    The Part D transition requirement was first codified in our January 
2005 Part D final rule (70 FR 4194) \170\ under the authority of 
section 1860D-11(d)(2)(B) of the Act, which provides CMS with authority 
similar to that provided to the Director of the Office of Personnel 
Management with respect to health benefit plans to prescribe reasonable 
minimum standards for health benefits plans. We noted in that final 
rule that failure to appropriately transition certain beneficiaries 
could result in aggravation of certain medical conditions including, in 
some cases, hospitalization, which could ultimately increase costs to 
Medicare under Parts A and B (70 FR 4264).
---------------------------------------------------------------------------

    \170\ https://www.govinfo.gov/content/pkg/FR-2005-01-28/pdf/05-1321.pdf
---------------------------------------------------------------------------

    Part D transition guidance is contained in Chapter 6 of the 
Medicare Prescription Drug Benefit Manual (Manual Chapter 6),\171\ 
Section 30.4--Part D Drugs and Formulary Requirements. While most of 
the transition requirements are codified at Sec.  423.120(b), there are 
some aspects of the current guidance in section 30.4 of Manual Chapter 
6 that are not. Therefore, the purpose of this proposal is to codify 
those aspects of the current Part D transition guidance in regulation. 
In some cases, as detailed later in this section, our proposed 
regulation would clarify the policies reflected in current guidance.
---------------------------------------------------------------------------

    \171\ https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/part-d-benefits-manual-chapter-6.pdf.
---------------------------------------------------------------------------

    Specifically, we propose to codify our policies with respect to the 
following topics: 1) quantity limits (QLs); 2) the minimum 108-day 
lookback period; 3) P&T committee role in transition; 4) transition 
notice timeframes; 5) level of care changes; and 6) (LTC) emergency 
supply.
2. Quantity Limits (QLs) During Transition
    Currently, under Sec.  423.120(b)(3), a sponsor is required to 
provide for an appropriate transition for an enrollee if the Part D 
drug is on the plan's formulary but requires prior authorization or 
step therapy. We propose to add to Sec.  423.120(b)(3) that certain 
quantity limits (QLs) would require a sponsor to provide for an 
appropriate transition for an enrollee if the Part D drug is on the 
plan's formulary. This proposal, if finalized, would apply both for a 
current enrollee when a QL has been added to a drug on the plan's 
formulary that is lower than the beneficiary's current dose, and for a 
new enrollee when an existing QL for a formulary drug is lower than the 
beneficiary's current dose. This proposal is consistent with Section 
30.4 of Manual Chapter 6.
    We also propose an exception to the proposal that QLs would require 
a sponsor to provide for an appropriate transition for an enrollee if 
the Part D drug is on the plan's formulary. Specifically, we propose 
that QLs that are ``safety-based claim edits,'' meaning those claim 
edits that are consistent with drug utilization review (DUR) 
requirements described at Sec.  423.153(c)(2) to prevent unsafe or 
inappropriate dosing, would continue to be applied to transition 
supplies. We believe it is necessary to continue to allow ``safety-
based claim edits'' that are QLs to be applied to transition fills, 
because not allowing them would mean that enrollees could obtain 
transition fills that were unsafe or were inappropriate drug use under 
standard DUR reviews. This approach is consistent with our current 
transition policy in Manual Chapter 6, Section 30.4.8.
    We propose to add a definition of ``safety-based claim edit'' to 
Sec.  423.100. Our proposed definition of incorporates Sec.  
423.153(c)(2), which states that a review of each prescription must 
include but not be limited to:--
     Screening for potential drug therapy problems due to 
therapeutic duplication;
     Age/gender-related contraindications;
     Over-utilization and under-utilization;
     Drug-drug interactions;
     Incorrect drug dosage or duration of drug therapy;
     Drug-allergy contraindications; and
     Clinical abuse/misuse.
    In light of our proposal described in the preceding two paragraphs, 
we are also specifically proposing that Sec.  423.120(b)(3) would state 
that a Part D sponsor must provide for an appropriate transition 
process for enrollees prescribed Part D drugs that are not on its Part 
D plan's formulary, including Part D drugs that are on a sponsor's 
formulary, require prior authorization, step therapy, or under a plan's 
drug utilization management rules, are subject to a quantity limit that 
is not a safety-based claim edit as defined in Sec.  423.100.
    To illustrate these standards, the following QLs are examples of 
safety-based edits that could be applied to transition fills:
     A claim edit that is a QL based on the maximum dose in the 
FDA-approved label, such as an acetaminophen limit, would meet the 
standard at Sec.  423.153(c)(2)(v) regarding prevention of incorrect 
drug dosage.
     A QL based on the dose, dosing frequency, and/or duration 
of therapy limits supported by the FDA-approved label, if no clearly 
stated maximum dosing limits are specified in the FDA-approved label 
(for example, short- and long-acting opioids, would meet the standard 
at Sec.  423.153(c)(2)(iii)).
     A QL that limits topical products to a reasonable quantity 
over time taking into consideration the indication, directions for use, 
and size of the area being treated would meet the standard at Sec.  
423.153(c)(2)(iii).
     A QL that supports dose optimization to promote adherence 
and ensure safe and appropriate utilization by reducing pill burden 
when multiple strengths of the same drug are available (for example, 
one 40 mg tablet daily instead of two 20 mg tablets daily when the 
appropriate dosing frequency is once daily) would meet the standard at 
Sec.  423.153(c)(2)(v) to prevent incorrect drug dosage.

[[Page 79592]]

    We also note that claim edits to help determine Part A or B vs. 
Part D coverage and to prevent coverage of a non-Part D drug are 
permitted during a transition period, as they reflect statutory limits 
on Part D coverage.
    We propose to make a conforming change to Sec.  423.120(b)(3)(iii) 
to include a reference to QLs. We solicit comment on this proposal.
3. Minimum 108-Day Lookback Period
    Under our current regulations at Sec.  423.120(b)(3), Part D 
sponsors must provide for an appropriate transition process for certain 
enrollees. We have consistently interpreted an appropriate transition 
to be required for ongoing therapy--that is, when an enrollee is 
receiving a drug for the first time, there is nothing to transition 
from, and therefore a transition supply is not necessary. Therefore, in 
providing for appropriate transition, it is necessary for Part D 
sponsors to determine whether an enrollee is receiving a new 
prescription or a refill for ongoing therapy, and we have long 
recognized that distinguishing between ``new starts'' and ongoing 
therapy may be difficult.
    As described in Section 30.4.3 of Manual Chapter 6, our 
longstanding Part D policy for distinguishing between new starts and 
ongoing therapy has been to treat all prescriptions that could qualify 
for a transition as ongoing therapy unless the sponsor can make the 
distinction at the point of sale. More recently, Section 30.4 was 
updated to specify that when sponsors are able to access prior drug 
claims history for an enrollee of an affiliated plan, a minimum of a 
108-day lookback is typically needed to adequately document ongoing 
drug therapy. That is, if a 108-day lookback does not show claims 
history for the drug for the beneficiary, the Part D sponsor treats it 
as a first fill, and does not provide a transition supply.
    A 108-day lookback for this purpose accounts for the enrollee 
having a quantity of a Part D drug on hand prior to requesting a 
subsequent fill--meaning that CMS calculates the quantity on hand by 
assuming the enrollee has a 20 percent remaining balance of a 
previously dispensed 90-day supply prior to receiving a subsequent 90-
day supply leading up to their transition period. The enrollee could 
have a total of 108 days supply on hand to use before they would need a 
transition supply and no claims for the drug during that 108-day 
period. Thus, on day 109, the sponsor would need to look back 108 days 
to catch the enrollee's last refill for the drug, which demonstrates 
ongoing therapy.
    We propose to codify our policy by requiring at Sec.  
423.120(b)(3)(vii)(A) and (B) that, if a Part D sponsor has access to 
prior drug claims history for the enrollee (through an affiliated plan 
or otherwise), the sponsor must use a minimum 108-day claims history 
lookback period to determine at point-of-sale whether a pharmacy claim 
represents a new prescription which would not require a transition 
fill, or ongoing drug therapy which would require a transition fill. If 
a Part D sponsor does not have access to prior claims history for the 
enrollee and cannot determine at point-of-sale whether a pharmacy claim 
represents a new prescription or ongoing therapy, the sponsor must 
treat the prescription as ongoing therapy which would require a 
transition fill.
4. Pharmacy & Therapeutics (P&T) Committee Role in Transition
    Section 30.1.7 of Manual Chapter 6 addresses the P&T Committee's 
role in transition. Last updated in 2008, some of its language is 
outdated vis-a-vis the current transition requirements of Sec.  
423.120(b)(3). However, we do wish to codify the P&T committee's role 
in transition. As Manual Chapter 6 states, CMS looks to transition 
process submissions for assurances that a sponsor's P&T Committee will 
review and provide recommendations regarding the transition procedures. 
The manual guidance states the rationale for this policy--because a 
Part D sponsor's P&T committee must include a majority of members who 
are practicing physicians and/or pharmacists under Sec.  423.120(b), 
when the sponsor's P&T committee reviews a sponsor's transition 
procedures, it ensures that persons with medical and pharmaceutical 
expertise have reviewed such procedures.
    We propose to codify this policy by adding new Sec.  
423.120(b)(3)(viii) to require that the Part D sponsor's transition 
policies and procedures include assurances that the Part D sponsor's 
P&T Committee has reviewed, provided recommendations as warranted, and 
approved the plan's transition policies and procedures to comply with 
Sec.  423.120(b)(3). We further propose to codify our current 
subregulatory guidance that such policies and procedures must be 
submitted through a process specified by CMS as part of the plan's 
annual bid.
5. Timing Clarifications for Transition Notices
    Section 30.4.10 of Manual Chapter 6 provides guidance on transition 
notices, which must be sent by the Part D sponsor to the affected 
enrollee within 3 business days after adjudication of the temporary 
transition fill, in accordance with Sec.  423.120(b)(3)(iv). We have 
received questions about how to calculate the three business days. 
While we have not previously provided specific guidance about this 
issue, we propose to specify in Sec.  423.120(b)(3)(iv) that the first 
business day after adjudication of the transition fill--that is, the 
processing of the claim--counts as business day 1. For example:
     Claim adjudication occurs on either Friday, May 3, 
Saturday May 4, or Sunday, May 5.
     Monday, May 6 at 11:59 p.m. is the end of business day 1.
     Tuesday, May 7 at 11:59 p.m. is the end of business day 2.
     Wednesday, May 8 at 11:59 p.m. is the end of business day 
3 and the deadline for sending the notice in this example.
6. Level of Care Changes
    Section 30.4.7 of Manual Chapter 6 describes unplanned 
circumstances for current enrollees that can arise in which current 
drug regimens are not on sponsors' formularies. These circumstances 
usually involve level of care changes in which a beneficiary is 
changing from one treatment setting to another. For example, this 
includes beneficiaries who are discharged from a hospital to a home; 
end their skilled nursing facility Medicare Part A stay (where pharmacy 
charges were covered as part of the stay) and need to obtain their 
medications from their Part D plan thereafter; give up hospice status 
to revert to standard Medicare Part A and B benefits; end an LTC 
facility stay and return to the community; or are discharged from 
psychiatric hospitals with drug regimens that are highly 
individualized.
    These admission and discharge scenarios potentially involve 
circumstances in which an enrollee's prescriptions are adjusted as they 
move through the health care system, and such adjusted prescriptions 
may include drugs that are not on a sponsor's formulary, or are on a 
sponsor's formulary but require prior authorization, step therapy, or 
are subject to an approved QL lower than the enrollee's current dose 
that is not a safety-based claim edit, as proposed at paragraph Sec.  
423.120(b)(3). Thus, these scenarios could involve interruptions in 
ongoing drug therapy for a Part D beneficiary.
    Section 30.4.7 acknowledges that while Part A does provide 
reimbursement for ``a limited supply'' to

[[Page 79593]]

facilitate beneficiary discharge, beneficiaries need to have a full 
outpatient supply available to continue therapy once this limited 
supply is exhausted. The guidance further notes that this is 
particularly true for beneficiaries using mail-order pharmacy services, 
using home infusion therapy, or residing in rural areas where obtaining 
a continuing supply of drugs may involve certain delays.
    For these reasons, we propose at new paragraph Sec.  
423.120(b)(3)(i)(A)(5) to require Part D sponsors to apply their 
transition processes to current enrollees experiencing a level of care 
change, such as admission or discharge from a hospital, skilled nursing 
facility, long-term care facility, and hospice. This would mean that, 
pursuant to Sec.  423.120(b)(3), a Part D sponsor must provide for an 
appropriate transition process for enrollees experiencing a level of 
care change who are prescribed Part D drugs that are not on a sponsor's 
formulary, or are on a sponsor's formulary but require prior 
authorization, step therapy, or are, as proposed in section W.2. of 
this proposed rule, subject to a quantity limit that is not a safety-
based claim edit as defined in Sec.  423.100.
    However, acknowledging that a Part D sponsor may not have access to 
information about an enrollee's level of care changes, we propose new 
Sec.  423.120(b)(3)(i)(A)(5) to specify that the sponsor would have to 
apply its transition process to enrollees experiencing a level of care 
change only if the sponsor were notified of such change by the enrollee 
or their representative, their prescriber, the hospital or facility, or 
a pharmacy before or at the time of the request for the fill referenced 
in Sec.  423.120(b)(3)(iii). Such notification could be by electronic 
messaging.
7. LTC Emergency Supply
    Section 30.4.6 of Manual Chapter 6 states, that as a matter of 
general practice, LTC facility residents need to receive their 
medications as ordered without delay. This is because the requirements 
for LTC facilities at Sec.  483.45 state that the facility must provide 
routine and emergency drugs and biologicals to its residents, or obtain 
them under an agreement described in Sec.  483.70(g). Section 483.45(a) 
also requires that a facility provide pharmaceutical services 
(including procedures that assure the accurate acquiring, receiving, 
dispensing, and administering of all drugs and biologicals) to meet the 
needs of each resident.
    The State Operations Manual Appendix PP--Guidance to Surveyors for 
Long Term Care Facilities (Rev. 11-22-17) \172\ contains guidance for 
complying with Sec.  483.45. Paragraph A on page 455 of this guidance, 
titled ``Provision of Routine and/or Emergency Medications'' states, 
``The regulation at Sec.  483.45 requires that the facility provide or 
obtain routine and emergency medications and biologicals in order to 
meet the needs of each resident . . . Whether prescribed on a routine, 
emergency, or as needed basis, medications should be administered in a 
timely manner. Delayed acquisition of a medication may impede timely 
administration and adversely affect a resident's condition.''
---------------------------------------------------------------------------

    \172\ https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/GuidanceforLawsAndRegulations/Downloads/Appendix-PP-State-Operations-Manual.pdf.
---------------------------------------------------------------------------

    Accordingly, our longstanding policy in section 30.4.6 has been 
that Part D sponsors must also cover emergency supplies of new starts 
of non-formulary Part D drugs for LTC facility residents, outside of 
any respective transition periods for them, while an exception or prior 
authorization request is being processed. We propose to codify this 
requirement. Specifically, we propose to add a paragraph (8) to Sec.  
423.120(b) that would require a Part D sponsor to cover such an 
emergency supply during any portion of the plan year when the enrollee 
did not otherwise qualify for a transition fill under Sec.  
423.120(b)(3). Additionally, we propose that for purposes of a LTC 
emergency fill requirement, ``non-formulary'' would have the same 
meaning as it does for transition fills at paragraph (b)(3)--that is, a 
non-formulary drug also means drugs that are on the Part D plan's 
formulary (including Part D drugs that are on a sponsor's formulary but 
require prior authorization, step therapy, or are subject to a QL that 
is not a safety-based claim edit as defined in Sec.  423.100 under the 
plan's drug utilization management rules). Also, in Sec.  
423.120(b)(8), we propose that this emergency supply must be for at 
least 31 days of medication, regardless of dispensing increments, 
unless the prescription is written by a prescriber for less than 31 
days.
8. Summary of Proposals
    In summary, we are proposing to codify current Part D transition 
guidance at Sec.  423.120(b) as follows:
     Specify at paragraph (b)(3) that, for transition purposes, 
non-formulary drugs include drugs that are on the sponsor's formulary 
but are subject to a QL that is not a safety-based claim edit as we 
propose to define that term in Sec.  423.100; and make a conforming 
change to Sec.  423.120(b)(3)(iii) to include a reference to QLs.
     Add new paragraph (b)(3)(vii)(A) to require that if a Part 
D sponsor has access to prior drug claims history for the enrollee 
(through an affiliated plan or otherwise), the sponsor must use a 
minimum 108-day claims history lookback period to determine whether a 
pharmacy claim represents a new prescription which would not require a 
transition fill, or ongoing drug therapy which would require a 
transition fill. Paragraph (b)(3)(vii)(B) would state that if a Part D 
sponsor does not have access to prior claims history for the enrollee 
and cannot determine at point-of-sale whether a pharmacy claim 
represents a new prescription or ongoing therapy, the sponsor must 
treat the prescription as ongoing therapy which requires a transition 
fill.
     Add new paragraph (b)(3)(viii) to require that the Part D 
sponsor's transition policies and procedures include assurances that 
the Part D sponsor's P&T Committee has reviewed, provided 
recommendations as warranted, and approved the plan's transition 
policies and procedures to comply with Sec.  423.120(b)(3), and that 
such policies and procedures must be submitted through a process 
specified by CMS as part of the plan's annual bid.
     Specify at paragraph (b)(3)(iv) that the first business 
day after adjudication of the transition fill counts as business day 1 
for purposes of determining when a transition notice must be provided 
to an enrollee.
     Add new paragraph (b)(3)(i)(A)(5) to include a new group 
of enrollees experiencing a level of care change, to which a Part D 
sponsor's transition process must apply, if the sponsor is notified of 
such change by the enrollee or their representative, their prescriber, 
the hospital or facility, or a pharmacy before or at the time of the 
request for the fill referenced in Sec.  423.120(b)(3)(iii).
    In addition, we propose to codify our current long-term care (LTC) 
emergency supply guidance as follows:
     Add new paragraph Sec.  423.120(b)(8) to codify a 
requirement that a Part D sponsor must cover an emergency supply of a 
non-formulary Part D drug for a long-term care facility resident after 
their respective transition period, including Part D drugs that are on 
a sponsor's formulary but under a plan's drug utilization management 
rules, require prior authorization, step therapy, or are subject to a 
quantity limit that is not a safety-based claim edit as defined in 
Sec.  423.100.

[[Page 79594]]

    As the foregoing describes our proposal to codify existing guidance 
with which we believe Part D sponsors are currently complying, we 
conclude that there is no additional paperwork burden for sponsors from 
this proposal.
    We solicit comments on these proposals.

X. Update of Terminology to ``Individuals with Intellectual 
Disabilities'' (Sec.  423.154)

    Following the passage of Rosa's Law (Pub. L. 111-256) in 2010, CMS 
updated references in CMS regulations to the term ``mentally retarded'' 
(MR) and replaced that term with the term ``individuals with 
intellectual disabilities'' (IID) in the ``Medicare and Medicaid 
Program; Regulatory Provisions to Promote Program Efficiency, 
Transparency, and Burden Reduction'' final rule which appeared in the 
Federal Register on May 16, 2012 (77 FR 29001). This global terminology 
change included updating the definition at Sec.  435.1010 of 
individuals receiving active treatment in ``intermediate care 
facilities for the mentally retarded'' (ICF/MR),'' changing the term 
for the facility to ``intermediate care facilities for individuals with 
intellectual disabilities.'' However, at that time, we inadvertently 
neglected to update the Part D regulation at Sec.  423.154(c), which 
provides a waiver for certain requirements regarding dispensing Part D 
drugs to individuals in intermediate care facilities (ICFs) ``for the 
mentally retarded . . . as defined in Sec.  435.1010'' that otherwise 
apply to other types of long-term care facilities.
    Additionally, in the ``Medicare Program; Contract Year 2016 Policy 
and Technical Changes to the Medicare Advantage and the Medicare 
Prescription Drug Benefit Programs'' final rule which appeared in the 
Federal Register on February 12, 2015 (80 FR 7911), we updated the 
abbreviation in regulation text in Sec.  423.154 from ICFs/MR to ICFs/
IID, but inadvertently neglected to change the corresponding text in 
the regulation from which the abbreviation derives.
    Consequently, we are taking this opportunity to update the current 
language at Sec.  423.154(c) (that is, intermediate care facilities for 
the mentally retarded) with the abbreviation (that is, ICFs/IID) and 
the definition at Sec.  435.1010. We propose to replace the term ``the 
mentally retarded'' at Sec.  423.154(c) with ``individuals with 
intellectual disabilities.''
    We welcome comments on this proposal.

Y. Technical Correction To Restore the Substantial Difference 
Requirement (Sec.  423.265)

    We are proposing to make a technical correction to Sec.  
423.265(b)(2) to restore language on requirements for substantial 
differences between Medicare Part D sponsors' bids that was 
inadvertently removed in a recent revision of the section.
    Section 1857(e)(1) of the Act authorizes us to establish contract 
terms that CMS finds ``necessary and appropriate.'' Section 1860D- 
11(d)(2)(B) of the Act requires us to promulgate ``reasonable minimum 
standards'' for Part D sponsors through regulations. Accordingly, we 
added language to the regulatory text at Sec.  423.265(b) to require 
Part D bid submissions to reflect substantial differences in benefit 
packages or plan costs as part of the ``Medicare Program; Policy and 
Technical Changes to the Medicare Advantage and the Medicare 
Prescription Drug Benefit Programs'' final rule, which appeared in the 
Federal Register on April 15, 2010 (75 FR 19678).
    Additionally, 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, which appeared in the 
Federal Register on April 16, 2018 (hereinafter referred to as the 
April 2018 final rule, 73 FR 16440), we reorganized paragraph (b)(2) to 
incorporate a general rule in paragraph (b)(2)(i) and an exception in 
paragraph (b)(2)(ii), the latter of which excluded enhanced alternative 
plan bid submissions from the substantial difference requirement.
    We added language placing limits on the number of Part D plan 
offerings as part of the final rule titled ``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'' which appeared in the Federal Register 
on January 19, 2021 (hereinafter referred to as the January 2021 final 
rule, 86 FR 5864). However, the new language was incorrectly added to 
Sec.  423.265(b)(2) rather than Sec.  423.256(b)(3), and the previous 
regulatory text on substantial differences was inadvertently 
overwritten. To correct this inadvertent deletion, we propose to:
     Redesignate the regulatory text from our January 2021 
final rule limiting the number of bids a Part D plan sponsor may submit 
currently at Sec.  423.265(b)(2) as Sec.  423.265(b)(3);
     Restore the language from our April 2018 final rule on 
substantial differences at Sec.  423.265(b)(2)(i) and (ii); and
     Redesignate the regulatory text currently at Sec.  
423.265(b)(3) as paragraph (b)(4).
    As described previously, all of the regulatory language that we 
propose to restore at Sec.  423.265(b)(2) has previously undergone the 
full notice and comment process. This proposal would merely correct a 
technical error made by the January 2021 final rule.
    We welcome comments on this proposal.

Z. Part D Global and Targeted Reopenings (Sec. Sec.  423.308 423.346)

    Pursuant to the authority under section 1860D-15(f)(1)(B) of the 
Act, the Secretary has the right to inspect and audit any books and 
records of a Part D sponsor or MA organization regarding costs provided 
to the Secretary. We stated in the January 2005 Part D final rule (70 
FR 4194, 4316) that this right to inspect and audit would not be 
meaningful, if upon finding mistakes pursuant to such audits, the 
Secretary was not able to reopen final determinations made on payment. 
Therefore, we established a reopening provision at Sec.  423.346 that 
would allow us to ensure that the discovery of any payment issues could 
be rectified. In the January 2005 Part D final rule, we established 
that a reopening was at our discretion and could occur for any reason 
within 12 months of the final determination of payment, within 4 years 
for good cause, or at any time when there is fraud or similar fault. We 
operationalized this provision by conducting program-wide reopenings 
(that is, global reopenings) and, when necessary, reopenings targeted 
to specific sponsors' contracts (that is, targeted reopenings).
    In this proposed rule, we propose to codify the definitions of 
``global reopening'' and ``targeted reopening.'' We also propose to 
modify the timeframe for performing a reopening for good cause from 
within 4 years to within 6 years to align with the 6-year overpayment 
look-back period described at Sec.  423.360(f) and to help ensure that 
payment issues, including overpayments, can be rectified. In addition, 
we propose to codify the circumstances under which CMS will notify the 
sponsor(s) of our intention to perform a reopening and the requirement 
for CMS to announce when it has completed a reopening.

[[Page 79595]]

1. Summary of the Current Process
    Under the current process and under Sec.  423.346, CMS performs a 
reopening of a Part D payment reconciliation (that is, the initial 
payment determination) as a result of substantial revisions of 
prescription drug event (PDE) data and/or direct and indirect 
remuneration (DIR) data due to plan corrections, CMS corrections of 
systems errors, post reconciliation claims activity, and audit and 
other post reconciliation oversight activity. Based on our experience 
in the Part D program and the changes that we observed in the PDE and 
DIR data, we understood when we established this process that we would 
need to perform a reopening of the initial payment determination for 
every contract year.
    By calendar year 2013, CMS had completed reopenings of the 2006, 
2007, and 2008 Part D payment reconciliations and began our pattern of 
completing reopenings for subsequent Part D payment reconciliations 
approximately 4 years after the completion of each Part D payment 
reconciliation (consistent with the timing described at Sec.  
423.346(a)(2)). These reopenings included all Part D contracts that met 
the following criteria: (1) were in effect during the contract year 
being reopened, and (2) were either in effect at the time CMS completed 
the reopening or, if nonrenewed or terminated pursuant to Sec.  423.507 
through Sec.  423.510 (collectively referred to as ``terminated'' for 
the purposes of the proposed rule), had not completed the final 
settlement process by the time CMS completed the reopening. CMS has 
referred to this type of program-wide reopening as a ``global 
reopening.'' See, for example, HPMS memorandum, ``Reopening of the 
2006, 2007, and 2008 Part D Payment Reconciliations,'' April 2, 2012 
(available at https://www.cms.gov/httpseditcmsgovresearch-statistics-data-and-systemscomputer-data-and-systemshpmshpms-memos-archive/hpms-memos-2012-qtrs-1-4).
    In addition to ``global reopenings,'' CMS has performed reopenings 
as part of our process to correct certain issues. We would consider 
performing a reopening to correct issues such as those associated with 
CMS-identified problems with an internal CMS file that CMS used in a 
Part D payment reconciliation, a coverage gap discount program 
reconciliation, or a reopening; CMS corrections to a PDE edit that 
impacted a specific plan type (for example, EGWPs); fraud or similar 
fault of the Part D sponsor or any subcontractor of the Part D sponsor; 
or a Part D sponsor's successful appeal of a reconciliation result. 
See, for example, HPMS memorandum, ``Second reopening of the 2011 Final 
Part D Payment Reconciliation,'' July 7, 2017 (available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Computer-Data-and-Systems/HPMS/HPMS-Memos-Archive-Annual-Items/SysHPMS-Memo-Archive-%3F-2017-Qtr3) and HPMS memorandum, ``Reopening of the 2014 Final Part D 
Reconciliation for Employer Group Waiver Plans (EGWPs),'' January 11, 
2017 (available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Computer-Data-and-Systems/HPMS/HPMS-Memos-Archive-Annual-Items/SysHPMS-Memo-Archive-%3F-2017-Qtr1). These reopenings are not program-
wide, but rather are targeted to the Part D contracts that are impacted 
by the particular issue that needs to be addressed by CMS (that is, 
``targeted reopenings''). The targeted reopenings are not performed on 
a predictable schedule, and instead are utilized by CMS in the confines 
on the reopening timeframes described in the current regulation at 
Sec.  423.346(a)(1) through (3).
    Although in our most recent experience, CMS has utilized targeted 
reopenings as part of our process to correct certain issues (described 
above), under the current process, if a particular issue was program-
wide, CMS would perform a global reopening to address that issue. This 
global reopening could be in addition to the scheduled global reopening 
that CMS has performed approximately four years after the Part D 
payment reconciliation for that year.
2. Aligning the Timing of Reopenings to the Overpayment Look-Back 
Period
    Pursuant to the current Sec.  423.346(a)(2), CMS may reopen and 
revise an initial or reconsidered final payment determination within 4 
years after the date of the notice of the initial or reconsidered 
determination to the Part D sponsor, upon establishment of good cause 
for reopening. As already discussed, this paragraph (a)(2) has set up 
our current global reopening schedule. CMS performs the Part D payment 
reconciliation (that is, the initial payment determination) for a 
contract year, and then within four years of announcing the completion 
of that reconciliation, we perform a global reopening on that contract 
year.
    This reopening process is used to recoup overpayments associated 
with PDE and DIR related overpayments. Pursuant to the current 
overpayment provision at Sec.  423.360(f), there is a ``look-back 
period'' in which a Part D sponsor must report and return any 
overpayment identified within the 6 most recent completed payment 
years. As described at Sec.  423.360, an overpayment occurs after the 
``applicable reconciliation.'' The applicable reconciliation refers to 
the deadlines for submitting data for the Part D payment 
reconciliation.
    The following example illustrates the timing of look-back period. 
The deadlines for submitting data for the 2021 Part D payment 
reconciliation were in June 2022. Prior to the deadlines for submitting 
data for the 2021 Part D payment reconciliation, a PDE or DIR related 
overpayment could not exist for 2021, and the latest year for which an 
overpayment could occur was 2020. Therefore, prior to the deadlines for 
submitting data for the 2021 Part D payment reconciliation, the look-
back period was 2015-2020.
    This 6-year look-back period along with the 4-year reopening 
timeframe described at Sec.  423.346(a)(2) results in overpayments 
being reported for a contract year after CMS has performed the global 
reopening for that contract year. Continuing from the example above, if 
a Part D sponsor identified a PDE or DIR related overpayment associated 
with contract year 2016 in May 2022 (that is, prior to the deadlines 
for submitting data for the 2021 Part D payment reconciliation), that 
overpayment falls within the 2015-2020 look-back period, and the 
sponsor would have reported the overpayment to CMS mid-2022. However, 
CMS completed the global reopening of the 2016 Part D payment 
reconciliation in January 2022. This discrepancy between the 4-year 
reopening timeframe and the 6-year overpayment look-back period results 
in operational challenges for CMS, discussed below.
    CMS had described a process for recouping PDE and DIR related 
overpayments after the global reopening for the contract year at issue 
had been completed. In the preamble to our final rule, ``Contract Year 
2015 Policy and Technical Changes to the Medicare Advantage and the 
Medicare Prescription Drug Benefit Programs,'' 79 FR 29843 (May 23, 
2014) and in subsequent subregulatory guidance, we stated that 
overpayments reported after the global reopening would be reported by 
the sponsor with an auditable estimate and that CMS would recoup the 
overpayment by either requesting a check or offsetting monthly 
prospective payments for the amount provided in the auditable estimate. 
See HPMS memorandum, ``Reopening Process and Updates to the PDE/DIR-
related Overpayment Reporting,'' April 6, 2018 (available at https://
www.cms.gov/Research-Statistics-Data-and-Systems/Computer-Data-and-
Systems/HPMS/

[[Page 79596]]

HPMS-Memos-Archive-Weekly-Items/SysHPMS-Memo-2018-Week1-Apr-2-6). For 
PDE and DIR related overpayments, that approach presents challenges 
primarily because sponsors have also reported PDE and DIR related 
underpayments after the global reopening, which we do not have a method 
to process other than the reopening process.
    We have contemplated doing targeted reopenings to reconcile the 
changes in PDE and DIR data, but that also presents operational 
challenges. Targeted reopenings are conducted using the same payment 
reconciliation system that conducts the Part D payment reconciliation, 
the coverage gap discount program reconciliation, and the scheduled 
global reopening. Given the volume of reporting after the scheduled 
global reopening, it would be challenging to find the time and 
resources to run multiple targeted reopenings.
    Therefore, we propose to modify Sec.  423.346(a)(2) such that CMS 
may reopen and revise an initial or reconsidered final payment 
determination after the 12-month period (described at Sec.  
423.346(a)(1)), but within 6 years after the date of the notice of the 
initial or reconsidered determination to the Part D sponsor, upon 
establishment of good cause for reopening. This proposed change will 
allow CMS to process all changes to PDE data and DIR data after the 
overpayment look-back period for a contract year. Once a contract year 
falls outside the look-back period, we would perform the global 
reopening for that contract year within the new proposed 6-year 
timeframe, and in doing so, would recoup the PDE and DIR related 
overpayments reported by sponsors for that contract year (as well as 
process underpayments).
    Should this proposal be adopted, CMS will provide operational 
guidance, as we have with every regularly scheduled global reopening. 
The following example describes the proposed timing for performing the 
scheduled global reopening. The data for the 2020 Part D payment 
reconciliation was due June 2021. That reconciliation was completed 
November 2021. Assuming the current 4-year schedule, the DIR data for 
the contract year 2020 global reopening would be due to CMS by the end 
of July 2025, PDE data would be due September 2025, and the 2020 global 
reopening would be completed the end of 2025 or early 2026. However, 
the 2020 contract year remains in the overpayment look-back period 
through June 2027. Under the proposed 6-year timeframe, data for the 
2020 global reopening would be due middle to late 2027, and the global 
reopening would be completed late 2027 or early 2028, after the 6-year 
look-back period.
3. Standards for Performing Global and Targeted Reopenings
    Consistent with the existing regulation at Sec.  423.346(a) and 
(d), reopenings are at CMS' discretion. Under the current process, CMS 
has used its discretion to perform a scheduled global reopening on a 
Part D payment reconciliation within the timeframe specified at Sec.  
423.346(a)(2). Given the significant time and the costs associated with 
conducting a reopening, it is expected that CMS will use its discretion 
to conduct a targeted reopening (or an additional global reopening for 
a program-wide issue) only under limited circumstances. We would 
contemplate using our discretion to perform a targeted reopening (or an 
additional global reopening) to correct or rectify a CMS file or CMS-
created PDE edit-type issue, revise a payment determination that was 
based on PDE and/or DIR data that was submitted due to fraudulent 
activity of the sponsor or the sponsor's contractor, or pursuant to a 
successful appeal under Sec.  423.350. CMS will not use its discretion 
to conduct a reopening to reconcile data that will be, or should have 
been, reconciled in the scheduled global reopening, which would include 
data from plan corrections, claims activity, and audits that were 
completed after the deadline for submitting data for the scheduled 
global reopening. In addition, we are unlikely to conduct a reopening 
solely pursuant to a sponsor's request. First, we propose that in order 
to be included in a reopening, a contract must have been in effect 
(that is, receiving monthly prospective payments and submitting PDE 
data for service dates in that year) for the contract year being 
reopened. Intuitively, if a contract was not in the reconciliation for 
a particular contract year, it cannot be included in the reopening of 
that contract year's reconciliation. Second, we propose that if CMS has 
sent a nonrenewed or terminated contract the ``Notice of final 
settlement,'' as described at proposed Sec.  423.521(a), by the time 
CMS completes the reopening, described at proposed Sec.  423.346(f), 
CMS will exclude that contract from that reopening. We established the 
proposed exclusion based on the timing of the issuance of the ``Notice 
of final settlement'' and completion of the reopening, as opposed to 
the announcement of the reopening, due to the potentially lengthy 
reopening process and the likelihood that the ``Notice of final 
settlement'' will be issued prior to CMS completing the reopening 
process. For example, under the current timeframe for the scheduled 
global reopening, CMS has typically announced in the Spring and 
completed the reopening in December of that year or January of the 
next. During that timeframe, nonrenewed or terminated contracts will 
likely go through the final settlement process, and as a result, will 
not be able to complete the reopening process. This is because, 
pursuant to proposed Sec.  423.521(f), after the final settlement 
amount is calculated and the ``Notice of final settlement'' is issued 
to the Part D sponsor, CMS will no longer apply retroactive payment 
adjustments, and there will be no adjustments applied to amounts used 
in the calculation of the final settlement amount. We propose to codify 
these inclusion criteria at Sec.  423.346(g).
    We also propose at Sec.  423.346(g)(2) that, specifically for 
targeted reopenings, CMS will identify which contracts or contract 
types are to be included in the reopening. This is because, as 
described above, targeted reopenings are targeted to the Part D 
contracts that are impacted by the particular issue that CMS needs to 
address. Therefore, in order to be included in a targeted reopening, 
the Part D contract must have been impacted by the issue that causes 
CMS to perform a reopening. To date, most targeted reopenings have been 
performed because of a CMS-identified issue that most sponsors were not 
aware of prior to CMS completing the targeted reopening. Meaning that, 
sponsors would not be aware of this specific inclusion criteria unless 
CMS informed the sponsors of the CMS-identified issue and the sponsors' 
contracts impacted. Therefore, we propose that CMS will notify sponsors 
of this specific inclusion criteria via the proposed reopening 
notification and/or the proposed reopening completion announcement, as 
described below.
4. Reopening Notification and Reopening Completion Announcement
    We propose to add new paragraphs at Sec.  423.346 to codify our 
existing policy regarding reopening notifications and reopening 
completion announcements. We propose to codify at Sec.  423.346(e) that 
CMS will notify the sponsor(s) that will be included in the global or 
targeted reopening of its intention to perform a global or a targeted 
reopening--that is, the sponsor would receive prior notice of the 
reopening--only when it is necessary for the sponsor(s) to submit PDE 
data and/or DIR data prior to the reopening. In contrast, if it is not 
necessary for the

[[Page 79597]]

sponsor(s) to submit data prior to a reopening, we propose to notify 
the sponsor(s) only after we have conducted the reopening. For example, 
if CMS identifies an error in an internal CMS file that CMS used in the 
reconciliation or reopening, CMS may correct that file and reopen 
(holding all other data originally used constant), without the need for 
the sponsor(s) to submit PDE data or DIR data. See, for example, HPMS 
memorandum, ``Second reopening of the 2011 Final Part D Payment 
Reconciliation,'' July 7, 2017 (available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Computer-Data-and-Systems/HPMS/HPMS-Memos-Archive-Annual-Items/SysHPMS-Memo-Archive-%3F-2017-Qtr3).
    We propose at paragraph (e)(1) that CMS will include in the 
notification the deadline for submitting PDE data and/or DIR data to be 
included in the reopening. We also propose that the deadline to submit 
this data will be at least 90 calendar days after the date of the 
notice. Ninety days is consistent with our proposed PDE timeliness 
requirements at proposed Sec.  423.325(b).
    In addition, we propose at Sec.  423.346(e)(2) that the reopening 
notification will include inclusion criteria in the form of a 
description of the contract(s) (either specifically by contract number 
or generally by contract-type or contract status) that will be included 
in the reopening. This will put a sponsor on notice of whether its 
contracts are included in the reopening.
    We propose to codify at Sec.  423.346(f) that CMS will announce 
when it has completed a reopening, including in cases where CMS issued 
a notice under proposed paragraph (e). This announcement is consistent 
with existing policy and past practice. At paragraph (f)(1), we propose 
to specify that CMS will provide a description of the data used in the 
reopening. As in past reopenings, this data could include PDE data 
described by the processed date on the Prescription Drug Front-end 
System (PDFS) response report, DIR data described by the date received 
in the Health Plan Management System (HPMS), as well as any other 
relevant data used to perform the reopening.
    At paragraph (f)(2), we propose to include in the notice a 
statement of the contract(s) (either specifically by contract number or 
generally by contract-type or contract status) that were included in 
the reopening, consistent with proposed Sec.  423.346(e)(2). We propose 
to specify which contracts or contract types are included in both 
notices, that is, both the announcement of the completion of the 
reopening and the reopening notification because, as proposed above, 
CMS would not issue a reopening notification when it is not necessary 
for the sponsor(s) to submit PDE data and/or DIR data prior to the 
reopening.
    At paragraph (f)(3), we propose to include in the announcement of 
the completion of the reopening the date by which reports describing 
the reopening results will be available to the sponsor. In addition, at 
paragraph (f)(4), we propose to include the date by which a sponsor 
must submit an appeal, pursuant to Sec.  423.350, if the sponsor 
disagrees with the reopening results.
5. Definitions of ``Global Reopening'' and ``Targeted Reopening''
    We propose to adopt definitions of global reopening and targeted 
reopening at Sec.  423.308. We propose that a global reopening is a 
reopening under Sec.  423.346 in which CMS includes all Part D sponsor 
contracts that the meet the inclusion criteria described at proposed 
Sec.  423.346(g). We propose that the definition of the targeted 
reopening is a reopening under Sec.  423.346 in which CMS includes one 
or more (but not all) Part D sponsors contracts that the meet the 
inclusion criteria described at proposed Sec.  423.346(g). Finally, 
consistent with these proposed definitions, we propose to add the terms 
``global reopening'' and ``targeted reopening'' to existing Sec.  
423.346(a).
    The proposals described previously are consistent with our current 
guidance and requirements. Nothing in this proposal places additional 
requirements on Part D sponsors. As such, the proposed changes to Sec.  
423.308 and Sec.  423.346 do not place any additional burden on the 
Part D sponsors or their pharmacy benefit managers (PBMs). Our proposal 
will not change the extent to which Part D sponsors comply with the 
reopening process. Part D sponsors' compliance with this reopening 
process is evidenced by each Part D sponsor's signed attestation 
certifying the cost data (pursuant to Sec.  423.505(k)(3) and (5)) that 
CMS uses in each of the reopenings. In addition, the burden associated 
with the submission of cost data is already approved under the OMB 
control numbers 0938-0982 (CMS-10174) and 0938-0964 (CMS-10141). 
Therefore, we do not believe that our proposal will result in 
additional burden and have not incorporated this provision in the COI 
section of this rule, nor are we are scoring this provision in the 
Regulatory Impact Analysis section because industry is already 
complying with this process.

AA. Part D Proposed Automatic Shipment Requirements (Sec.  423.505)

1. Background
    An automatic shipment or automatic delivery (collectively referred 
to hereinafter as ``auto-ship'') service refers to the service whereby 
a pharmacy ships prescription refills to an individual's home when the 
refill is due without requiring the individual to make separate 
requests for each refill. Auto-ship service does not refer to the 
delivery of new prescription fills or prescription refills coordinated 
by long-term care (LTC) facilities for their residents. By 
``prescription refills,'' we mean all fills of a prescription for a 
medication after an individual has obtained an initial fill; including 
both refills with the same prescription number as well as prescription 
renewals for the same drug, dose, and instructions with new 
prescription numbers. Additionally, while often employed by traditional 
mail-order pharmacies, some retail pharmacies also offer auto-ship 
services.
    Auto-ship services provide an added convenience for Part D 
enrollees and have the potential to improve adherence by preventing 
interruptions in therapy resulting from late refills. However, auto-
ship services can also generate waste and additional costs for Part D 
enrollees and the Part D program when unneeded or unwanted refills are 
shipped. Once a drug leaves the pharmacy, it generally cannot be 
returned and reused. In an effort to address concerns with the 
potential waste, we provided guidance in the Final CY 2014 Call Letter 
instructing Part D sponsors to require their network pharmacies to 
obtain enrollee consent prior to shipping each new prescription or 
prescription refill (See page 144, published on April 1, 2013, and 
available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2014.pdf). In effect, 
we were instructing Part D sponsors to prohibit their network 
pharmacies from providing auto-ship services because we were still 
requiring the individual to make separate requests for each refill.
    Since the Final CY 2014 Call Letter, however, we have provided 
clarifications to the initial guidance, via Health Plan Management 
System (HPMS) memoranda and more recent Call Letters, that have 
gradually allowed for additional auto-ship services. For example, the 
subsequent guidance provided exceptions for employer-group waiver plans 
(EGWPs) and for new prescriptions received directly from the

[[Page 79598]]

prescriber for Part D enrollees with experience using auto-ship 
services. We applied these exceptions to pharmacies meeting certain 
conditions intended to balance the benefits of auto-ship services 
against the potential for waste and associated increased costs, such as 
providing that auto-ship services are for Part D enrollees that opt-in, 
and providing for refunds for any unwanted shipments. Most recently, we 
solicited feedback on proposed modifications to auto-ship services 
guidance as a part of the Draft CY 2020 Call Letter (See page 199 of 
Part 2, published on January 30, 2019, and available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2020Part2.pdf). The proposed modifications included expectations 
that pharmacies would obtain annual consent from enrollees to 
participate in an auto-ship program, only offer an auto-ship option for 
refills of drugs that a Part D enrollee has been on for at least four 
consecutive months, send at least two reminders in advance of each 
shipment, and provide a full refund for any refills auto-shipped that a 
Part D enrollee reported as unneeded or otherwise unwanted. After 
receiving overwhelmingly positive comments, we announced in the Final 
CY 2020 Call Letter (See page 230, published on April 1, 2019, and 
available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf) that, 
beginning in CY 2020, interested Part D sponsors could permit network 
pharmacies to offer opt-in, voluntary, auto-ship for refills of 
established therapies to further promote consistent access to 
medications, support medication adherence, and offer Part D enrollees 
additional choices in obtaining their covered Part D drugs. The final 
policy did not include the expectation that pharmacies obtain annual 
consent, or to auto-ship only to those enrollees that had been on the 
drug for at least four consecutive months. The guidance applied to 
auto-ship services for traditional multi-month mail-order supplies as 
well as auto-ship services for shorter day supplies from pharmacies 
utilizing innovative dispensing models and specialized packaging.
    We have not received concerns or complaints from Part D enrollees 
or Part D sponsors since we issued our current guidance in the Final CY 
2020 Call Letter. We are now proposing to codify these policies for 
auto-ship services.
    Section 1860D-12(b)(3) of the Act (42 U.S.C. 1395w-112(b)(3)) 
authorizes the Secretary to include contract terms for Part D sponsors 
that are consistent with Part C as found under sections 1857(a) and 
1857(d) of the Act. We are committed to ensuring consistent and 
reliable access to Part D drugs for Part D enrollees, and propose to 
codify in regulation auto-ship policies with appropriate safeguards to 
prevent or limit unwanted or unnecessary auto-shipped prescriptions. 
Specifically, we propose to add a new paragraph at Sec.  423.505(b)(28) 
to require Part D sponsors to require their network pharmacies that 
offer auto-ship services to--
     Provide automatic shipments only to Part D enrollees that 
opt-in, on a drug-by-drug basis, after an initial fill;
     Provide shipping reminders prior to each shipment;
     Refund any cost sharing paid by the Part D enrollee and 
reverse the claim when the enrollee reports the shipment is not needed 
or wanted; and
     Discontinue auto-ship services when a Part D enrollee 
requests to opt-out or when notified that a Part D enrollee has entered 
a skilled nursing facility or elected hospice coverage.
2. Voluntary Participation
    We propose to add new paragraph Sec.  423.505(b)(28)(i) to require 
Part D sponsors to require their network pharmacies that provide auto-
ship services to provide automatic shipments only to Part D enrollees 
that opt-in to auto-ship services, on a drug-by-drug basis, after an 
initial fill. Drug-by-drug means that network pharmacies would be 
required to document that a Part D enrollee has opted to receive auto-
ship services for each specific drug. A blanket opt-in option applying 
across multiple drugs would not satisfy this requirement. We propose 
the qualifier ``after an initial fill,'' because network pharmacies 
should not assume the Part D enrollee would consent to auto-ship 
services for a specific drug at the same time as an initial fill. A 
period of time is needed for the Part D enrollee to initiate therapy, 
and establish with their prescriber whether treatment with the new drug 
is tolerated and to be continued. Once a Part D enrollee voluntarily 
selects auto-ship services for a specific drug after an initial fill, a 
network pharmacy could consider this Part D enrollee to have chosen to 
have auto-shipped all prescription refills authorized for that drug. In 
addition, if a provider renews a prescription for a drug for which an 
enrollee previously selected auto-ship services, we propose that the 
network pharmacy may extend the Part D enrollee's previous consent for 
auto-ship services to the new prescription and its authorized refills, 
unless instructed otherwise by the Part D enrollee, their provider, or 
an authorized representative. In turn, auto-ship services may be 
cancelled by a Part D enrollee, their provider, or an authorized 
representative.
    We welcome comments on this proposal.
3. Enrollee Notification
    We propose to add new paragraph Sec.  423.505(b)(28)(ii)(A)) to 
require Part D sponsors to require their network pharmacies to provide 
a minimum of two (2) shipping reminders to the Part D enrollee prior to 
shipment through auto-ship services. Such reminders would need to be 
received prior to shipment so that a Part D enrollee can modify or 
cancel an order, if needed. Part D sponsors may specify an approximate 
shipping date range (for example, 2-3 calendar days) in lieu of an 
exact date in shipping reminders.
    We also propose to add new paragraph Sec.  423.505(b)(28)(ii)(B) to 
specify that network pharmacies must provide the shipping reminders by 
hard copy mailing, telephone, electronic delivery, or other comparable 
means of communication such as a fax machine. The method of delivery 
should be based on the Part D enrollee's stated preference when 
feasible. A missed call with no message left, bounce-back email 
messages, or returned direct mailings would not count as successful 
shipping reminders because they indicate that the enrollee never 
received the reminder.
    Additionally, we propose to add for Sec.  423.505(b)(28)(ii)(C) the 
requirement that all types of reminders must, at a minimum, include the 
name of the Part D drug, any applicable cost sharing, the scheduled 
shipping date, instructions on how to cancel the pending automatic 
shipment, and instructions on how to opt-out of any future automatic 
shipments. In turn the pharmacy would be required to honor the request 
to cancel the specified drugs from further auto shipment.
    We welcome comments on this proposal.
4. Refund Policy
    We propose to add new paragraph Sec.  423.505(b)(28)(iii) to 
require Part D sponsors to require their network pharmacies that 
provide auto-ship services to refund any cost sharing paid by the Part 
D enrollee for any shipped prescriptions that such Part D enrollee 
reports as unneeded or otherwise unwanted, regardless of whether the 
drug is returned to the pharmacy, and reverse the claim. Part D 
sponsors would be required to delete the associated Prescription Drug 
Event (PDE) for these reversed claims. We

[[Page 79599]]

believe a full refund policy is necessary to protect the Part D 
enrollee from the potential cost, safety risk, and inconvenience of 
unneeded or unwanted prescriptions being filled, charged, and shipped. 
Unlike a retail pharmacy setting where a Part D enrollee can review a 
medication, including its use and cost, prior to purchasing, auto-ship 
services remove the opportunity for the Part D enrollee (or their 
authorized representative) to provide a final in-person check and 
confirmation of understanding prior to purchase. In addition, should a 
Part D enrollee report a drug enrolled in auto-ship services as 
unneeded or unwanted, this presents an opportunity for discussion 
between the network pharmacy and the Part D enrollee on continuing 
auto-ship services for the drug in question, or any other drugs 
enrolled in auto-ship services for the Part D enrollee. Given the 
proposed reminder requirements discussed in section IV.AA.3 of this 
proposed rule, combined with the fact that we have received no 
complaints since our current guidance on auto-ship services has been in 
effect, we believe network pharmacies are well positioned to evaluate 
the appropriateness and safety of auto-ship services in collaboration 
with Part D enrollees. Moreover, we believe the lack of complaints 
received are also an indication that the potential for abuse of such a 
refund policy is low.
    We welcome comments on this proposal.
5. Discontinuation
    We propose to add new paragraph Sec.  423.505(b)(28)(iv) to require 
Part D sponsors to require their network pharmacies that offer auto-
ship services to discontinue auto-ship services if A) the enrollee 
requests to opt-out of automatic shipments or B) the network pharmacy 
receives notification that a Part D enrollee entered a skilled nursing 
facility (SNF) or elected hospice. Notification that an enrollee has 
entered a SNF or elected hospice coverage may come via the Part D 
enrollee, the Part D enrollee's provider, the Part D enrollee's 
authorized representative, or the Part D sponsor. A Part D sponsor 
could receive such information via a data system, such as daily 
Transaction Record Reports (TRR) or the MARx system. Section 1860D-
2(e)(2)(B) of the Act states that a drug prescribed to a Part D 
eligible individual cannot be considered a covered Part D drug if 
payment for such drug is available (or would be available but for the 
application of a deductible) under Part A or B for that individual as 
prescribed and dispensed or administered, such as during an inpatient 
hospital stay or home health episode. Thus, it is imperative that a 
network pharmacy discontinue auto-ship services for any drug that 
should be covered under Parts A or B due to a change in the Part D 
enrollee's status that has drug coverage implications.
    We welcome comments on this proposal.
6. Summary of Proposals
    In summary, consistent with our longstanding subregulatory 
guidance, we are proposing to codify in regulation at new paragraph 
Sec.  423.505(b)(28) the following requirements for auto-ship services 
that Part D sponsors would be required to include in their network 
pharmacy contracts:
     The proposed Sec.  423.505(b)(28)(i) would require that 
participation is voluntary;
     The proposed Sec.  423.505(b)(28)(ii)(A) would require a 
minimum of two (2) shipping reminders prior to shipment, and Sec.  
423.505(b)(28)(ii)(B) would require that all types of reminders include 
all relevant information, such as the name of the Part D drug, any 
applicable cost sharing, the scheduled shipping date, instructions on 
how to cancel the pending automatic shipment ; and instructions on how 
to opt-out of any future automatic shipments;
     The proposed Sec.  423.505(b)(28)(iii) would require a 
refund policy; and
     The proposed Sec.  423.505(b)(28)(iv) would require 
discontinuation of auto-ship services if the network pharmacy receives 
a request from the enrollee, enrollee's prescriber, or authorized 
representative to opt-out of automatic shipments or notification that 
the Part D enrollee entered a skilled nursing facility or elected 
hospice coverage.
    Additionally, as discussed in the preamble to this section, we have 
been monitoring compliance to this policy by monitoring complaints from 
both Part D sponsors and Part D enrollees. Consequently, there is no 
additional paperwork burden associated with codifying this longstanding 
policy.
    We solicit comments on these proposals.

AB. Part D Subcontractors May Terminate Only at the End of a Month 
(Sec.  423.505)

    At Sec.  423.505(i), we propose to require Part D sponsors to 
include a provision in certain contracts with first tier, downstream, 
and related entities (FDRs) (as defined at Sec.  423.501) that the FDR 
may terminate its contract only at the end of a calendar month after 
providing at least 60 days' prior notice. Specifically, we propose that 
this prior notice be required in contracts with FDRs that perform 
critical functions on the sponsor's behalf, as discussed below. We 
believe this change is necessary to protect beneficiaries from 
disruptions in receiving Part D benefits and to protect the Part D 
program from incurring additional financial liability.
    Part D sponsors contract with FDRs to perform many of the services 
critical to the operation of the Part D program. For example, FDRs 
administer formularies, process beneficiary enrollments into plans, 
contract with pharmacies, process Part D claims at the point of sale, 
and administer enrollee appeals and grievance processes. Many Part D 
sponsors do not have the internal capability to take over 
administration of these functions from their FDRs on short notice. If 
an FDR ceases operations under a contract, enrollees in an affected 
plan may therefore be left without access to their Part D benefits 
until the sponsor is able to make alternative arrangements.
    For these reasons, CMS has a critical interest in ensuring Part D 
sponsors' contracts with these FDRs protect beneficiaries and the 
program. We have codified a variety of requirements for sponsors' 
relationships with FDRs at Sec.  423.505(i). For instance, we require 
that contracts protect enrollees from liability for fees that are the 
responsibility of the Part D sponsor (Sec.  423.505(i)(3)(i)) and that 
the FDR must provide services in a manner that is consistent with the 
Part D sponsor's contractual obligations (Sec.  423.505(i)(3)(iii)). 
These requirements promote consistent and competent administration of 
the Part D program.
    Occasionally, Part D sponsors face financial difficulties so severe 
that they may stop paying FDRs for services provided under their Part D 
contracts. Such difficulties may also cause sponsors to be placed into 
receivership or bankruptcy. In response to such developments, an FDR 
may terminate its contract with the Part D sponsor or, in the case of 
FDRs that administer claims at point of sale, stop paying claims to 
prevent or minimize operating losses. Such actions may be prompted by 
overdue reimbursement from the sponsor or anticipated payment stoppages 
and can occur in the middle of a month, depending on the termination 
notice terms in the sponsor's contract with the FDR. Fortunately, such 
mid-month terminations are rare. However, when they occur, they can 
result in significant disruptions for enrollees, including a lack of 
access to needed prescriptions through their Part D plan. For instance, 
a PDP contract terminated in the middle

[[Page 79600]]

of March 2021 due, in part, to their PBM terminating its contract mid-
month for nonpayment. This disrupted care for almost 40,000 
beneficiaries and forced CMS to incur additional expense to ensure that 
all beneficiaries had continuous coverage for the month of March.
    Mid-month terminations can also result in CMS incurring additional 
costs. CMS makes prospective monthly capitation payments to Part D 
sponsors, as provided in section 1860D-15(a)(1) of the Act and codified 
in Sec.  423.315(b). When an FDR performing critical functions on a 
sponsor's behalf terminates a contract mid-month, CMS has already paid 
the sponsor for the services that the FDR was supposed to render for 
the remainder of that month. To protect beneficiaries from suffering 
further harm, CMS may find it necessary to terminate a sponsor's 
contract pursuant to Sec.  423.509 or come to terms for a mutual 
termination pursuant to Sec.  423.508. CMS reassigns affected 
beneficiaries to other Part D plans in the same service area when such 
terminations occur at any time other than the end of a contract year. 
When these reassignments occur mid-month, CMS makes a full prospective 
payment for that month to the plan into which enrollees are reassigned, 
so that CMS pays twice for the same month. For example, if contract 1 
terminates effective May 15 and CMS reassigns enrollees to contract 2, 
CMS would pay contract 2 for the full month of May even though it 
already paid contract 1 for the month of May. CMS has authority under 
Sec.  423.509(b)(2)(ii) to recover the prorated share of the capitation 
payments made to the Part D sponsors covering the period of the month 
following the contract termination, but as a practical matter, a 
contract terminated due to financial difficulties usually does not have 
the funds available to repay CMS. Nor is CMS able to make a prorated 
monthly payment to the contract into which enrollees are reassigned.
    To protect beneficiaries and the Part D program from the 
consequences of mid-month terminations of certain FDR contracts, we 
propose to establish at Sec.  423.505(i)(6) a requirement that all Part 
D sponsors' contracts with FDRs that perform certain key Part D 
functions require a minimum of 60-days' prior notice of termination 
with an effective date that coincides with the end of a calendar month. 
We are adopting this change pursuant to our authority at section 
1857(e) of the Act, made applicable to Part D through section 1860D-
12(b)(3)(D), which authorizes the Secretary to adopt contract terms and 
conditions as necessary and appropriate and not inconsistent with the 
Part D statute. This proposed policy is consistent with the existing 
requirement that FDRs must comply with Part D requirements and support 
the sponsor's performance of its Part D functions, including ensuring 
access to covered Part D drugs under Sec.  423.120(a), as required at 
Sec.  423.505(i)(3)(iii) and (iv). Since Part D sponsors are paid 
prospectively and in units of no less than one calendar month, their 
subcontractors should be able to negotiate arrangements with their 
sponsors to access to covered Part D drugs in no less than 1-month 
increments by, for example, requiring sponsors to provide a surety bond 
to compensate the FDR in the event of the sponsors' fiscal insolvency. 
We do not believe that this will result in significant additional 
expense for sponsors because mid-month terminations have been very rare 
to date.
    The proposed provision at new paragraph (6) will require the 
contract between a Part D sponsor and an FDR providing certain 
functions to state that a contract termination could only occur after a 
60-day notice period and have an effective date that coincides with the 
end of a calendar month. The functions for which this requirement would 
apply would be:
     Authorization, adjudication, and processing of 
prescription drug claims at the point of sale;
     Administration and tracking of enrollees' drug benefits in 
real time;
     Operation of an enrollee appeals and grievance process; 
and
     Contracting with or selection of prescription drug 
providers (including pharmacies and non-pharmacy providers) for 
inclusion in the Part D sponsor's network.
    All of these functions are critical to beneficiaries maintaining 
access to Part D drugs and ensuring that they pay appropriate out of 
pocket costs. The disruption of any one of these functions could result 
in beneficiaries not receiving necessary drugs or incurring unnecessary 
costs.
    We solicit comments on this proposal.

AC. Application of 2-Year Ban on Reentering the Part D Program 
Following Non-Renewal (Sec. Sec.  423.507 and 423.508)

    We are proposing to amend Sec. Sec.  423.507(a)(3) and 423.508(e) 
to clarify that the prohibition on PDP sponsors that non-renew or 
mutually terminate a contract receiving a new PDP contract for 2 years 
applies at the PDP region level. That is, if a sponsor non-renews or 
mutually terminates a PDP contract, the two-year exclusion would only 
prohibit them from receiving a new or expanded PDP contract in the PDP 
region(s) they exited and would not prevent them from receiving a new 
or expanded contract in another region(s). We are also proposing to 
clarify that that the 2-year exclusion applies whenever a PDP sponsor 
terminates all of its benefit packages (PBPs) in a PDP region, commonly 
known as a ``service area reduction,'' even if they continue to serve 
other PDP regions under the contract.
    Under current regulations at Sec. Sec.  423.507(a)(3) and 
423.508(e), Part D sponsors that non-renew or mutually terminate their 
contracts with CMS are ineligible to enter into a new Part D contract 
for two years following the non-renewal, absent circumstances that 
warrant special consideration. CMS adopted the two-year exclusion at 
the beginning of the Part D program in 2006 in order to implement the 
requirements of section 1857(c)(4) of the Act, made applicable to the 
Part D program by section 1860D-12(b)(3)(B) of the Act. The 2-year 
exclusion following contract non-renewal promotes stability in the Part 
D program, as the additional period of contracting ineligibility causes 
organizations to consider more than just the year-to-year fluctuations 
in the Part D market in deciding whether to discontinue their 
participation in the program.
    Given the significance of plan availability on a per region basis 
under the Part D statute, it makes sense to treat each PDP multiregion 
contract as, in effect, a set of distinct contracts, one for each PDP 
region, when CMS is taking action to protect market stability. For 
example, pursuant to Sec.  423.859(a), CMS is required to make 
available to each beneficiary the choice of at least two Part D plans 
that serve the area in which they reside. At least one of those plans 
must be a PDP. Also, each PBP may only serve one PDP region. PDP 
sponsors submit separate bids for each PDP region. CMS uses those 
region-specific bids to determine the regional premium benchmarks and 
identify PBPs into which LIS beneficiaries will be automatically 
enrolled. As such, a PDP sponsor exiting or reentering one region has 
little or no effect on the market for PDP products in any other region.
    Applying the 2-year exclusion at the PDP region level would 
sufficiently promote the market-stabilizing purpose of the exclusion by 
prohibiting PDP sponsors from non-renewing all their plans in a region 
and returning to the same market after only one year of absence from 
the program. We believe the 2-year exclusion as applied at the

[[Page 79601]]

regional level would prevent sponsors from undermining the 
nondiscrimination requirements at section 1860D-11(e)(2)(D)(i) of the 
Act by, for example, terminating PBPs in a region so they would no 
longer receive LIS auto-enrollment. If the two-year exclusion were not 
applied at the regional level, the effective penalty for tying Part D 
sponsors' participation in Part D solely to serve one segment of 
beneficiaries (that is, LIS eligible) would be only year's absence from 
offering plans in that region, rather than two. However, these same 
concerns do not apply across regions. A sponsor that non-renews a plan 
receiving LIS auto-enrollments in one region that wishes to enter a 
different region the next year would not simply be seeking to enroll 
more desirable beneficiaries who had declined to enroll in their 
previous plan; instead, they would be competing in a completely 
different market. Therefore, we see no reason to prohibit sponsors that 
non-renew their plans in one region from offering plans in a new region 
before the 2-year exclusion period elapses.
    We believe the effective administration of the Part D program is 
best served by promoting stability at the PDP region level and 
preventing sponsors exiting and re-entering regions each year, which 
may cause disruption to the regional PDP offerings. We do not believe 
that we need to prohibit sponsors from entering new regions for two 
years after they have opted to exit other regions in order to 
accomplish this goal. Therefore, we propose to modify Sec. Sec.  
423.507(a) and 423.508(e).
    We propose to modify Sec.  423.507(a)(3) as follows:
     Revising paragraph (3) to add regulatory text clarifying 
that the requirements in this paragraph pertain to PDP sponsors' 
ineligibility to enter into a contract for two years;
     Redesignating paragraph (a)(3) regarding the current 
regulatory requirement regarding a 2-year contracting ban following 
non-renewal of a PDP contract as new paragraph (a)(3)(i);
     Adding language to new paragraph (a)(3)(i) stating that 
CMS cannot enter into a new contract in the PDP region or regions 
served by the non-renewing contract;
     Adding new paragraph (a)(3)(ii) to authorize CMS to make 
organizations that non-renew all of their PBPs in a PDP region 
ineligible to have plan bids approved again in that region for 2 years; 
and
     Adding new paragraph (a)(3)(iii) exempting new EGWP PBPs 
from the two year ban.
    Similarly, we propose to apply our policy limiting the offering of 
plans at the PDP region level for 2 years to mutual terminations under 
Sec.  423.508. We propose to add a sentence to the existing regulatory 
text at paragraph (e) stating that a mutual termination of 
participation in a PDP region makes a PDP sponsor ineligible to apply 
for qualification to offer new plans in that region for 2 years. While 
we already require sponsors seeking a mutual termination to agree not 
to apply for a new contract for two years, we believe that the same 
concerns that support applying the 2-year exclusion for non-renewals at 
the regional level pertain to mutual terminations. Allowing a sponsor 
that mutually terminates a contract in one PDP region to apply for a 
new contract in another PDP region does not incentivize the market-
destabilizing practice of entering and exiting the PDP market in rapid 
succession. Therefore, we believe our application of the 2-year 
exclusion should be consistent between non-renewals and mutual 
terminations.
    We note that this proposed provision would not apply to a PDP 
sponsor's non-renewal of its EGWP plans since those plans do not affect 
the availability of plan choices to beneficiaries or the number of 
plans that qualify for automatic LIS enrollments. We are also not 
concerned that non-renewal of EGWP plans would be driven by a sponsor's 
attempt to engage in adverse selection because EGWP plans are subject 
to contract negotiation between employers and sponsors and are not open 
to enrollment to all beneficiaries in the service area.
    We solicit comments on these proposals.

AD. Crosswalk Requirements for Prescription Drug Plans (Sec.  423.530)

1. Overview and Summary
    We propose to codify, with modifications, the current process and 
conditions under which PDP sponsors can transfer their enrollees into a 
different PDP's plan benefit packages (PBPs) from year to year when 
such enrollees have made no other election. This process is known as a 
``plan crosswalk'' and does not apply to enrollees in employer group 
health or waiver plans. Our proposal defines plan crosswalks and 
crosswalk exceptions, codifies the circumstances under which enrollees 
can be transferred into different PDP PBPs from year to year, 
establishes the circumstances under which enrollees can be transferred 
into PDP PBPs offering different types of prescription drug coverage 
(``basic'' or ``enhanced alternative'' coverage), establishes the 
circumstances under which enrollees can be transferred due to contract 
consolidations of PDPs held by subsidiaries of the same parent 
organization, and provides protections against excessive premium 
increases resulting from crosswalks. We also propose to limit the 
ability of PDP sponsors to create new PDP PBPs to replace non-renewing 
PBPs under certain circumstances.
    We request comment on whether and under what circumstance we should 
permit crosswalks from PBPs offering basic prescription drug coverage 
to PBPs offering enhanced prescription drug coverage, whether we should 
require sponsors that non-renew an enhanced alternative PBP while 
continuing to offer individual market coverage in the same PDP region 
to crosswalk affected beneficiaries into another PBP, and on 
limitations we should place on premium and cost increases for enrollees 
who are crosswalked between different PBPs. We are particularly 
interested in how best to balance avoiding gaps in prescription drug 
coverage, preserving beneficiary choice and market stability, and 
preventing substantial increases in costs to beneficiaries resulting 
from crosswalks.
    Finally, we propose to codify the current procedures that a Part D 
sponsor must follow when submitting a crosswalk or crosswalk exception 
request.
2. Summary of Current PDP Crosswalk Policy
    CMS has set forth its current PDP crosswalk policy in ``Guidance 
for Prescription Drug Plan (PDP) Renewals and Nonrenewals'' 
(hereinafter referred to as the PDP Renewal and Nonrenewal Guidance), 
issued in April 2018 and posted the CMS website at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Guidance-for-Prescription-Drug-Plan-PDP-Renewals-and-Non-Renewals-.pdf. We developed the guidance to prevent beneficiary 
disruptions when a PDP sponsor discontinues PBPs and to allow the 
consolidation of PDP contracts of subsidiaries of the same parent 
organization. We also developed guidance related to continuation of 
enrollment in renewing PDP PBPs in order to facilitate ``evergreen'' 
enrollments, as required by sections 1851(c)(3)(B) and 1860D-
1(b)(1)(B)(ii) of the Act, by not requiring additional enrollment 
transactions when a PBP renews in a new plan year.
    Consistent with the requirement in sections 1851(c)(3)(B) and 
1860D-

[[Page 79602]]

1(b)(1)(B)(ii) of the Act that an individual who has elected a plan is 
considered to make the same election until the individual changes an 
election or the plan is discontinued in the area in which the 
individual resides, enrollees remain in a renewing PBP for the 
following year if they do not make another election (or opt to 
discontinue Part D coverage). CMS requires the PBP's plan ID number to 
remain the same, and beneficiaries remain enrolled in the PBP unless 
they make another election.
    If a Part D sponsor discontinues a PBP but continues to offer 
individual market coverage under the same PDP contract, CMS currently 
``crosswalks'' enrollment from the non-renewing PBP into another active 
PBP under the same contract. This means that beneficiaries enrolled in 
the non-renewing PBP during the current plan year will be enrolled in 
another surviving PBP offered under the same contract the following 
year unless the beneficiary selects alternative coverage during the 
Annual Election Period (AEP). These plan crosswalks are referred to as 
``consolidated renewal'' crosswalks. We use consolidated renewal 
crosswalks primarily to prevent beneficiaries from losing Part D 
coverage, as past experience indicates that about 20 percent of 
beneficiaries enrolled in Part D plans that non-renew without a 
subsequent plan crosswalk fail to select new coverage. In those cases, 
the beneficiaries not only lose Part D coverage, but also are subject 
to the Part D late enrollment penalty. We also use plan crosswalks in 
these situations in order to prevent plans from ``dumping'' 
beneficiaries who are high cost or whom the organization otherwise no 
longer wishes to cover.
    Consolidated renewal crosswalks occur only with respect to non-
renewing PBPs offering enhanced alternative coverage, as defined at 
Sec.  423.100. Consistent with Sec.  423.104(f)(2), we do not permit 
organizations to non-renew a PBP offering basic prescription drug 
coverage, as defined at Sec.  423.100, unless they are non-renewing all 
individual market PBPs in a PDP region because a basic prescription 
drug plan offering is a requirement in order for a sponsor to offer 
enhanced alternative coverage within the same service area. In 
consolidated renewal crosswalks, sponsors may transfer affected 
enrollees into a PBP offering either enhanced alternative or basic 
prescription drug coverage. The enrollment of a non-renewing PBP is not 
``split'' among multiple PBPs--that is, all beneficiaries enrolled in a 
non-renewing PBP are crosswalked to the same PBP in the following year.
    If a Part D sponsor or multiple Part D sponsors under a single 
parent organization (as defined in Sec.  423.4) operate multiple PDP 
contracts that they wish to consolidate in the following contract year, 
we permit plan crosswalks between the PBPs of the non-renewing 
contract(s) and the PBPs in the surviving contract. These plan 
crosswalks are referred to as ``contract consolidation'' crosswalks. We 
do not permit plan crosswalks between PBPs under different PDP 
contracts held by subsidiaries of different parent organizations. We 
currently encourage contract consolidations when multiple subsidiaries 
of a parent organization offer individual market PDP coverage in the 
same region(s) in order to promote meaningful choices and competition 
in the PDP market. We are proposing in section III.V. of this proposed 
rule to limit the number of PDP contracts a parent organization may 
offer through its subsidiaries to one per PDP region, but we do not 
think this proposal will cause significantly more contract 
consolidations because, historically, few parent organizations have 
declined to consolidate contracts in this situation.
    All the enrollment in a non-renewing contract subject to contract 
consolidation is crosswalked into the surviving contract. The surviving 
PDP contract must offer individual market plans in all the PDP 
region(s) covered by the non-renewing contract(s). As with consolidated 
renewal crosswalks, enrollment from a non-renewing PBP is not ``split'' 
into multiple PBPs and all enrollees from non-renewing enhanced 
alternative PBPs are transferred into another PBP offering either 
enhanced alternative or basic coverage.
    Unlike with consolidated renewal crosswalks, contract consolidation 
crosswalks can involve the non-renewal of PBPs offering basic coverage. 
For contract consolidation crosswalks, enrollees in non-renewing PBPs 
offering basic coverage are crosswalked into the PBP in the surviving 
contract that offers basic coverage. We do not permit contract 
consolidation crosswalks from PBPs offering basic coverage to PBPs 
offering enhanced alternative coverage, in order to protect 
beneficiaries receiving low income subsidies (``LIS'') from unexpected 
cost increases. A portion of the premium for an enhanced alternative 
PBP is supplemental premium. Under Sec.  423.780(b)(1)(i), the LIS can 
only be used for the portion of the monthly beneficiary premium 
attributable to basic coverage. This does not include the amount 
attributed to supplemental coverage for enhanced alternative plans. Any 
LIS-eligible individuals enrolled in a non-renewing PBP offering basic 
prescription drug coverage that were transferred into a PBP offering 
enhanced alternative coverage, and who did not change their election, 
might therefore have to pay more than they would for a PBP offering 
basic prescription drug coverage even if the enhanced alternative PBP 
had a lower overall premium.
3. Proposed General Rules for Plan Crosswalks (Sec.  423.530(a))
    Section 1860D-1(b)(1)(B) of the Act requires the Secretary to use 
rules similar to and coordinated with the rules for enrollment, 
disenrollment, termination, and change of enrollment in MA-PD plans 
under certain provisions of section 1851 of the Act. Therefore, in 
proposing to codify general rules for plan crosswalks, we seek both to 
maintain current policy and, to the extent possible, be consistent with 
the requirements for MA plan crosswalks codified at Sec.  422.530 in 
the final rule published in the January 19, 2021 Federal Register (CMS-
4192-F2) (86 FR 5864).
    At Sec.  423.530(a)(1), we propose to define a plan crosswalk as 
the movement of enrollees from one PDP PBP to another PDP PBP. This 
definition is consistent with current policy and with the definition of 
crosswalks for MA plans, codified at Sec.  422.530(a)(1).
    We propose at Sec.  423.530(a)(2)(i) through (iii) to adopt the 
crosswalk prohibitions in current CMS subregulatory guidance, described 
in the PDP Renewal and Nonrenewal Guidance. First, we propose to 
prohibit crosswalks between PBPs in different PDP contracts unless the 
PDP contracts are held by the same Part D sponsor or by sponsors that 
are subsidiaries of the same parent organization. Second, we propose to 
prohibit crosswalks that split enrollment of one PBP into multiple 
PBPs. Third, we propose to prohibit crosswalks from PBPs offering basic 
coverage to PBPs offering enhanced alternative coverage.
    In the past, organizations have sought exceptions to the 
prohibition of basic-to-enhanced alternative crosswalks on the grounds 
that one of the available enhanced alternative PBPs is lower cost or 
otherwise a better alternative for enrollees in a non-renewing basic 
PBP than the available basic PBP. These requests come in the context of 
proposed contract consolidations crosswalks and, because CMS prohibits 
PDP contracts from offering more than one PBP offering basic coverage 
in a region under Sec.  423.265(b)(2), there would only be one option 
for the enrollees in non-renewing basic PBP to be transferred into. 
PBPs offering basic

[[Page 79603]]

prescription drug coverage can vary widely in premium and estimated out 
of pocket costs. Enhanced alternative PBPs sometimes offer lower 
premiums than basic PBPs under the same contract. However, as discussed 
previously in section IV.AD.2. of this proposed rule, a portion of the 
premium for an enhanced alternative PBP is the ``supplemental'' premium 
and any LIS-eligible individuals transferred from a basic to an enhance 
PBP might therefore have to pay more than they would in the available 
basic PBP, even if the enhanced alternative PBP has lower overall 
premium. Therefore, we propose to continue our current policy in order 
to protect LIS-eligible beneficiaries from unanticipated premium 
increases.
    We solicit comments on whether and under what circumstances to 
allow crosswalks from PBPs offering basic prescription drug coverage to 
enhanced alternative coverage. For instance, should CMS allow plan 
crosswalks under these circumstances if the premiums and/or estimated 
total beneficiary cost of the plan offering enhanced alternative 
coverage would be substantially lower than for the plan offering basic 
coverage. CMS is interested in how and to what extent permitting such 
crosswalks would affect the market for basic prescription drug 
coverage. CMS is particularly interested in how such crosswalks could 
be administered in a way that protects LIS-eligible beneficiaries from 
premium and other cost increases.
    Plan crosswalks often occur in the context of contract renewals and 
non-renewals. We propose at Sec.  423.530(a)(3) to require sponsors 
seeking crosswalks to comply with rules in Sec. Sec.  423.507 and 
423.508 governing non-renewals and contract terminations, respectively. 
This requirement is consistent with the requirement for MA plan 
crosswalks codified at Sec.  422.530(a)(3).
    We propose at Sec.  423.530(a)(4) to make clear that only enrollees 
eligible for enrollment under Sec.  423.30 can be crosswalked from one 
PBP to another. Individuals who are not eligible for Part D enrollment 
cannot be enrolled in a Part D plan, so CMS cannot allow crosswalks of 
non-eligible individuals into new Part D plans.
    Finally, we propose at Sec.  423.530(a)(5) to continue to allow 
enrollees in employer group health or waiver PBPs to be transferred 
between PBPs in accordance with the usual process for enrollment in 
employer group health or waiver plans, rather than in accordance with 
the proposed provisions of Sec.  423.530. This proposal ensures that 
the process for enrollment in employer group health or waiver plans is 
not disrupted by this proposed rule.
    We solicit comments on these proposals.
4. Mandatory Crosswalks (Sec.  423.530(b))
    We propose at Sec.  423.530(b)(1) and (2) to require enrollees in 
PDP PBPs that are renewing to be transferred into the same PBP for the 
following contract year. This is consistent with the current process 
summarized for renewal plans in the PDP Renewal and Nonrenewal 
Guidance. This requirement would continue to apply to PBPs offering 
both enhanced alternative and basic coverage. The proposed requirement 
continues to facilitate evergreen enrollment as required by section 
1851(c)(3)(B) of the Act. The proposal is also consistent with the 
requirements for MA renewal crosswalks codified at Sec.  
422.530(b)(1)(i).
    We solicit comment on this proposal.
5. Plan Crosswalk Exceptions (Sec.  423.530(c))
    We propose at Sec.  423.530(c) to classify consolidated renewal and 
contract consolidation crosswalks as ``crosswalk exceptions.'' We 
propose to define ``consolidated renewals'' and ``contract 
consolidations'' consistent with the current policy described 
previously in section IV.AD.2. of this proposed rule. We propose to 
codify our current policy for the two types of plan crosswalk 
exceptions with some modifications.
    For consolidated renewals, we propose to codify current policy at 
Sec.  423.530(c)(1) with four major modifications that balance concerns 
for beneficiaries in non-renewing plans losing coverage with concerns 
about market stability and limiting unexpected premium increases. As we 
state in the PDP Renewal and Nonrenewal Policy, we currently expect 
sponsors that non-renew a PBP while continuing to offer individual 
market plans in the PBP's service area to crosswalk affected enrollees 
into a renewing PBP. As noted previously in section IV.AD.2. of this 
proposed rule, in recent years about 20 percent of beneficiaries in 
non-renewing plans that were not crosswalked failed to select new Part 
D coverage. These beneficiaries not only lose Part D coverage, but also 
may be subject to higher premiums when they reenroll in Part D because 
of the late enrollment penalty required under Sec.  423.46. CMS has 
also sought to prevent sponsors from engaging in adverse selection by 
discontinuing a PBP, dropping its enrollees, and immediately starting a 
new PBP with the intention of attracting lower cost or otherwise more 
desirable enrollees.
    However, in recent years, some plan crosswalks in these situations 
have resulted in premium increases of as much as 381 percent. In 2021, 
the median premium increase for such crosswalks was over 234 percent. 
While not every consolidated renewal crosswalk results in a premium 
increase, and increases are typically much smaller than those 
experienced in 2021, such large premium increases create a significant 
burden for beneficiaries. CMS has received significant complaints from 
beneficiaries who were surprised by large premium increases following a 
crosswalk. Affected contracts had more complaints than other contracts 
in the first three months after enrollees were crosswalked. To address 
this concern, we propose requirements for consolidated renewals that 
would reflect our current subregulatory policy, but with four 
significant differences.
    First, we propose at Sec.  423.530(c)(1) to allow, but not require, 
plan crosswalks in consolidated renewal scenarios. PDP sponsors could 
request a crosswalk of enrollment from a non-renewing PBP to another 
PBP under the same contract, provided it meets the requirements we are 
proposing.
    We propose at Sec.  423.530(c)(1)(i) through (iv) to codify 
provisions of our current policy for consolidated renewal crosswalks:
     The plan ID for the upcoming contract year PBP must be the 
same plan ID as one of the PBPs for the current contract year;
     The PBPs being consolidated must be under the same PDP 
contract;
     A PBP offering basic prescription drug coverage may not be 
discontinued if the PDP contract continues to offer plans (other than 
employer group waiver plans) in the service area of the PBP; and
     Enrollment from a PBP offering enhanced alternative 
coverage may be crosswalked either into a PBP offering either enhanced 
alternative or basic prescription drug coverage.
    Our second major proposed change from current policy, at Sec.  
423.530(c)(1)(v), is that when a PDP sponsor chooses to crosswalk in a 
consolidated renewal scenario, to require enrollees from non-renewing 
PBPs offering enhanced alternative coverage to be crosswalked into the 
PBP that will result in the lowest premium increase. We intend for this 
requirement to minimize the premium increases experienced by 
beneficiaries who are crosswalked to new PBPs under a consolidated 
renewal crosswalk. Under

[[Page 79604]]

this proposed requirement, we would permit an otherwise allowable plan 
crosswalk into any eligible PBP that offered the same or lower premium 
compared to the nonrenewing plan, but would not allow a crosswalk into 
a PBP with a $30 higher premium if an eligible plan with a $10 higher 
premium were available. We recognize that premiums are not the only 
aspect of a PBP's structure that affect costs to beneficiaries or the 
beneficiary experience. The PBP's formulary and cost-sharing structure 
are also important elements affecting beneficiary costs. However, 
premiums for a PBP are the same for every enrollee and are therefore 
the most straightforward factor to use to protect enrollees from 
unexpected cost increases. We are soliciting comments on whether we 
should use other factors, such as differences in estimated out of 
pocket costs (OOPC) between the non-renewing and surviving PBPs, rather 
than simply the difference in plan premiums, to determine whether 
approving a plan crosswalk exception is the best option for enrollees 
in a non-renewing PBP. We are also requesting comments on whether to 
allow plan crosswalks to a higher premium plan if the difference 
between the higher premium plan and the lower premium plan is less than 
a certain dollar amount--for example, should CMS permit a crosswalk to 
a higher premium surviving PBP despite the availability of a lower 
premium surviving PBP if the difference between the premiums is less 
than a fixed dollar amount.
    Third, we propose at Sec.  423.530(c)(2)(vi) to prohibit plan 
crosswalks for consolidated renewals if the crosswalk would result in a 
premium increase greater than 100 percent, unless the dollar amount of 
the premium increase would be less than the base beneficiary premium, 
as described in Sec.  423.286(c), compared to the current year premium 
for the non-renewing PBP. CMS does not currently explicitly limit 
premium increases for renewing PBPs; however, CMS does have the 
authority under section1860D-11(d)(3) of the Act and Sec.  
423.265(b)(3) to decline to approve a bid that proposes significant 
increases in cost sharing or decreases in benefits. CMS negotiates with 
sponsors pursuant to this authority in order to limit increases in cost 
sharing or decreases in benefits, but not to explicitly limit premium 
increases.
    Renewing PBPs therefore sometimes experience high premium 
increases. Despite this, in the past two years a larger share of 
consolidated renewal crosswalks have had premium increases of 100 
percent or more compared to renewal PBPs. Only 0.8 percent of 906 PDP 
PBPs renewing for 2021 and 1.8 percent of 729 PBPs renewing for 2022 
had premium increases greater than 100 percent. By contrast, 94.3 
percent of 35 consolidated renewal crosswalks for 2021 and 29.6 percent 
for 2022 had premium increases greater than 100 percent.
    Premium changes are also more variable year-to-year for 
consolidated renewal crosswalks. For the past 5 years, the average 
premium change for renewal PBPs ranged from an increase of 3.3 percent 
in 2019 to an increase of 15.9 percent in 2022. In the same time 
period, consolidated renewal crosswalks resulted in average premium 
changes that ranged from a decrease of 38.7 percent in 2019 to an 
increase of 229.5 percent in 2021. The data is summarized in Table 3.
[GRAPHIC] [TIFF OMITTED] TP27DE22.011

    Because of the compressed time frames between bid submission and 
approval, CMS would base its assessment of premiums for the following 
plan year on information received with the initial bids on the first 
Monday in June. Bids are subject to change during the bid negotiation 
process, so a premium increase that appears acceptable in June may be 
higher by the time final bids are approved in August. However, the 
timing of plan crosswalk exceptions and bid review prevent CMS from 
basing crosswalk exception approvals on final bid amounts. Based on 
historical experience, we do not believe that there is significant risk 
that final premiums will differ substantially from those in the initial 
bid. We are soliciting comments on whether this timing may result in 
manipulation of bids and whether another measure of beneficiary costs, 
such as estimated OOPC, would be a more reliable measure to use given 
the difficulty of basing crosswalk approvals on final approved bids.
    We recognize that some non-renewing plans may have very low 
premiums. A 100 percent increase for beneficiaries in a non-renewing 
plan with a current year premium of $14 would bring the following 
year's premium to only $28, which is less than 2022's base beneficiary 
premium of $33.37. We do not wish to prohibit plan crosswalk exceptions 
that would result in a large percentage increase and a relatively small 
dollar amount increase. Therefore, we propose to allow plan crosswalk 
exceptions where the premium increase would exceed 100 percent if the 
dollar amount of the premium increase would be less than the base 
beneficiary premium, as described in Sec.  423.286(c), for the current 
year. We propose to use the current year's base beneficiary premium 
because the base beneficiary premium for the following year is not 
known at the time bids are submitted. CMS also does not wish to reveal 
an estimated base beneficiary premium before the official release of 
the date in late July.
    We seek comment on alternatives to using the base beneficiary 
premium. Potential alternatives include a fixed

[[Page 79605]]

dollar amount, the low-income premium subsidy amount, described in 
Sec.  423.780(b), for the non-renewing PBP's region, or the national 
average monthly bid amount, described in Sec.  423.279.
    The fourth and final proposed major modification to CMS's policy 
for consolidated renewal crosswalks at Sec.  423.530(c)(1)(vii) is that 
sponsors that fail to request and receive a plan crosswalk exception 
would not be permitted to offer a new enhanced alternative PBP for the 
contract year after they non-renew an enhanced alternative PBP. For 
example, if a sponsor non-renews an enhanced alternative PBP effective 
12/31/2023 and did not request and receive a plan crosswalk exception, 
we would decline to approve a new enhanced alternative PBP starting 
January 1, 2024. In other words, the earliest the sponsor would be 
permitted to create new PBP to replace the non-renewed PBP would be the 
2025 plan year. We propose to adopt this restriction pursuant to the 
Secretary's authority at section 1857(e) of the Act, made applicable to 
the Part D program by section 1860D-12(b)(3) of the Act, to adopt 
additional terms and conditions as the Secretary may find necessary and 
appropriate. The proposed limitation on creating new PBPs would 
encourage sponsors to request plan crosswalk exceptions and discourage 
them from using the non-renewal process to disenroll beneficiaries who 
are high cost or who they otherwise no longer wish to serve. We believe 
this proposed policy will prevent discrimination and instability in the 
market. This policy is also consistent with other requirements in the 
Part D regulation, such as the restrictions at Sec. Sec.  
423.507(a)(3), 423.508(e), and 423.510(e)(1) on CMS entering into a new 
contract with sponsors that non-renewed or terminated a Part D contract 
for two years following the nonrenewal or termination.
    These four proposed changes represent a significant shift from 
current policy. As such, we are soliciting comments on alternative 
approaches. Possible alternatives include, but are not limited to: (1) 
requiring plan crosswalks when a sponsor non-renews an enhanced 
alternative PBP while continuing to offer individual market coverage 
under the same PDP contract, but prohibiting sponsors from creating a 
new PBP to replace the non-renewing PBP; (2) adopting the requirements 
as proposed, but prohibiting sponsors from creating new PBPs to replace 
non-renewing PBPs even if a plan crosswalk exception is requested and 
received; (3) using an alternative measure, such as OOPC, instead of or 
in addition to plan premiums to assess whether a plan crosswalk 
exception should be granted; or (4) adopting the current subregulatory 
policy without modification.
    We are also proposing requirements for contract consolidations that 
would reflect our current subregulatory policy, but with two 
significant differences that parallel the proposals with respect to 
consolidated renewals. For contract consolidations, consistent with our 
current policy, we propose at Sec.  423.530(c)(2) to approve plan 
crosswalk exceptions from non-renewing PBPs into PBPs in the surviving 
contract when the surviving contract is held by the same sponsor or by 
a subsidiary of that sponsor's parent organization. We propose at Sec.  
423.530(c))(2)(i)-(iv) to adopt the following requirements of current 
subregulatory policy:
     The non-renewing PDP contract and the surviving contract 
must be held by the same legal entity or by legal entities with the 
same parent organization;
     The approved service area of the surviving contract must 
include the service area of the non-renewing PBPs whose enrollment will 
be crosswalked into the surviving contract;
     Enrollment may be crosswalked between PBPs offering the 
same type of prescription drug coverage (basic or enhanced 
alternative); and
     Enrollment from a PBP offering enhanced alternative 
coverage may be crosswalked into a PBP offering basic prescription drug 
coverage.
    The first significant change we propose to current subregulatory 
policy for contract consolidations is at Sec.  423.530(c)(2)(v), which 
would require plan crosswalks from non-renewing PBPs offering enhanced 
alternative coverage into the PBP that would result in the lowest 
premium increase. Second, we propose at Sec.  423.530(c)(2)(vi) to 
prohibit plan crosswalks that would result in a premium increase 
greater than 100 percent, unless the dollar amount of the premium 
increase would be less than the base beneficiary premium, as described 
in Sec.  423.286(c), compared to the current year premium for the non-
renewing PBP. We are proposing these modifications to current contract 
consolidation crosswalk policy for the same reasons outlined with 
respect to consolidated renewal crosswalks. We acknowledge that 
contract consolidations are infrequent compared to consolidated 
renewals--as shown in Table 3, contract consolidation crosswalks 
occurred in only 2 of the last 5 years--and that data unique to 
contract consolidation crosswalks is therefore less available. However, 
we believe that requirements for the different types of plan crosswalk 
exceptions should be as consistent as possible and are therefore 
proposing to apply the same requirements with respect to premium 
increases for consolidated renewal crosswalks to contract consolidation 
crosswalks.
    We solicit comments on these proposals.
6. Procedures for Requesting Plan Crosswalks (Sec.  423.530(d))
    We propose to codify current procedures for submitting plan 
crosswalks and or making plan crosswalk exception requests at Sec.  
423.530(d), as described in ``Bid Pricing Tool for Medicare Advantage 
Plans and Prescription Drug Plans'' CMS-10142, posted for final comment 
pursuant to the Paperwork Reduction Act of 1995 at 87 FR 2441 (February 
14, 2022). We propose that a Part D sponsor must submit all allowable 
plan crosswalks in writing through the bid submission process in HPMS 
by the bid submission deadline. Through the bid submission process, the 
Part D sponsor may indicate if a plan crosswalk exception is needed at 
that time; however, the Part D sponsor must also request a crosswalk 
exception through the crosswalk exception functionality in HPMS. CMS 
would verify the exception request and notify the requesting Part D 
sponsor of the approval or denial of the request after the plan 
crosswalk exception request deadline. CMS would approve any plan 
crosswalk exception that met the requirements of the proposed 
regulation. Because plan crosswalks are requested when a PBP is non-
renewing, a denied crosswalk request would result in the PBP being non-
renewed without enrollment being crosswalked. Part D sponsors would be 
required to submit these exception requests to ensure that PBP 
enrollment is allocated properly.
    We solicit comments on this proposal.
7. Summary of Proposals
    In summary, we are proposing to add a new Sec.  423.530 codifying 
plan crosswalk requirements and policy for PDP contracts. We propose 
making the following changes:
     At proposed paragraph (a)(2)(i), prohibit plan crosswalks 
between PBPs under one PDP contract to PBPs under a different contract, 
unless the contracts are held by the same Part D sponsor or by sponsors 
that are subsidiaries of the same parent organization;
     At proposed paragraph (a)(2)(ii), prohibit plan crosswalks 
that split the

[[Page 79606]]

enrollment of one PBP into multiple PBPs;
     At proposed paragraph (a)(2)(iii), prohibit plan 
crosswalks between a PBP offering basic prescription drug coverage to a 
PBP offering enhanced alternative coverage;
     At proposed paragraph (b), require that renewing PBPs keep 
their enrollment and plan IDs from the previous year;
     At proposed paragraph (c), codify policy for plan 
crosswalk exceptions--including consolidated renewals and contract 
consolidations--with certain modifications relative to current 
subregulatory policy;
     At proposed paragraph (c)(1), permit consolidated renewal 
crosswalks when a sponsor non-renews an enhanced alternative PDP PBP 
while continuing to offer individual market coverage under the same PDP 
contract;
     At proposed paragraphs (c)(1)(iv) and (c)(2)(v), require 
that enrollment for enhanced alternative PBPs crosswalked pursuant to a 
crosswalk exception be crosswalked to the available PBP with the lowest 
premium increase;
     At proposed paragraphs (c)(1)(v) and (c)(2)(vi), prohibit 
plan crosswalks that would result in premium increase greater than 100 
percent or higher than the base beneficiary premium for the current 
year, whichever is greater; and
     At proposed paragraph (c)(1)(vi), prohibit an organization 
that non-renews an enhanced alternative PBP without requesting and 
receiving a plan crosswalk exception from creating a new enhanced 
alternative PBP in the following contract year.
     At proposed paragraph (d), codify the process for 
requesting plan crosswalks for renewals and crosswalk exceptions.
    We solicit comment on these proposals.

AE. Drug Management Program (DMP) Appeal Procedures (Sec.  423.562)

    The Comprehensive Addiction and Recovery Act of 2016 (CARA) amended 
section 1860D-4(c)(5)(A) of the Act to provide that Part D plan 
sponsors may establish drug management programs (DMPs) for at-risk 
beneficiaries to reduce opioid overutilization in the Part D program. 
Subsequently, section 2004 of the Substance Use Disorder Prevention 
that Promotes Opioid Recovery and Treatment for Patients and 
Communities (SUPPORT) Act provided that Part D plan sponsors must 
implement a DMP for plan years beginning on or after January 1, 2022.
    We are proposing a technical change at Sec.  423.562(a)(1)(v) that 
would remove discretionary language as it relates to a Part D plan 
sponsor's responsibility to establish a DMP under Sec.  423.153(f) with 
appeal procedures that meet the requirements of subpart M for issues 
that involve at-risk determinations. This would eliminate the 
discretionary language and improve consistency with Sec.  423.153(f), 
which requires each Part D plan sponsor to establish and maintain a 
drug management program and include appeal procedures that meet the 
requirements of subpart M for issues involving at-risk determinations. 
This provision would be strictly a technical change to the wording at 
Sec.  423.562(a)(1)(v) and would not impact the underlying burden 
related to processing appeals of at-risk beneficiaries. Therefore, this 
proposal is not expected to have an economic impact beyond current 
operating expenses, and there is no paperwork burden or associated 
impact on the Medicare Trust Fund.
    We solicit comments on this proposal.

AF. Part D Sponsor Website Requirements (Sec. Sec.  423.2265(b)(12) and 
423.2265(c)(1)(vi))

    As required under Sec. Sec.  422.111(h)(2), 422.2265, 
423.128(d)(2), and 423.2265, all plans must have a website that 
includes specific posted materials and content. We are proposing two 
changes to the Part D sponsor website requirements at Sec.  423.2265.
    At paragraph Sec.  423.2265(b)(12), we are proposing a technical 
correction to delete a duplicate reference to the prescription drug 
transition policy, as this information is already listed as required 
website content at Sec.  423.2265(b)(10). We propose to remove the 
reference to the ``Prescription Drug Transition policy'' at paragraph 
(b)(12) and redesignate that paragraph as reserved.
    We are also proposing to clarify the requirements at Sec.  
423.2265(c)(1)(vi) to be consistent with longstanding policy. 
Specifically, we wish to clarify that a Part D sponsor's utilization 
management criteria, as approved by CMS, must be posted on the plan's 
website by October 15 prior to the plan year. The regulation currently 
indicates that utilization management forms must be posted; however, we 
recognize that utilization management criteria themselves are distinct 
from the forms used to submit a coverage determination to satisfy said 
criteria. We understand that historically, Part D sponsors would post 
utilization management criteria within a customized coverage 
determination form for a particular drug. Part D sponsors still have 
the option of taking this approach; however, we have learned that in 
recent years, Part D sponsors have favored the approach of posting 
utilization management criteria without generating drug-specific 
utilization management forms. Specifically, Part D sponsors have used 
the CMS Part D Model Coverage Determination Request form referenced at 
Sec.  423.2265(c)(2)(ii). This model form does not contain plan 
specific utilization management criteria. Plans may continue to take 
either approach--that is, posting plan-specific utilization management 
criteria within a custom form or separately from the model form. 
However, to account for the evolution in plan practice, we propose 
modifying paragraph Sec.  423.2265(c)(1)(vi) to clarify the requirement 
that utilization management criteria (whether contained in a form or 
other format) must be posted on the plan's website by October 15 prior 
to the beginning of the plan year. By doing so, we ensure that 
beneficiaries can take the utilization criteria required to access a 
particular drug into account when evaluating their Part D plan options 
during the Annual Election Period (AEP). This revision also aligns the 
regulatory requirement with longstanding instructions from CMS in the 
``Medicare Parts C and D Annual Calendar'' for Medicare Advantage (MA) 
plans, Medicare Advantage Prescription Drug (MA-PD) plans, and 
Prescription Drug Plans (PDPs) which specifies that Part D sponsors 
must post prior authorization and step therapy criteria on their 
websites by October 15 prior to the start of the benefit year.
    We solicit comment on these proposals.

AG. Medicare Final Settlement Process and Final Settlement Appeals 
Process for Organizations and Sponsors That Are Consolidating, Non-
Renewing, or Otherwise Terminating a Contract (Sec. Sec.  422.500(b), 
422.528, 422.529, 423.501, 423.521, and 423.522)

    In this proposed rule, we propose to amend 42 CFR part 422, subpart 
K, and part 423, subpart K, to codify in regulation our final 
settlement process for Medicare Advantage (MA) organizations and Part D 
sponsors whose contracts with CMS have been consolidated with another 
contract, non-renewed, or otherwise terminated.
    Sections 1857(a) and 1860D-12(b)(1) of the Act require contracts 
between CMS and the legal entity that offers, respectively, one or more 
MA plans or Part D plans to beneficiaries. Sections 1857(e)(1) and 
1860D-12(b)(3)(D)(i) of the Act provide that these contracts shall 
contain terms and conditions that the Secretary may find necessary and 
appropriate in addition to the applicable

[[Page 79607]]

requirements and standards set forth in the statute and the terms of 
payment set by the statute. At Part 422, subpart K, and Part 423, 
subpart K, we have codified provisions relating to the contracts 
between CMS and MA organizations and Part D sponsors, including a 
description of minimum terms that must be included in the contract; the 
duration of contracts; minimum enrollment, reporting, and prompt 
payment requirements; and provisions regarding the consolidation, 
nonrenewal, or termination of a contract. In addition, these contracts 
require compliance with the regulations governing the program, which 
are adopted as standards implementing and interpreting the statutory 
requirement and as new terms and conditions that are not inconsistent 
with, and necessary and appropriate for administration of, the MA and 
Part D programs. Our proposal here would add to those requirements.
    CMS makes monthly payments to MA organizations and Part D sponsors 
for each beneficiary enrolled in a plan for that month. If there is an 
update to the payment amount that was paid for a month, CMS will make 
an adjustment to a month's payment for a beneficiary in a later month. 
For example, if beneficiary's Medicaid eligibility for a month is 
changed, CMS will recalculate the payment for that month after receipt 
of the updated Medicaid eligibility status for a beneficiary and make a 
retroactive payment update to that month's payment in a later month. In 
addition, CMS reconciles a number of different payment amounts after 
specified periods of time to permit plan data submission for a payment 
year as described below. These reconciliations typically take place the 
year after a payment year and result in retroactive payment adjustments 
for the prior payment year.
    Generally, MA organizations and Part D sponsors continue to offer 
plans to beneficiaries from year to year. From time to time, a contract 
between CMS and an MA organization or Part D sponsor may consolidate, 
nonrenew, or otherwise terminate as a result of a plan initiated 
termination, mutual termination, or CMS initiated termination. Once a 
contract has consolidated, nonrenewed, or otherwise terminated, the 
retroactive payment adjustments for a year that would have been made 
had the contract remained in effect are not paid to the MA organization 
or Part D sponsor, but are held until after the reconciliations for the 
final payment year are calculated as described below. After such time, 
all retroactive adjustments to payment for the consolidated, 
nonrenewed, or otherwise terminated contract are totaled and either a 
net payment amount is made to the MA organization or Part D sponsor or 
an amount is charged to the MA organization or Part D sponsor.\173\
---------------------------------------------------------------------------

    \173\ In the case of a bankrupt or liquidated plan that owes CMS 
money, CMS still completes the reconciliations, final settlement 
process, and issues a notice of final settlement, but refers the 
plan to the Department of Justice to collect the money owed.
---------------------------------------------------------------------------

    The process used to determine the final net payments for an MA 
organization or Part D sponsor, provide notice of these amounts to the 
MA organization or Part D sponsor, adjudicate disputes, and receive or 
remit payment constitutes the final settlement process and begins at 
least 18 months following the end of the last contract year in which 
the contract was in effect.
    Before CMS determines the final settlement amount owed to or from 
an MA organization or Part D sponsor whose contract has consolidated, 
nonrenewed, or otherwise terminated, CMS first completes a series of 
reconciliation activities and calculates the related payment 
adjustments for both consolidated, nonrenewed, or otherwise terminated 
contracts as well as ongoing contracts: (1) MA risk adjustment 
reconciliation (described in Sec.  422.310(g)), (2) Part D annual 
reconciliation (described in Sec. Sec.  423.336 and 423.343), (3) 
Coverage Gap Discount Program annual reconciliation (described in Sec.  
423.2320), and (4) medical loss ratio (MLR) report submission and 
remittance calculation (described in Sec. Sec.  422.2460, 422.2470. 
423.2460 and 423.2470). Each individual reconciliation process allows 
the MA organization or Part D sponsor to raise concerns about the 
calculation of that particular reconciliation amount. Once each 
reconciliation is complete and no errors have been identified, the MA 
organization or Part D sponsor is presumed to accept that 
reconciliation amount and it is not reconsidered during the final 
settlement process.
    For a given consolidated, nonrenewed, or otherwise terminated 
contract, the final settlement amount is then calculated by summing the 
applicable reconciliation amounts from these 4 processes and any 
retroactive payment adjustments that accumulated after a contract has 
consolidated, nonrenewed, or otherwise terminated. Note that these 
reconciliation amounts represent all of the reconciliation amounts that 
could be included in the final settlement calculation. Whether each 
reconciliation amount will factor into the final settlement amount for 
a particular contract will depend on the specifics of that contract. 
For example, MA risk adjustment reconciliation would not be performed 
for a prescription drug plan contract.
    The final settlement adjustment period is the period of time 
between when the contract consolidates, nonrenews, or otherwise 
terminates and the date the MA organization or Part D sponsor is issued 
a notice of the final settlement amount (also referred to herein as the 
notice of final settlement). The length of the final settlement period 
is determined by the time it takes for these reconciliations and 
related payment adjustments to be completed. During this time, CMS 
continues to calculate payment adjustments that reflect changes in 
beneficiary status.\174\ CMS tracks all payment adjustments for a 
terminated contract for use in the final settlement for that contract.
---------------------------------------------------------------------------

    \174\ A beneficiary profile status change reflects a change in a 
beneficiary's economic or health status, such as low-income status 
for Part D, Medicaid status, Hospice or ESRD status.
---------------------------------------------------------------------------

    The final settlement adjustment period ends on the date on the 
notice of final settlement that CMS issues to MA organizations and Part 
D sponsors. At the end of the final settlement adjustment period, CMS 
will no longer make adjustments to reconciliations for a contract that 
has consolidated, nonrenewed, or otherwise terminated, that would 
otherwise have been made for a continuing contract. Once the notice of 
final settlement has been issued, contracts that have been 
consolidated, nonrenewed, or otherwise terminated will also be excluded 
from all reopenings, including program-wide reopenings, or 
reconciliations for prior payment years when the contract was in 
effect. For example, under Sec.  423.346, CMS has the authority to 
reopen and revise an initial or reconsidered Part D final payment 
determination, including the Part D reconciliation amounts included in 
the final settlement amount, for a prior payment year. However, this 
reopening would not apply to consolidated, nonrenewed, or otherwise 
terminated contracts that have already received a notice of final 
settlement. This allows CMS to largely close out any outstanding 
financial responsibilities associated with consolidated, nonrenewed, or 
otherwise terminated contracts, either on the part of CMS or on the 
part of the MA organization or Part D sponsor.\175\
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    \175\ Once a contract has completed final settlement, the MA 
organization or Part D sponsor may still have financial 
responsibilities under section 1128J(d) of the Act.

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[[Page 79608]]

    After determining the final settlement amount, CMS issues a notice 
of final settlement to the MA organization or Part D sponsor for each 
contract that has consolidated, nonrenewed, or otherwise terminated, 
even if the final settlement amount is $0. The notice of final 
settlement explains whether the MA organization or Part D sponsor will 
receive or owe a final settlement amount and provides the information 
needed to conduct the associated financial transaction. The notice of 
final settlement includes the information CMS used to calculate the 
final settlement amount, including the payment adjustments that are 
reported on all monthly membership reports created from the date the 
contract ended until the month the final settlement amount was 
calculated. It also includes information on the process and timeline 
for requesting a review concerning the accuracy of the final settlement 
amount calculation.
    We propose to codify longstanding and existing guidance pertaining 
to procedures for the final settlement process described in the above 
paragraphs. In addition, we propose to add a new appeals process for MA 
organizations or Part D sponsors that disagree with the final 
settlement amount. MAOs or Part D sponsors may request an appeal of the 
final settlement amount within 15 calendar days of the date of issuance 
of the notice of final settlement. We believe that will provide 
organizations with sufficient time to request an appeal, as MA 
organizations and Part D sponsors would already be aware of the 
reconciliation amounts that factor into the final settlement amount at 
the time the notice of final settlement is issued, and requiring a 
request for appeal within this timeframe would help ensure accurate and 
timely payment of final settlement amounts. If an MA organization or 
Part D sponsor agrees with the final settlement amount, no response 
would be necessary or required. Failure to request appeal within 15 
calendar days of the date of issuance of the notice of final settlement 
would indicate acceptance of the final settlement amount. CMS would 
strongly encourage MA organizations and Part D sponsors to communicate 
their acceptance to CMS to facilitate prompt payment.
    Finally, in addition to codifying our longstanding and existing 
review process under which MA organizations and Part D sponsors are 
able to request a reconsideration of CMS' final settlement amount 
calculation, we propose to add two additional levels of appeal: (1) an 
informal hearing conducted by the CMS Office of Hearings to review CMS' 
initial determination, following a request for appeal of the 
reconsideration of CMS' initial determination, and (2) a review by the 
CMS Administrator of the hearing officer's determination if there is an 
appeal of the hearing officer's determination. We believe that these 
additional levels of appeal will afford MA organizations and Part D 
sponsors sufficient opportunities to present objections to the 
calculation of the final settlement amount. This additional process 
would only be available to appeal CMS' final settlement amount 
calculation and would not be used to review any prior payments or 
reconciliation amounts. MA organizations and Part D sponsors seeking 
review of prior payments or reconciliation amounts must do so during 
the appropriate reconciliation process. CMS believes that these 
additional levels of appeal would only be used in exceptional 
circumstances given the narrow, mathematical nature of the final 
settlement process. We anticipate that calculation errors will be rare, 
and, if they do occur, that they will be quickly corrected to the 
mutual satisfaction of both parties without a need for further review.
1. Process for MA Organizations and Part D Sponsors That Do Not Request 
an Appeal
    If an MA organization or Part D sponsor that owes a final 
settlement amount to CMS does not request an appeal or provides an 
optional response acknowledging and confirming the amount owed to CMS 
within 15 calendar days of the date of the notice of final settlement, 
the MA organization or Part D sponsor would be required to remit full 
payment to CMS within 120 calendar days of receiving the notice of 
final settlement. If an MA organization or Part D sponsor is owed money 
and does not appeal the final settlement amount, CMS would remit 
payment to the MA organization or Part D sponsor within 60 calendar 
days of the date of issuance of the notice of final settlement. If an 
MA organization or Part D sponsor does not owe or is not owed a final 
settlement amount and does not request an appeal of the $0 final 
settlement amount within 15 calendar days of the date of issuance of 
the notice of final settlement, no further actions would occur. If an 
MA organization or Part D sponsor does not appeal the final settlement 
amount indicated in the notice of final settlement within 15 calendar 
days of the issuance of the notice of final settlement no subsequent 
requests for appeal would be considered.
2. Process for Responses Requesting an Appeal of the Final Settlement 
Amount
    In cases in which the MA organization or Part D sponsor submits a 
request for an appeal of the final settlement amount within 15 calendar 
days of the date of the notice of final settlement, the MA organization 
or Part D sponsor would have to specify the calculations with which 
they disagree and the reasons for their disagreement, as well as 
provide evidence supporting the assertion that CMS' calculation of the 
final settlement amount described in the notice of final settlement is 
incorrect. MA organizations and Part D sponsors would not be able to 
submit new reconciliation data or data that was submitted to CMS after 
the final settlement notice was issued. CMS would not consider 
information submitted for the purpose of retroactively adjusting a 
prior reconciliation.
    CMS would not accept requests for appeal that are submitted more 
than 15 calendar days after the date of issuance of the notice of final 
settlement. As noted previously, if an MA organization or Part D 
sponsor does not reply within 15 calendar days, they would be deemed to 
accept the final settlement amount indicated in the notice of final 
settlement.
    Once CMS has reconsidered the calculation of the final settlement 
amount in light of the evidence provided by the MA organization or Part 
D sponsor, CMS would provide written notice of the reconsideration 
decision to the MA organization or Part D sponsor.
    If the MA organization or Part D sponsor does not agree with CMS's 
reconsideration decision, it would be able to request an informal 
hearing from a CMS hearing officer. The MA organization or Part D 
sponsor would have to submit a request for review within 15 calendar 
days of the date of CMS's reconsideration decision. The MA organization 
or Part D sponsor would be required to provide a copy of CMS' decision, 
the findings or issues with which it disagrees, and the reasons why it 
disagrees with CMS' decision. As the hearing officer's review would be 
limited to a review of the existing record, the MA organization or Part 
D sponsor would not be able to submit new evidence to support its 
assertion that CMS' calculation of the final settlement amount 
described in the notice of final settlement is incorrect in addition to 
the evidence submitted during CMS' reconsideration.
    CMS would provide written notice of the time and place of the 
informal hearing at least 30 days before the

[[Page 79609]]

scheduled date and would provide a copy of the record that was before 
CMS when CMS made its reconsideration decision to the hearing officer. 
The CMS hearing officer would not receive new testimony or accept new 
evidence in addition to the evidence submitted by the MA organization 
or Part D sponsor during CMS' reconsideration to support its assertion 
that CMS' calculation of the final settlement amount is incorrect.
    Once the hearing officer has reviewed the record, the hearing 
officer would send a written decision to the MA organization or Part D 
sponsor explaining the basis of the hearing officer's decision. The 
hearing officer's decision would be final and binding unless the 
decision is reversed or modified by the CMS Administrator.
    If the MA organization or Part D sponsor does not agree with the 
hearing officer's decision, they would be able to request an 
additional, final review from the CMS Administrator. The MA 
organization or Part D sponsor would have to submit a request for 
review within 15 calendar days of the date of the issuance of CMS 
hearing officer's decision. The MA organization or Part D sponsor would 
be able to submit written arguments to the Administrator for review but 
would not be able to submit evidence in addition to the evidence 
submitted during CMS' reconsideration.
    The CMS Administrator would have the discretion to elect to review 
the hearing officer's decision or decline to review the hearing 
officer's decision within 30 calendar days of receiving the request for 
review. If the Administrator declines to review the hearing officer's 
decision, the hearing officer's decision would be final and binding. If 
the Administrator elects to review the hearing officer's decision and 
any written argument submitted by the MA organization or Part D 
sponsor, the Administrator would review the hearing officer's decision, 
as well as any information included in the record of the hearing 
officer's decision and any written argument submitted by the MA 
organization or Part D sponsor and determine whether to uphold, 
reverse, or modify the hearing officer's decision. The Administrator's 
decision would be final and binding and no other requests for review 
would be considered.
    If an MA organization or Part D sponsor requests an appeal of the 
final settlement amount, the financial transaction associated with the 
issuance or payment of the final settlement amount will be stayed until 
all appeals are exhausted. Once all levels of appeal are exhausted or 
the MA organization or Part D sponsor fails to request further review 
within the 15-day timeframe, CMS would communicate with the MA 
organization or Part D sponsor to complete the financial transaction 
associated with the issuance or payment of the final settlement amount, 
as appropriate.
    At all levels of review, the MA organization or Part D sponsor's 
appeal would be limited to CMS' calculation of the final settlement 
amount. CMS would not consider information submitted for the purposes 
of retroactively adjusting a prior reconciliation. The MA organization 
or Part D sponsor would bear the burden of proof by providing evidence 
demonstrating that CMS' calculation of the final settlement amount is 
incorrect.
    We solicit comments on this proposal.
3. Proposed Amendments to Regulations (Sec. Sec.  422.500(b), 422.528, 
422.529, 423.501, 423.521, and 423.522)
a. Definitions
    We propose to amend Sec. Sec.  422.500(b) and 423.501 to add 
several definitions relevant for the codification of the final 
settlement process.
    First, we propose to add a definition for the term final settlement 
amount, which would be the final payment amount CMS calculates and 
ultimately pays to the MA organization or Part D sponsor or that an MA 
organization or Part D sponsor pays to CMS for a Medicare Advantage or 
Part D contract that has terminated through consolidation, non-renewal, 
or other termination. The proposed definition provides that CMS would 
calculate the final settlement amount by summing retroactive payment 
adjustments for a contract that accumulate after that contract 
consolidates non-renews, or otherwise terminates, but before the 
calculation of the final settlement amount, including the applicable 
reconciliation amounts that have been completed as of the date the 
notice of final settlement has been issued, without accounting for any 
data submitted after the data submission deadlines for calculating the 
reconciliation amounts. These reconciliation amounts used in this 
process are: (1) MA risk adjustment reconciliation (described in Sec.  
422.310), (2) Part D annual reconciliation (described in Sec. Sec.  
423.336 and 423.343), (3) Coverage Gap Discount Program annual 
reconciliation (described in Sec.  423.2320), and (4) MLR report 
submission, including calculation of remittances (described in 
Sec. Sec.  422.2470 and 423.2470).
    We propose to add a definition for the term final settlement 
process, which we propose to define as the process by which CMS would 
calculate the final settlement amount for a Medicare Advantage or Part 
D contract that has been consolidated, nonrenewed, or otherwise 
terminated, issue the final settlement amount along with supporting 
documentation (described above) in the notice of final settlement to 
the MA organization or Part D sponsor, receive responses from MA 
organizations and Part D sponsors requesting an appeal of the final 
settlement amount, and take final actions to adjudicate an appeal (if 
requested) and make payments to or receive final payments from MA 
organizations or Part D sponsors. The proposed definition of final 
settlement process would specify that the final settlement process 
begins after all applicable reconciliations have been completed.
b. Final Settlement Process and Payment
    We propose to add Sec. Sec.  422.528 (for MA) and 423.521 (for Part 
D) to our regulations to codify our process for notifying MA 
organizations and Part D sponsors of the final settlement amount and 
how payments to or from CMS would be made.
    Once CMS has calculated the final settlement amount, we would 
notify MA organizations and Part D sponsors of the final settlement 
amount. At paragraph (a) of proposed Sec. Sec.  422.528 (for MA) and 
423.521 (for Part D), we propose to codify that CMS would send a notice 
of final settlement to MA organizations and Part D sponsors. 
Specifically, proposed paragraphs (a)(1), (a)(2), (a)(3), and (a)(4) 
specify that the notice would contain at least the following 
information: a final settlement amount; relevant banking and financial 
mailing instructions for MA organizations and Part D sponsors that owe 
CMS a final settlement amount; relevant CMS contact information; and a 
description of the steps for the MA organizations or Part D sponsor to 
request an appeal of the final settlement amount calculation.
    CMS is seeking comment on the following proposals, which would 
change the current final settlement process. At paragraph (b) of 
proposed Sec. Sec.  422.528 and 423.521, we propose to establish that 
MA organizations and Part D sponsors would have 15 calendar days from 
the date of issuance of the notice to request an appeal. We propose at 
paragraphs (b)(1) and (b)(2) of these new regulation sections that, if 
an MA organization or Part D sponsor agrees with the final settlement 
amount, no response would be required, and that, if an MA organization 
or Part D sponsor does not request an appeal within 15

[[Page 79610]]

calendar days, CMS would not consider any subsequent requests for 
appeal of the final settlement amount.
    At proposed paragraph (c), we propose to codify the actions that 
would take place if an MA organization or Part D sponsor does not 
appeal the final settlement amount. Specifically, at paragraph (c)(1), 
we propose to specify that, if an MA organization or Part D sponsor 
owed a final settlement amount from CMS does not appeal, CMS would 
remit payment within 60 calendar days of the date of the issuance of 
the notice of final settlement. At proposed paragraph (c)(2), we 
propose that an MA organization or Part D sponsor that owes money to 
CMS and does not appeal would have to remit payment in full to CMS 
within 120 calendar days from issuance of the notice of final 
settlement. We further specify that an MA organization or Part D 
sponsor that does not appeal and does not remit payment within 120 
calendar days of issuance of the notice would be subject to having any 
debts owed to CMS referred to the Department of Treasury for 
collection.\176\
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    \176\ In the case of a bankrupt or liquidated plan that owes CMS 
money, CMS still completes the reconciliations and the final 
settlement process and issues a notice of final settlement, but 
refers the plan to the Department of Justice to collect the money 
owed.
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    At proposed paragraph (d), we propose to establish that the actions 
following submission of a request for an appeal would be taken per 
proposed Sec. Sec.  422.529 (for MA) and 423.522 (for Part D).
    At proposed paragraph (e), we propose that after the final 
settlement amount is calculated and the notice of final settlement is 
issued to the MA organization or Part D sponsor, CMS would no longer 
apply retroactive payment adjustments for the terminated contract and 
there would be no adjustments applied to the final settlement amount.
c. Requesting an Appeal of the Final Settlement Amount
    We propose to add Sec. Sec.  422.529 (for MA) and 423.522 (for Part 
D) to our regulations to codify that an MA organization or Part D 
sponsor would be able to request an appeal of the calculation of the 
final settlement amount, and the process and requirements for making 
such a request.
    At paragraph (a) of proposed Sec. Sec.  422.529 and 423.522, we 
propose to establish requirements that would apply to MA organizations' 
and Part D sponsors' requests for appeal of the final settlement amount 
calculation.
    Specifically, at proposed paragraph (a)(1), we propose to establish 
the process under which an MA organization or Part D sponsor may 
request reconsideration of the final settlement amount. We propose to 
specify that the 15-calendar-day period for filing the request would 
begin on the date the notice of final settlement from CMS is issued. We 
also propose that MA organizations and Part D sponsors would have to 
include in their request the calculations with which they disagree and 
that the MA organization or Part D sponsor would have the obligation to 
provide evidence supporting the assertion that the CMS calculation of 
the final settlement amount is incorrect. We further specify that MA 
organizations and Part D sponsors should not submit new reconciliation 
data or data that was submitted to CMS after the final settlement 
notice was issued. CMS would not consider information submitted for the 
purposes of retroactively adjusting a prior reconciliation.
    At proposed paragraph (a)(1)(iii), we propose to establish that the 
CMS reconsideration official would review the calculations that were 
used to determine the final settlement amount and any additional 
evidence timely submitted by the MA organization or Part D sponsor. We 
further propose to establish that the CMS reconsideration official 
would inform the MA organization or Part D sponsor of their decision on 
the reconsideration in writing and that their decision would be final 
and binding unless the MA organization or Part D sponsor requests a 
hearing officer review.
    At proposed paragraph (a)(2), we propose to establish that MA 
organizations and Part D sponsors that disagree with CMS' 
reconsideration decision under paragraph (a)(1) of this section would 
be able to an informal hearing by a CMS hearing officer.
    Specifically, at paragraph (a)(2)(i), we establish that MA 
organizations and Part D sponsors would have to submit their requests 
for an informal hearing within 15 calendar days of the date of the 
reconsideration decision. At paragraph (a)(2)(ii), we propose that MA 
organizations and Part D sponsors would have to include in their 
request a copy of CMS' decision, the specific findings or issues with 
which they disagree, and the reasons for which they disagree. At 
paragraph (a)(2)(iii), we propose to establish the informal hearing 
procedures. Specifically, we propose that CMS would provide written 
notice of the time and place of the informal hearing at least 30 
calendar days before the scheduled date and would provide a copy of the 
record that was before CMS when CMS made its reconsideration decision 
to the hearing officer. We further propose that the hearing would be 
conducted by a hearing officer who would neither receive testimony nor 
accept new evidence. We finally propose that the hearing officer would 
be limited to the review of the record that was before CMS when CMS 
made its decision. At paragraph (a)(2)(iv), we propose that the CMS 
hearing officer would send a written decision to the MA organization or 
Part D sponsor explaining the basis for the decision. At proposed 
paragraph (a)(2)(v), we propose to establish that the hearing officer's 
decision is final and binding, unless the decision is reversed or 
modified by the CMS Administrator.
    We further propose to establish at paragraph (a)(3) that MA 
organizations and Part D sponsors that disagree with the hearing 
officer's decision would be able to request a review by the CMS 
Administrator.
    At paragraph (a)(3)(i), we establish that MA organizations and Part 
D sponsors would have to submit their requests for a review by the 
Administrator within 15 calendar days of the date of the decision and 
may submit written arguments to the Administrator for review. At 
paragraph (a)(3)(ii), we propose that the CMS Administrator would have 
the discretion to elect or decline to review the hearing officer's 
decision within 30 calendar days of receiving the request for review. 
We further propose that if the Administrator declines to review the 
hearing officer's decision, the hearing officer's decision would be 
final and binding. We propose at paragraph (a)(3)(iii) that, if the 
Administrator elects to review the hearing officer's decision, the 
Administrator would review the hearing officer's decision, as well as 
any information included in the record of the hearing officer's 
decision and any written arguments submitted by the MA organization or 
Part D sponsor, and determine whether to uphold, reverse, or modify the 
decision. At proposed paragraph (a)(3)(iv), we propose that the 
Administrator's determination would be final and binding.
    At proposed paragraph (b), we propose to establish the matters 
subject to appeal and that an MA organization or Part D sponsor bears 
the burden of proof. At proposed paragraph (b)(1), we propose to 
establish that the Part D sponsor's appeal would be limited to CMS' 
calculation of the final settlement amount. We further propose that CMS

[[Page 79611]]

would not consider information submitted for the purposes of 
retroactively adjusting a prior reconciliation. At proposed paragraph 
(b)(2), we propose that the MA organization or Part D sponsor would 
bear the burden of proof by providing evidence demonstrating that CMS' 
calculation of the final settlement amount is incorrect.
    At proposed paragraph (c), we propose that if an MA organization or 
Part D sponsor requests an appeal of the final settlement amount, the 
financial transaction associated with the issuance or payment of the 
final settlement amount would be stayed until all appeals are 
exhausted. Once all levels of appeal are exhausted or the MA 
organization or Part D sponsor fails to request further review within 
the 15-calendar-day timeframe, CMS would communicate with the MA 
organization or Part D sponsor to complete the financial transaction 
associated with the issuance or payment of the final settlement amount, 
as appropriate.
    Proposed paragraph (d) clarifies that nothing in this section would 
limit an MA organization or Part D sponsor's responsibility to comply 
with any other applicable statute or regulation, including section 
1128J(d) of the Social Security Act.
    We solicit comments on this proposal.

AH. Gross Covered Prescription Drug Costs (Sec.  423.308)

    Section 1860D-15(b)(3) of the the Act defines ``gross covered 
prescription drug costs'' as, ``with respect to a part D eligible 
individual enrolled in a prescription drug plan or MA-PD plan during a 
coverage year, the costs incurred under the plan, not including 
administrative costs, but including costs directly related to the 
dispensing of covered part D drugs during the year and costs relating 
to the deductible. Such costs shall be determined whether they are paid 
by the individual or under the plan, regardless of whether the coverage 
under the plan exceeds basic prescription drug coverage.'' In our final 
rule, ``Medicare Program; Medicare Prescription Drug Benefit,'' 
published in the Federal Register on January 28, 2005 (70 FR 4194), we 
codified the definition of ``gross covered prescription drug costs'' at 
Sec.  423.308. This regulatory definition refers to ``gross covered 
prescription drug costs'' as ``actually paid costs.'' The term 
``actually paid'' has a specific meaning in Medicare Part D and is 
separately defined at Sec.  423.308 to mean costs actually incurred by 
the plan that are net of direct and indirect remuneration (DIR), 
including discounts, rebates, or other price concessions typically 
received and applied after the point of sale. However, unlike the 
statutory definitions of ``allowable reinsurance costs'' and 
``allowable risk corridor costs'' at sections 1860D-15(b)(2) and 1860D-
15(e)(1)(B) of the Act, respectively, the statutory definition of 
``gross covered prescription drug costs'' at section 1860D-15(b)(3) of 
the Act does not use the phrase ``actually paid'' or otherwise specify 
that such costs must be net of all DIR. Because the definition of 
``gross covered prescription drug costs'' was codified in regulation 
for the sole purpose of describing the methodology for calculating the 
reinsurance payment amount, in using the phrase ``actually paid'' in 
said regulatory definition of ``gross covered prescription drug 
costs,'' CMS was incorporating a requirement from the statutory 
definition of ``allowable reinsurance costs'' to emphasize that DIR 
would be netted out in the calculation of costs eligible for Part D 
reinsurance as required by the statute.
    We note that certain provisions added to the Social Security Act by 
the Inflation Reduction Act of 2022 (IRA) refer to ``gross covered 
prescription drug costs as defined in section 1860D-15(b)(3) [of the 
Act]'' (see sections 1191(c)(5) and 1860D-14C(g)(4)(D) of the Act). 
Accordingly, we believe it is an appropriate time to revisit our 
regulatory definition of ``gross covered prescription drug costs'' to 
mirror the statute's language and to remove any ambiguity that might 
arise from the current regulatory definition as it may now also be 
applicable outside of the reinsurance context. Therefore, we propose to 
amend the definition of ``gross covered prescription drug costs'' at 
Sec.  423.308 to remove the phrase ``actually paid.''
    Revising the definition as proposed would not change the fact that 
Part D reinsurance is ultimately based on net drug costs or change the 
final reinsurance payment amount a Part D sponsor receives. Rather, as 
explained further below, allowable reinsurance costs would continue to 
be defined at Sec.  423.308 as the subset of gross covered prescription 
drug costs actually paid. The proposed revision, therefore, would not 
constitute a change in policy or require a change in operations under 
Part D, and thus would not place any additional burden or reduce burden 
on Part D sponsors, nor result in government savings or costs.
1. Background
    The term ``gross covered prescription drug costs'' (hereinafter 
referred to as ``GCPDC'') is defined and used at section 1860D-15(b) of 
the Act for the purpose of describing the methodology for calculating 
the reinsurance payment amount. As specified in section 1860D-
15(b)(1)(A) of the Act, the reinsurance payment amount for a year 
preceding 2025 is equal to ``80 percent of the allowable reinsurance 
costs (as specified in paragraph (2)) attributable to that portion of 
gross covered prescription drug costs as specified in paragraph (3) 
incurred in the coverage year after such individual has incurred costs 
that exceed the annual out-of-pocket threshold specified in section 
1860D-2(b)(4)(B).'' As noted above, although the statutory definition 
of ``allowable reinsurance costs'' at paragraph (2) of section 1860D-
15(b) of the Act specifies that such costs are the subset of GCPDC that 
are ``actually paid (net of discounts, chargebacks, and average 
percentage rebates),'' the statutory definition of GCPDC at paragraph 
(3) of that provision does not use the phrase ``actually paid'' or 
otherwise specify that such costs must be net of all DIR. This 
distinction, coupled with the use of the modifier ``gross'' to describe 
these costs indicates that the best reading of section 1860D-15(b)(3) 
of the Act is that GCPDC should reflect gross costs, not net costs that 
reflect all DIR that a Part D sponsor may receive. As stated above, 
CMS's use of the phrase ``actually paid'' in the current regulatory 
definition of GCPDC was intended to emphasize that all DIR would be 
netted out in the calculation of costs eligible for Part D reinsurance 
consistent with the plain language of the statute, which requires that 
the reinsurance payment amount be based on net drug costs. While the 
use of the phrase in the current regulatory definition of GCPDC is 
consistent with the statute for this reason, we recognize that that it 
may have led to ambiguity as to when the DIR would be netted out. We 
also recognize that the use of the phrase could create ambiguity when 
GCPDC is referenced outside of the reinsurance context (as it now is by 
the IRA).
    It is important to note that the statutory definition of GCPDC 
further describes these costs as ``not including administrative costs, 
but including costs directly related to the dispensing of covered Part 
D drugs during the year and costs relating to the deductible.'' CMS has 
long held that costs directly related to the dispensing of covered Part 
D drugs are most logically calculated as the accumulated total of the 
negotiated prices that are used for purposes of determining payment to 
the pharmacy or other dispensing entity for covered Part D drugs, and 
which are required

[[Page 79612]]

under section 1860D-2(d)(1) of the Act to be made available to Part D 
beneficiaries and are used to adjudicate the Part D benefit (that is, 
used to determine plan, beneficiary, manufacturer, and government 
liability during the course of the payment year).177 
178 As stated in several past rulemakings, we interpret the 
statutory definition of ``negotiated prices'' at section 1860D-
2(d)(1)(B) of the Act as allowing the application of DIR at the point 
of sale, to reduce the negotiated price, either at the discretion of 
Part D plan sponsors or at the direction of CMS (see, for example, 70 
FR 4244, 74 FR 1511, and 87 FR 27833). Therefore, even if the phrase 
``actually paid'' were not included in the regulatory definition of 
GCPDC, GCPDC would continue to be reduced by POS DIR reflected in 
negotiated prices. However, such an accounting of POS DIR would not 
make the resulting amount ``actually paid,'' which requires the 
accounting for all DIR, including DIR not applied at the POS.
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    \177\ This logic is borne out in the portion of our current 
regulatory definition of GCPDC at Sec.  423.308 that states that 
GCPDC reflect ``actual costs.'' ``Actual cost'' is defined at Sec.  
423.100 as the negotiated price for a covered Part D drug when the 
drug is purchased at a network pharmacy, and the usual and customary 
price when a beneficiary purchases the drug at an out-of-network 
pharmacy.
    \178\ The different components of the negotiated price of a 
drug, and ultimately of GCPDC, are required to be reported 
separately using the following cost fields on the Prescription Drug 
Event (PDE) record submitted to CMS by Part D plan sponsors for 
payment purposes, the sum of which must equal GCPDC: Ingredient 
Cost, Dispensing Fee, Vaccination Administration, and Sales Tax. 
GCPDC are also required to be reported using the following two 
payment fields on the PDE record depending on whether the costs fall 
in the catastrophic phase: Gross Drug Cost Below the Out of Pocket 
(OOP) Threshold (GDCB) and Gross Drug Cost Above the OOP Threshold 
(GDCA). The amounts reported in these fields are then used to update 
the Total Gross Covered Drug Cost (TGCDC) Accumulator on the PDE 
record, which tracks and indicates which non-catastrophic phase of 
the Part D benefit the beneficiary is in. See, for example, 2006 
Prescription Drug Event Data Training Participant Guide, available 
at https://www.csscoperations.com/internet/csscw3_a.nsf/DIDC/
K3V5B8PN1H~Prescription%20Drug%20Program%20(Part%20D)~Training, and 
2011 Regional Prescription Drug Event Data Technical Assistance 
Participant Guide, available at https://www.csscoperations.com/
internet/csscw3.nsf/DIDC/
FJUKANFCP1~Prescription%20Drug%20Program%20(Part%20D)~Training.
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    To mirror the statute's language and to remove any ambiguity that 
might arise from the current regulatory definition of GCPDC as 
described above, we propose to amend the definition of ``gross covered 
prescription drug costs'' at Sec.  423.308 as discussed in greater 
detail below.
2. Proposed Change
    Consistent with the language of section 1860D-15(b) of the Act, 
policy, including the current reporting requirements, and operations, 
including how the industry tracks and reports costs (that is, industry 
practice), we propose to amend the definition of ``gross covered 
prescription drug costs'' at Sec.  423.308 to remove the two references 
to ``actually paid'' to clarify that GCPDC are not net of all DIR.
    The proposed change would have no impact on Part D payment 
calculations or reporting requirements. Consistent with section 1860D-
15(b)(2), the reinsurance payment amount would continue to be 
calculated based on drug costs net of DIR. Outside of the reinsurance 
context, CMS' long-standing operational guidance has instructed plans 
to report costs without first netting out DIR applied after the point 
of sale, and, thus, the guidance would not need to be adjusted as a 
result of this proposed change to the regulatory definition of GCPDC. 
For instance, the amounts reported in the Ingredient Cost, Dispensing 
Fee, Vaccine Administration, Sales Tax, GDCB, GDCA, and the TGCDC 
Accumulator fields on the PDE record are required to include costs 
incurred by the Part D sponsor and all amounts paid by or on behalf of 
an enrollee under a Part D plan.\179\ Further, CMS guidance instructs 
Part D sponsors to net out only plan administrative costs and any DIR 
applied at the POS when reporting GCPDC.\180\ Hence, a key step in 
calculating the Part D reinsurance payment amount is to determine the 
allowable reinsurance cost amount by subtracting from the GCPDC 
incurred in the catastrophic phase all DIR attributable to the 
proportion of catastrophic phase spending that was not already 
accounted for at the POS in order to determine the amount ``actually 
paid'' by the Part D plan and ensure that the reinsurance payment 
amount is ultimately calculated based on net drug costs. As we would 
continue to take this important step in determining allowable 
reinsurance costs for purposes of calculating the reinsurance payment 
amount even if ``actually paid'' were removed from the regulatory 
definition of GCPDC as proposed, there would be no change in the final 
reinsurance payment amount a Part D sponsor receives.
---------------------------------------------------------------------------

    \179\ See 2006 Prescription Drug Event Data Training Participant 
Guide, available at https://www.csscoperations.com/internet/
csscw3_a.nsf/DIDC/
K3V5B8PN1H~Prescription%20Drug%20Program%20(Part%20D)~Training, and 
2011 Regional Prescription Drug Event Data Technical Assistance 
Participant Guide, available at https://www.csscoperations.com/
internet/csscw3.nsf/DIDC/
FJUKANFCP1~Prescription%20Drug%20Program%20(Part%20D)~Training.
    \180\ See page 1-15 of the 2011 Regional Prescription Drug Event 
Data Technical Assistance Participant Guide, available at https://
www.csscoperations.com/internet/csscw3.nsf/DIDC/
FJUKANFCP1~Prescription%20Drug%20Program%20(Part%20D)~Training.
---------------------------------------------------------------------------

    Moreover, no other rules or policies would be affected by this 
proposed change, including the rules regarding how to account for 
coverage not provided by the Part D sponsor, and instead provided by 
other payers, because they do not directly address the calculation of 
the reinsurance payment amount and thus do not rely on the current 
regulatory definition of GCPDC. For example, under rules regarding 
Medicare secondary payer (MSP) or subrogated claims, the amounts 
reported in the cost and payment fields of the PDE record reflect a 
reduction in the Part D plan's incurred cost for a drug resulting from 
other payer arrangements, which are currently and will continue to be 
captured in GCPDC.
    We note that in a rulemaking published earlier this year, we 
amended our regulations at Sec.  423.100, to add a new definition of 
``negotiated price'' effective January 1, 2024. The new definition 
specifies, among other things, that the negotiated price for a Part D 
drug is the lowest possible reimbursement a network pharmacy will 
receive, in total, for the drug, net of all pharmacy price concessions. 
Thus, as of January 1, 2024, all price concessions from network 
pharmacies, negotiated by Part D sponsors and their contracted pharmacy 
benefit managers (PBMs), will be reflected in the negotiated price that 
is made available at the POS and reported to CMS on a PDE record, 
meaning that these pharmacy price concessions will be reflected in 
GCPDC even if the phrase ``actually paid'' is removed from the 
regulatory definition of the term as proposed. As noted above, 
accounting for DIR, including pharmacy price concessions, applied at 
the point of sale in the calculation of GCPDC, does not make the 
resulting amount ``actually paid,'' which requires accounting for all 
DIR, including DIR not applied at the POS.
    While this proposed change to the regulatory definition would not 
be a change in policy and would not directly affect the way in which 
GCPDC are calculated and used for purposes of Part D, we believe it is 
important to revise the definition to remove any ambiguity regarding 
the meaning of the term ``gross covered prescription drug costs.'' As 
noted previously, the Inflation Reduction Act of 2022 added provisions

[[Page 79613]]

to the Social Security Act that refer to ``gross covered prescription 
drug costs as defined in section 1860D-15(b)(3) [of the Act].'' 
Removing the phrase ``actually paid'' from the regulatory definition of 
GCPDC as proposed would eliminate any ambiguity in the regulation text 
and help to ensure there is a consistent understanding of the meaning 
of this term for purposes of both the Part D program and the relevant 
provisions of the IRA.
    Nothing in this proposal places additional requirements on Part D 
sponsors or beneficiaries or changes how CMS currently uses the GCPDC 
reported by the Part D sponsor on the PDE for purposes of determining 
payments under Part D. This proposal is consistent with our current 
policy and operations, including the current reporting requirements. As 
such, the proposed change to the definition of ``gross covered 
prescription drug costs'' at Sec.  423.308 would not place any 
additional burden on Part D sponsors, nor do we expect that this change 
would result in savings.

V. Medicare Advantage/Part C and Part D Prescription Drug Plan Quality 
Rating System (42 CFR 422.162, 422.164, 422.166, 422.260, 423.182, 
423.184, and 423.186)

A. Introduction

    CMS develops and publicly posts a 5-star rating system for Medicare 
Advantage (MA)/Part C and Part D plans based on the requirement to 
disseminate comparative information, including information about 
quality, to beneficiaries under sections 1851(d) and 1860D-1(c) of the 
Act and the collection of different types of quality data under section 
1852(e) of the Act. The Part C and Part D Star Ratings system is used 
to determine quality bonus payment (QBP) ratings for MA plans under 
section 1853(o) of the Act and the amount of beneficiary rebates under 
section 1854(b) of the Act. Cost plans under section 1876 of the Act 
are also included in the MA and Part D Star Ratings system, as codified 
at Sec.  417.472(k). We use multiple data sources to measure quality 
and performance of contracts, such as CMS administrative data, surveys 
of enrollees, information provided directly from health and drug plans, 
and data collected by CMS contractors. Various regulations, including 
Sec. Sec.  417.472(j) and (k), 422.152(b), 423.153(c), and 423.156, 
require plans to report on quality improvement and quality assurance 
and to provide data which help beneficiaries compare plans. The 
methodology for the Star Ratings system for the MA and Part D programs 
is codified at Sec. Sec.  422.160 through 422.166 and 423.180 through 
423.186, respectively, and we have specified the measures used in 
setting Star Ratings through rulemaking. In addition, the cost plan 
regulation at Sec.  417.472(k) requires cost contracts to be subject to 
the Part 422 and 423 Medicare Advantage and Part D Prescription Drug 
Program Quality Rating System. (83 FR 16526-27). As a result, the 
proposals here would apply to the quality ratings for MA plans, cost 
plans, and Part D plans. We generally use ``Part C'' to refer to the 
quality measures and ratings system that applies to MA plan and cost 
plans.
    We have continued to identify enhancements to the Star Ratings 
program to ensure it is aligned with the CMS Quality Strategy as that 
Strategy evolves over time. This includes clarifications as well as 
improvements related to the current methodology based on our recent 
experiences related to the impact of COVID-19 on quality measurement. 
The current CMS National Quality Strategy encourages the highest 
quality outcomes, safest care, equity, and accessibility for all 
individuals (https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy). In 
addition to focusing on a person-centric approach as individuals move 
across the continuum of care, the current CMS Quality Strategy aims to 
create a more equitable, safe, and outcomes-based health care system 
and, where feasible, works to align performance metrics, programs, and 
policy across CMS programs.
    In this proposed rule, we are proposing a health equity index 
reward to further incentivize Part C and D plans to focus on improving 
care for enrollees with social risk factors (SRFs), and this proposal 
supports CMS efforts to ensure attainment of the highest level of 
health for all people. We are also proposing to make changes in the 
specific measures used in the Star Ratings System:
     Remove the Part C Diabetes Care--Kidney Disease Monitoring 
measure;
     Remove the stand-alone Part C Medication Reconciliation 
Post-discharge measure;
     Add the updated Part C Colorectal Cancer Screening measure 
with the NCQA specification change;
     Add the updated Part C Care for Older Adults--Functional 
Status Assessment measures with the NCQA specification change;
     Add the updated Part D Medication Adherence for Diabetes 
Medication, Medication Adherence for Hypertension (RAS Antagonists), 
Medication Adherence for Cholesterol (Statins) measures (including non-
substantive changes to the specifications).
     Add the Part C Kidney Health Evaluation for Patients with 
Diabetes measure;
     Add the Part D Concurrent Use of Opioids and 
Benzodiazepines measure;
     Add the Part D Polypharmacy Use of Multiple 
Anticholinergic Medications in Older Adults measure; and
     Add the Part D Polypharmacy Use of Multiple Central 
Nervous System Active Medications in Older Adults measure.
    We are also proposing to make several methodological changes:
     Reduce the weight of patient experience/complaints and 
access measures to further align the Part C and Part D Quality Rating 
System with other CMS quality programs;
     Remove guardrails when determining measure-specific-
thresholds for non-Consumer Assessment of Healthcare Providers and 
Systems (CAHPS) measures;
     Modify the hold harmless policy for the Health Plan 
Quality Improvement and Drug Plan Quality Improvement measures;
     Add an additional basis for the subregulatory removal of 
Star Ratings measures; and
     Remove the 60 percent rule for the adjustment for extreme 
and uncontrollable circumstances (generally called the adjustment for 
disasters).
    Finally, we are also proposing a series of technical clarifications 
of the existing rules related to adjustments for disasters, QBP appeals 
processes, contract consolidations, and weighting of measures with a 
substantive specification change, as well as a technical amendment to 
Sec. Sec.  422.162(a)(2)(i) and 423.186(a)(2)(i) to fix a codification 
issue. Unless otherwise stated, proposed changes would apply (that is, 
data would be collected and performance measured) for the 2024 
measurement period and the 2026 Star Ratings.
    Section VIII includes simulations of the cumulative impact of these 
proposals on overall Star Ratings using data from the 2021 Star 
Ratings, including simulations by contract size and by geographical 
area--specifically, by State, DC, and Puerto Rico.

B. Definitions (Sec. Sec.  422.162 and 423.182)

    We propose to add the following definition for Part 422, Subpart D 
(for Part C plans) and Part 423, Subpart D (for Part D plans) in 
paragraph (a) of Sec. Sec.  422.162 and 423.182, respectively. This 
proposed new definition is relevant for our proposed policies

[[Page 79614]]

discussed in section V.G. of this proposed rule and would be used in 
that context.
     Health equity index means an index that 
summarizes contract performance among those with specified social risk 
factors (SRFs) across multiple measures into a single score.

C. Contract Ratings (Sec. Sec.  422.162(b) and 423.182(b))

1. Contract Type
    In the April 2018 final rule (83 FR 16440) at Sec. Sec.  422.162(b) 
and 423.182(b), we codified the methodology for calculating the same 
overall and summary Star Ratings for all plan benefit packages (PBPs) 
offered under each MA-only, MA-PD, or PDP contract.
    As different organization or contract types offer different 
benefits, the overall and summary Star Ratings differ across contract 
types when the set of required measures differs. For example, non-SNP 
contracts do not submit the following measures and, therefore, their 
overall and Part C summary ratings do not include them: SNP Care 
Management, Care for Older Adults--Medication Review, and Care for 
Older Adults--Pain Assessment.
    We propose to amend Sec. Sec.  422.162(b)(1) and 423.182(b)(1) to 
add a sentence at the end to clarify that the overall and summary Star 
Ratings are calculated based on the measures required to be collected 
and reported for the contract type being offered for the Star Ratings 
year. This is our current practice and how the Star Ratings have 
historically been calculated. For example, the 2023 Star Ratings are 
calculated for the 2023 contract year using data primarily from 
measurement year 2021.\181\ The 2023 Star Ratings are published on 
Medicare Plan Finder in October 2022 to provide comparative quality 
performance information about plans for people with Medicare to use in 
making enrollment decisions for the 2023 calendar year. If a contract 
offered a SNP PBP in measurement year 2021, but is no longer offering a 
SNP PBP for the 2023 contract year, the 2023 Star Ratings exclude the 
SNP-only measures and the contract would be rated as ``Coordinated Care 
Plan without SNP''. This is our current (and historical) process and 
how the proposed regulatory clarification will be applied. We welcome 
comments on this proposal.
---------------------------------------------------------------------------

    \181\ There are exceptions to this for some measures. For 
example, as adopted in the April 2018 final rule and used now, the 
measures from the CAHPS survey are based on the most recent data 
submitted from surveys of enrollees; the surveys ask about the 
experience of the enrollees over the last six months. The annual 
Medicare Part C & D Star Ratings Technical Notes (available online 
here: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/PerformanceData) identify the measures and 
their data sources for each year's Star Ratings.
---------------------------------------------------------------------------

2. Contract Consolidations
    The process for calculating 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). As described in the April 2018 final 
rule (83 FR 16528 through 16531), we use the enrollment-weighted means 
of the measure scores of the consumed and surviving contract(s) to 
calculate the measure-level ratings for the first and second years 
following the contract consolidation. For all contracts, under 
Sec. Sec.  422.164(f)(4) and 423.184(f)(4), the Part C and Part D 
improvement measures compare current contract-level measure scores with 
scores from the prior year across all measures included in the 
improvement measures calculations. Given there are no comparable prior 
year measure-level scores available for contracts in the first year of 
the consolidation, historically we have not calculated the Part C and D 
improvement measures for the first year after a consolidation.
    We propose to amend Sec. Sec.  422.162(b)(3)(iv)(A)(1) and 
423.182(b)(3)(ii)(A)(1) to clarify the calculation of the Part C and 
Part D improvement measures for contracts that consolidate. For the 
first year after a consolidation, we propose to clarify that the Part C 
and Part D improvement measures will not be calculated for the 
consolidated contract. The prior year measure-level scores only include 
data from the surviving contract; using those as the comparison point 
for a consolidated contract would not be an accurate comparison because 
it does not include any information about performance of the consumed 
contract(s). For the second year after a consolidation, the improvement 
measure is calculated, using the enrollment-weighted measure scores for 
the current and prior year because scores for both years are available 
for the consolidated contract. This is our current (and historical) 
process and how the proposed regulatory clarification will be applied.
    We propose to revise the current regulation text at Sec. Sec.  
422.162(b)(3)(iv)(A)(1) and 423.182(b)(3)(ii)(A)(1) to clarify that the 
Part C and Part D improvement measures are not calculated for the first 
year after a contract consolidation. This proposal codifies our current 
application of the ratings rules. We welcome comments on this proposal.

D. Adding, Updating, and Removing Measures (Sec. Sec.  422.164 and 
423.184)

    The regulations at Sec. Sec.  422.164 and 423.184 specify the 
criteria and procedure for adding, updating, and removing measures for 
the Star Ratings program. In the April 2018 final rule, at 83 FR 16532, 
we stated we are committed to continuing to improve the Part C and Part 
D Star Ratings system and anticipated that over time measures would be 
added, updated, and removed. We also specified at Sec. Sec.  422.164(d) 
and 423.184(d) rules for measure updates based on whether they are 
substantive or non-substantive. The regulations, at paragraph (d)(1), 
list examples of non-substantive updates. See also 83 FR 16534-37. Due 
to the regular updates and revisions made to measures, CMS does not 
codify a list in regulation text of the measures (and their 
specifications) adopted for the Part C 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 issued with publication of the Star Ratings. In this rule, CMS 
is proposing measure changes to the Star Ratings program for 
performance periods beginning on or after January 1, 2024 unless noted 
otherwise. We are also proposing a new rule for the removal of measures 
and an additional example of a non-substantive measure update.
1. Proposed Measure Removal
a. Diabetes Care--Kidney Disease Monitoring (Part C)
    We are proposing to remove the Diabetes Care--Kidney Disease 
Monitoring measure because it has been retired by the measure 
steward.\182\ NCQA, the measure steward, announced the retirement of 
the Diabetes Care--Kidney Disease Monitoring measure after measurement 
year 2021. As we stated in the Announcement of Calendar Year (CY) 2023 
Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment 
Policies, since NCQA will no longer be collecting data for this 
Healthcare Effectiveness Data and Information Set (HEDIS) measure 
beginning with measurement year 2022, CMS will not have data for this 
measure to be included in the 2024 Star Ratings. The measure will be 
included in the

[[Page 79615]]

2023 Star Ratings using data from measurement year 2021. We are 
proposing to replace this measure with the Kidney Health Evaluation for 
Patients with Diabetes measure (described in section V.D.3.a. of the 
preamble to this proposed rule).
---------------------------------------------------------------------------

    \182\ The measure, which has the HEDIS label ``Comprehensive 
Diabetes Care (CDC)--Medical Attention for Nephropathy'' was retired 
after the 2021 performance period as noted here https://www.ncqa.org/wp-content/uploads/2022/07/Summary-Table-of-Changes-HEDIS-MY-2022.pdf and does not appear in the list for the 2022 
performance period.
---------------------------------------------------------------------------

    CMS is proposing to permanently remove the Diabetes Care--Kidney 
Disease Monitoring measure starting with the 2024 Star Ratings because 
we will not have data to calculate the measure.
b. Medication Reconciliation Post-Discharge (Part C)
    We are proposing to remove the Medication Reconciliation Post-
Discharge (MRP) measure as it would be duplicative of the MRP component 
of the Transitions of Care (TRC) measure to be included in the 2024 
Star Ratings. In the January 2021 final rule at 86 FR 5921-24, CMS 
finalized inclusion of the TRC measure in the 2024 Star Ratings. The 
TRC measure includes four indicators: MRP, Notification of Inpatient 
Admission, Patient Engagement After Inpatient Discharge, and Receipt of 
Discharge Information. Currently, MRP appears in both the Medicare Part 
C and Part D Star Ratings as a stand-alone measure and on the Medicare 
Part C and D display page as one of the four indicators included in the 
TRC measure. As discussed at 86 FR 5921 through 5924, transitions from 
an inpatient stay back to home often result in poor care coordination, 
including communication gaps between inpatient and outpatient 
providers; planned and inadvertent medication changes; incomplete 
diagnostic work-ups; and insufficient understanding of diagnoses, 
medication, and follow-up care needs. The Merit-based Incentive Payment 
System (MIPS) also includes MRP \183\ which is one component of the TRC 
measure. Although at this time CMS is only implementing the TRC measure 
in the Part C Star Ratings program, it is a HEDIS measure and over 
time, it may be used in other programs. Based on the importance of care 
coordination in the Part C program and how the TRC measure provides a 
more comprehensive picture of how plans manage transitions across 
settings for care, we believe its inclusion in the Part C Star Ratings 
is appropriate.
---------------------------------------------------------------------------

    \183\ Quality ID #46 (NQF 0097): Medication Reconciliation Post-
Discharge--National Quality Strategy Domain: Communication and Care 
Coordination--Claims (cms.gov).
---------------------------------------------------------------------------

    For measurement year 2020, NCQA provided multiple updates to the 
TRC measure as described at 86 FR 5921 and 5922. In one of these 
updates, NCQA revised the requirement of using one medical record from 
a specific provider to, instead, allow numerator information to be 
captured from additional communication forms accessible to the primary 
care provider or ongoing care provider (for example, admissions, 
discharges, and transfers (ADT) feeds, shared electronic medical 
records (EMRs)) that occur regularly in the field and meet the intent 
of the measure. This change also ensured that scores for the MRP 
indicator in the TRC measure and the stand-alone MRP measure would 
match. Currently, the MRP measure for the Part C and Part D Star 
Ratings comes from the MRP indicator collected through the TRC measure. 
This is because NCQA decided that the stand-alone MRP measure no longer 
needed to be separately reported since it could be pulled from the 
medication reconciliation indicator in the TRC measure.
    CMS is proposing to remove the stand-alone MRP measure from the 
2026 Star Ratings for measurement year 2024 since the same information 
about medication reconciliation is now also incorporated as a component 
of the TRC measure and, consequently, it is duplicative to have MRP as 
a stand-alone measure and as a component of the TRC measure. We welcome 
comments on this proposal.
2. Proposed Measure Updates
    In the April 2018 final rule, we specified at Sec. Sec.  422.164(d) 
and 423.184(d) rules for measure updates based on whether they are 
substantive or non-substantive. (83 FR 16534 and 16535). Where an 
update by the measure steward is substantive within the scope of 
Sec. Sec.  422.164(d)(2) and 423.184(d)(2), CMS will initially solicit 
feedback on whether to make substantive measure updates through the 
process described for changes in and adoption of payment and risk 
adjustment policies in section 1853(b) of the Act and then engage in 
rulemaking to make substantive changes to a Star Ratings measure. Per 
Sec. Sec.  422.164(d)(2) and 423.184(d)(2), CMS will place the updated 
measure on the display page for at least 2 years prior to using the 
updated measure to calculate and assign Star Ratings. This 2 year 
period for the updated measure to be on the display page may overlap 
with the period during which CMS solicits comment and engages in 
rulemaking. Further, the legacy measure may continue to be used in the 
Star Ratings during this period.
a. Colorectal Cancer Screening (Part C)--Substantive Change
    CMS is proposing a substantive update to the existing colorectal 
cancer screening measure because of changes in the applicable clinical 
guidance and by the measure steward. In May 2021, the U.S. Preventive 
Services Task Force (USPSTF) released updated guidance for the age at 
which colorectal cancer screenings should begin. Subsequently, NCQA, 
the measure steward, has updated its colorectal cancer screening 
measure to include a rate for adults 45-49 years of age for measurement 
year 2022. Therefore, CMS proposes expanding the age range for the 
Colorectal Cancer Screening measure to adults age 45-49, for an updated 
age range of 45-75, for the 2024 and subsequent measurement years. The 
expanded age range for this screening measure significantly increases 
the size of the population covered by this measure and is therefore a 
substantive measure specification change within the scope of Sec.  
422.164(d)(2). Other CMS programs, such as for the qualified health 
plans (QHPs) \184\ and the adult core set for Medicaid plans,\185\ are 
planning to introduce this change into their programs as they also use 
the same HEDIS measure.
---------------------------------------------------------------------------

    \184\ https://www.cms.gov/files/document/final-2022-call-letter-qrs-qhp-enrollee-survey.pdf.
    \185\ https://www.medicaid.gov/medicaid/quality-of-care/performance-measurement/adult-and-child-health-care-quality-measures/adult-health-care-quality-measures/index.html.
---------------------------------------------------------------------------

    CMS solicited feedback on making this substantive update to the 
measure in the Advance Notice of Methodological Changes for Calendar 
Year (CY) 2023 for Medicare Advantage (MA) Capitation Rates and Part C 
and Part D Payment Policies, and most commenters supported this change. 
As described in the April 2018 final rule (83 FR 16534), we may keep a 
legacy measure in the Star Ratings during the period that an updated 
version of the measure is on the display page. The legacy measure with 
the narrower age range of 50-75 years will remain available and be used 
in Star Ratings until the updated measure has been adopted through 
rulemaking and has been on the display page for 2 years. The updated 
measure will be on the display page for the 2024 Star Ratings, starting 
with the 2022 measurement year data.
b. Care for Older Adults--Functional Status Assessment (Part C)--
Substantive Change
    We are proposing to add the Care for Older Adults (COA)--Functional 
Status

[[Page 79616]]

Assessment measure back to the Star Ratings after it has been on the 
display page following a substantive measure specification change. The 
COA measure is collected for Special Needs Plans (SNPs) and includes 
three indicators--Medication Review, Functional Status Assessment, and 
Pain Assessment.
    For HEDIS 2021, based on the 2020 measurement year, NCQA 
implemented a change for the COA--Functional Status Assessment. 
Previously the measure specification was that documentation of a 
complete functional status assessment must include: (1) notation that 
Activities of Daily Living (ADLs) were assessed; (2) notation that 
Instrumental Activities of Daily Living (IADLs) were assessed; (3) 
result of assessment using a standardized functional assessment tool; 
or (4) notation that at least three of the following four components 
were assessed: (a) cognitive status, (b) ambulation status, (c) 
hearing, vision, and speech (that is, sensory ability), (d) other 
functional independence (for example, exercise, ability to perform 
job). Because the clinical field of functional status assessment was 
moving toward agreement on assessment using ADLs, IADLs, or another 
standardized tool, and to improve the clarity of the specification, 
NCQA removed the fourth option for meeting the numerator requirements 
for this indicator for HEDIS 2021.
    The measure change for the COA--Functional Status Assessment 
measure was considered substantive under Sec.  422.164(d)(2) because 
removal of a mechanism for positive performance on the measure may 
meaningfully impact the numerator. The updated measure was moved to the 
display page starting with the 2022 Star Ratings.
    CMS is proposing to return this updated measure to the Star 
Ratings, beginning with the 2026 Star Ratings and 2024 measurement 
period. With the updated specification, documentation of a complete 
functional status assessment must include: (1) notation that Activities 
of Daily Living (ADLs) were assessed; (2) notation that Instrumental 
Activities of Daily Living (IADLs) were assessed; or (3) result of 
assessment using a standardized functional assessment tool. 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; this treatment of 
substantively updated measures as new measures for purposes of 
weighting was addressed in the January 2021 final rule (86 FR 5919) and 
is proposed to be more clearly addressed in Sec.  422.166(e)(2) in 
section V.E.2 of this proposed rule. Therefore, this measure will 
receive a weight of 1 for its first year and will be treated as a 
process measure in subsequent years.
c. Medication Adherence for Diabetes Medication, Medication Adherence 
for Hypertension (RAS Antagonists), Medication Adherence for 
Cholesterol (Statins) (Part D)--Substantive Change
    CMS proposes to implement risk adjustment (also sometimes referred 
to as case-mix adjustment) based on sociodemographic status (SDS) 
characteristics, a substantive update, to the three Part D medication 
adherence measures for the 2028 Star Ratings (2026 measurement year). 
Health outcomes are affected by patient-related and external factors 
such as existing clinical conditions and SDS. Currently, the medication 
adherence measures (Diabetes, Hypertension, and Cholesterol) are 
included in the determination of the Star Ratings Categorical 
Adjustment Index (CAI) because they are not excluded by the criteria 
established in Sec. Sec.  422.166(f)(2) and 423.186(f)(2); for example, 
the measures are not case-mix adjusted for socioeconomic status. The 
CAI was implemented in the 2017 Star Ratings to adjust for average 
within-contract disparity in performance associated with the 
percentages of beneficiaries who receive low income subsidy and/or dual 
eligible (LIS/DE) and/or have disability status. The CAI was initially 
developed as an interim analytical adjustment to address concerns about 
disparities while longer-term solutions were explored, including 
engaging with measure stewards to examine if re-specification is 
warranted for measures used in the Star Ratings. The methodology for 
the CAI was codified at Sec. Sec.  422.166(f)(2) and 423.186(f)(2); the 
factor is calculated as the mean difference in the adjusted and 
unadjusted ratings (overall, Part D for MA-PDs, and Part D for PDPs) of 
the contracts that lie within each final adjustment category for each 
rating type.
    In addition, the National Quality Forum (NQF) convened an expert 
panel in 2014 and recommended that performance-based measures should be 
risk adjusted for socioeconomic status (SES) and other socio 
demographic factors in 2017. On June 28, 2020, the Office of the 
Assistant Secretary for Planning and Evaluation (ASPE) submitted a 
second Report to Congress; \186\ ASPE is required under section 2(d) of 
the Improving Medicare Post-Acute Care Transformation (IMPACT) to study 
the effects of certain social risk factors of Medicare beneficiaries on 
quality measures and measures of resource use in Medicare value-based 
purchasing programs.
---------------------------------------------------------------------------

    \186\ https://www.aspe.hhs.gov/reports/second-report-congress-social-risk-medicares-value-based-purchasing-programs.
---------------------------------------------------------------------------

    CMS contracted with the Pharmacy Quality Alliance (PQA), the 
steward of these measures, to examine the medication adherence measures 
for potential risk adjustment. PQA recommended sociodemographic status 
(SDS) risk adjustment for the Medication Adherence for Diabetes 
Medication, Medication Adherence for Hypertension (RAS Antagonists), 
and Medication Adherence for Cholesterol (Statins) measures. PQA 
recommended and endorsed the following changes related to SDS in their 
Measure Manual:
     All three adherence measures should be risk adjusted for 
SDS characteristics to adequately reflect differences in patient 
populations.
     The measures should be adjusted for the following 
beneficiary-level SDS characteristics: age, gender, dual eligibility/
low-income subsidy (LIS) status, and disability status.
     The measures should be stratified by these four 
beneficiary-level SDS characteristics (listed in the prior bullet) to 
allow health plans to identify disparities and understand how their 
patient population mix is affecting their measure rates.
    The PQA measure specifications were endorsed by NQF in the 2019 
Spring cycle (NQF endorsed #0541).
    CMS has included stratifications by age, gender, dual eligibility/
LIS status, and disability status in the Medication Adherence patient 
safety reports to Part D sponsors beginning with the 2019 measurement 
year.
    We are proposing to implement risk adjustment for the medication 
adherence measures based on the PQA specifications, which would be 
reflected in the Star Ratings. Additionally, because the medication 
adherence measures will be risk adjusted based on SDS characteristics 
(that is, for age, gender, dual eligibility/LIS, and disability 
status), the medication adherence measures will be excluded from the 
CAI adjustment per Sec. Sec.  422.166(f)(2)(ii)(A) and 
423.186(f)(2)(ii)(A). We found in our analysis that implementing the 
SDS risk adjustment to the patient safety reports can be very time 
consuming and should be incorporated at one period of time. Therefore, 
since we are proposing to implement the SDS risk adjustment to the 
medication adherence measures and remove these measures from the Star 
Ratings CAI determination, we also

[[Page 79617]]

intend to incorporate the SDS risk adjustment operationally to the 
medication adherence measures reported by CMS to Part D sponsors in the 
last monthly patient safety report for the measurement year.
    In developing this proposal, we considered how this change might 
affect Star Ratings for MA-PD and PDP contracts. We calculated SDS risk 
adjusted medication adherence measure rates using year of service (YOS) 
2019 measurement year data and recalculated the CAI values excluding 
these three adherence measures. We then recalculated the overall and 
Part D summary ratings using the SDS risk adjusted medication adherence 
measure rates, revised CAI values, the final 2021 Star Ratings for 
other measures, and the reward factor. In our analysis, we found that 
the threshold shifts for measure-level cut points with SDS risk 
adjustment were minimal for both MA-PD and PDP contracts, ranging from 
-2 to +1 percentage point(s) for MA-PD contracts and about -2 to +3 
percentage points for PDP contracts. We found that for both MA-PD and 
PDP contracts, approximately 60-70 percent of contracts retained the 
same star level across the Medication Adherence for Hypertension (RAS 
Antagonists) and Medication Adherence for Cholesterol (Statins) 
measures. When a star level shift was observed, most of the MA-PD and 
PDP contracts shifted by one-star level and usually shifted upwards 
when the SDS risk adjustment was applied to the adherence measures. One 
percent of MA-PD contracts shifted two-star levels for the Medication 
Adherence for Hypertension (RAS Antagonists) and Medication Adherence 
for Cholesterol (Stains) measures. The two-star level shifts were 
primarily upwards, but one contract did shift down two stars in the 
Medication Adherence for Cholesterol (Stains) measure. For the 
Medication Adherence for Diabetes Medication measure, 82 percent of MA-
PD contracts and 59 percent of PDP contracts retained the same star 
level. When a star level shift was observed for the Medication 
Adherence for Diabetes Medications measure, most MA-PD and PDP 
contracts saw a one-star downward movement with the SDS risk adjustment 
applied to the measure.
    As previously noted, if CMS implements SDS risk adjustment for the 
three medication adherence measures, the measures would no longer be 
included in determining the Star Ratings CAI. Therefore, we also 
conducted an analysis to simulate calculating the CAI values without 
case-mix adjusting the three adherence measures for LIS/DE and 
disability; these simulated CAI values were used in the application of 
the simulated summary rating calculations. For most MA-PD contracts, 
this resulted in a negative shift in the CAI adjustment values for the 
overall and Part D summary ratings, and in contrast, most PDPs had a 
positive shift in values. Additionally, the analysis found a minimal 
change in reward factor thresholds, ranging from -0.07 to +0.02 for 
mean percentile thresholds and -0.08 to +0.008 for variance percentile 
thresholds. In the analysis of the overall and Part D summary rating, 
91 percent of MA-PD contracts retained the same overall rating, 7 
percent decreased by half a star, and 2 percent increased by half a 
star. We found that 81 percent of MA-PD contracts retained the same 
Part D summary rating, 11 percent decreased by half a star, and 7 
percent increased by half a star. The impact on PDP contracts was 
neutral or positive; 63 percent of PDP contracts retained the same Part 
D summary rating star level while 37 percent increased by a half a 
star. No PDP contracts had a decrease in their Part D summary rating.
    The Part C and Part D improvement measures were not recalculated 
for this simulation. The final 2021 Star Ratings for both improvement 
measures were used for the summary rating recalculations in the 
simulations to illustrate the impact of this proposed change to the 
three medication adherence measures. Additionally, the final 2020 Star 
Ratings for both improvement measures and for the three adherence 
measures were used for the CAI value recalculations in the simulations. 
It is possible that the simulated differences could vary if or when we 
are able to have two consecutive years of adjusted data for 
recalculating these components.
    Per Sec.  423.184(d)(2), the change to implement SDS risk 
adjustment for the three Part D medication adherence measures would be 
a substantive update. We signaled this potential update and solicited 
initial feedback on incorporating the SDS risk adjustment in the 
Advance Notice and Announcement of Calendar Year (CY) 2023 Medicare 
Advantage (MA) Capitation Rates and Part C and Part D Payment Policies. 
A majority of the commenters supported SDS risk adjustment for the 
medication adherence measures. Some commenters also requested 
information on how the CAI will be affected by this update. We 
completed testing of the impact of the adjustment and are including the 
additional information about the simulations in this proposed rule, as 
summarized previously. If finalized, the legacy medication adherence 
measures would remain in the Star Ratings and the updated medication 
adherence measures with the SDS risk adjustment would be on the display 
page for at least 2 years (beginning with the 2024 measurement year for 
the 2026 display page). Beginning with the 2026 measurement year and 
2028 Star Ratings, CMS would then move the re-specified measures from 
display page to Star Ratings and the legacy measures would be removed 
under this proposal. We solicit comments on this substantive update to 
incorporate SDS risk adjustment for the medication adherence measures.
d. Medication Adherence for Diabetes Medication, Medication Adherence 
for Hypertension (RAS Antagonists), Medication Adherence for 
Cholesterol (Statins) (Part D)--Non-Substantive Changes
    In addition to the substantive changes (to add risk adjustment for 
SDS for the three adherence measures), our analysis of the proposed 
substantive updates incorporated two non-substantive changes to the 
adherence measures, based on the current PQA measure specifications, 
which are endorsed by NQF. While we do not need to propose non-
substantive changes through rule-making, given that we intend to make 
the non-substantive changes to the measures along with the proposed 
substantive changes to risk adjust the adherence measure, we describe 
the non-substantive updates as well in this preamble in order to 
provide a full picture of the changes to these measures. However, 
implementing these non-substantive updates is not dependent on 
finalizing the SDS risk adjustment proposal and will be included in the 
Announcement of Calendar Year (CY) 2024 Medicare Advantage (MA) 
Capitation Rates and Part C and Part D Payment Policies. These 
specification changes are non-substantive in accordance with Sec.  
423.184(d)(1) because they narrow the denominator population or do not 
change the target population or intent of the measure: (1) apply 
continuous enrollment (CE) instead of member-years (MYs) adjustment and 
(2) no longer adjust for stays in inpatient (IP) settings and skilled 
nursing facilities (SNFs).
    Currently, the Part D enrollment used by CMS in the medication 
adherence measures is adjusted monthly based on MYs to account for 
beneficiaries who are enrolled for only part of the contract year 
enrollment (for example, if a beneficiary is enrolled in the Part D 
contract for 6 out of 12 months of the

[[Page 79618]]

year, the beneficiary will count only as 0.5 member-years in the rate 
calculation). Moving forward when applying the SDS risk adjustment for 
the medication adherence measures, CMS intends to discontinue the use 
of MY of enrollment, which is a non-substantive update. Rather, we 
intend to align with PQA measure specifications of CE as defined by the 
treatment period and exclude beneficiaries with more than 1-day gap in 
enrollment during the treatment period.
    According to the current PQA measure specifications, the treatment 
period begins on the earliest date of service for a target medication 
during the measurement year which is the index prescription start date 
(IPSD) and extends through whichever comes first: the last day of the 
enrollment during the measurement year, death, or end of the 
measurement year. The treatment period should be at least 91 days. 
Therefore, a beneficiary may meet the requirements of enrollment in 
more than one contract in a measurement year but partial enrollment 
during the measurement year will no longer be adjusted using MYs 
methodology; this beneficiary may be eligible to be included in the 
measure calculation if continuously enrolled in one contract even if 
the beneficiary disenrolls from the contract prior to the end of the 
measurement year and enrolls into a different contract based on the PQA 
definition of CE. To clarify, per the current PQA measure 
specifications of treatment period, beneficiaries can have only one 
treatment period per contract--meaning if a beneficiary disenrolls 
after the IPSD and then re-enrolls (in the same Part D plan) in the 
same contract during the same measurement year, the beneficiary would 
not be included in the measure calculation for that particular contract 
if there is more than a one day gap in enrollment during the treatment 
period. If a beneficiary is enrolled in a Part D plan offered under one 
contract but then disenrolls and enrolls into a Part D plan offered 
under another (that is, different) contract and subsequently the 
beneficiary meets the measure criteria for one or both contracts, the 
beneficiary will be included in the measure rate calculation for all 
the applicable contract(s). The beneficiary partial enrollment would no 
longer be adjusted for partial MY enrollment (for example, 0.5) which 
accounts for a fraction of the beneficiary's enrollment in a contract 
but would now be calculated as 1 for rate calculation purposes under 
the CE methodology. CMS conducted an analysis of beneficiaries who met 
CE in the same contract using the YOS 2019 Patient Safety reports. 
Approximately 95 percent of beneficiaries met the definition for being 
continuously enrolled for the Medication Adherence for Diabetes 
Medications measure and about 96 percent for the Medication Adherence 
for Hypertension Medications (RAS Antagonists) and Medication Adherence 
for Cholesterol Medications (Statins) measures.
    Using YOS 2019 data, CMS analyzed the impact of implementing both 
the proposed SDS risk adjustment and the use of the current PQA measure 
specification definition of CE (instead of MY) for the three medication 
adherence measures. The analysis was limited to Part D contracts that 
were included in the 2021 Star Ratings for comparison purposes. Based 
on our analysis, we found that most MA-PD contract measure rates 
remained the same after the SDS risk adjustment and CE updates were 
applied. The change in distribution of rates among MA-PDs was 
negligible (at most 1 percentage point difference on average) between 
the current MY methodology and the SDS risk adjustment with CE 
methodology for all three medication adherence measures. Similarly, for 
PDPs, the change in distribution of rates among PDPs was minimal (at 
most 1 to 2 percentage point difference on average).
    Currently, we also adjust for Part D beneficiaries' stays in IP 
settings and SNFs. However, CMS plans to make a non-substantive change 
to discontinue adjusting for SNF and IP stays in calculating these 
measures. Our overall goal in making these non-substantive changes to 
the adherence measures is to fully align with current PQA measure 
specifications endorsed by the NQF; the PQA specifications do not 
include IP/SNF stay adjustments in the adherence measures. In addition, 
during our testing of both this adjustment and the SDS risk adjustment, 
we found that applying IP and SNF stay adjustments added a level of 
complexity and concerns about the accuracy of the SDS risk adjustment.
    In our analysis of comparing SDS adjusted rates with and without 
IP/SNF stays, the impact of the IP/SNF stay adjustment had very minimal 
impact to the distribution of measure rates for all three adherence 
measures for MA-PDs and PDPs. For the Medication Adherence for Diabetes 
measure, the mean rates remained the same for both MA-PDs (85 percent) 
and PDPs (84 percent) regardless of whether the IP/SNF stay adjustment 
was included or not. Similarly, for the Medication Adherence for 
Hypertension (RAS antagonists) measure, the mean rates for the MA-PDs 
remained the same at 86 percent regardless of IP/SNF stay adjustment, 
and for PDP contracts, there was a 1 percentage point difference seen 
in the mean rates between the two methods (86 percent with IP/SNF stay 
adjustment and 85 percent without IP/SNF adjustment). Likewise, for the 
Medication Adherence for Cholesterol (Statin) measure, there was a 1 
percentage point difference in the mean rates for the MA-PDs (85 
percent with IP/SNF stay adjustment and 84 percent without IP/SNF 
adjustment), and the mean rates remained the same for PDPs (84 percent) 
regardless of whether IP/SNF stay adjustment was included or not.
    We plan to implement CE starting with the 2024 measurement year for 
the 2026 Star Ratings. We plan to remove the IP/SNF stay adjustment 
from the adherence measures starting with the 2026 measurement year for 
the 2028 Star Ratings, which is the same time we propose to implement 
the SDS risk adjustment change, but is not dependent on finalizing that 
proposal.
3. Proposed Measure Additions
    We are committed to continuing to improve the Part C and Part D 
Star Ratings system by focusing on improving clinical and other health 
outcomes. Consistent with Sec. Sec.  422.164(c)(1) and 423.184(c)(1), 
we continue to review measures that are nationally endorsed and in 
alignment with the private sector. 83 FR 16521, 16533. For example, we 
regularly review measures developed by NCQA and PQA. CMS is proposing 
to adopt the new measures described in this rule, which are measures 
developed by NCQA or PQA. The Kidney Health Evaluation for Patients 
with Diabetes measure has been collected since 2020 measurement year 
and the new Part D measures are calculated from prescription drug event 
or CMS administrative data so they do not require any new data 
collections.
a. Kidney Health Evaluation for Patients With Diabetes (Part C)
    We propose to add the Kidney Health Evaluation for Patients with 
Diabetes (KED) measure to the 2026 Star Ratings. This measure was 
introduced as a HEDIS measure for the 2020 measurement year. NCQA, in 
collaboration with the National Kidney Foundation, developed a kidney 
health evaluation measure, and NCQA tailored the measure specifically 
for health plans. The KED NCQA measure assesses whether adults who have 
diabetes received an annual kidney profile evaluation, defined by an 
estimated

[[Page 79619]]

Glomerular Filtration Rate (eGFR) \187\ and a Urine Albumin-Creatinine 
Ratio (UACR) during the measurement year. This new measure aligns with 
recommendations from the American Diabetes Association and provides 
critical information for screening and monitoring of kidney health for 
patients with diabetes. This measure would replace the prior related 
measure, Diabetes Care--Kidney Disease Monitoring.
---------------------------------------------------------------------------

    \187\ NCQA added the new Logical Observation Identifiers Names 
and Codes (LOINC) for the new race-free eGFR equations to the KED 
value sets.
---------------------------------------------------------------------------

    CMS began reporting this measure on the display page for the 2022 
Star Ratings. As provided at Sec. Sec.  422.164 (c)(3) and (4) and 
423.184(c)(3) and (4) (83 FR 16534), as new performance measures are 
developed and adopted they are initially posted on the display page for 
at least 2 years.
    We have submitted the KED plan measure through the 2022 Measures 
Under Consideration process for review by the Measures Application 
Partnership, which is a multi-stakeholder partnership that provides 
recommendations to HHS on the selection of quality and efficiency 
measures for CMS programs. The MIPS program has also submitted it to 
the 2021 Measures Under Consideration process and this measure will 
also be implemented for QHPs.\188\
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    \188\ https://www.cms.gov/files/document/final-2022-call-letter-qrs-qhp-enrollee-survey.pdf.
---------------------------------------------------------------------------

    We propose to add the KED measure to the 2026 Star Ratings.
b. Concurrent Use of Opioids and Benzodiazepines (COB), Polypharmacy 
Use of Multiple Anticholinergic Medications in Older Adults (Poly-ACH), 
and Polypharmacy Use of Multiple Central Nervous System Active 
Medications in Older Adults (Poly-CNS) (Part D)
    CMS proposes to add the following measures to the 2026 Star Ratings 
(2024 measurement year): COB, Poly-ACH, and Poly-CNS. Additionally, the 
measures will include a non-substantive update: to align with the PQA 
measure specifications by using continuous enrollment (CE) and no 
longer adjusting for member-years (MYs). CMS has reported the following 
three Pharmacy Quality Alliance (PQA) measures for the Part D program 
on the 2021 display page (using 2019 data) and 2022 display page (using 
2020 data) on www.cms.gov as announced in the Announcement of Calendar 
Year (CY) 2020 Medicare Advantage Capitation Rates and Medicare 
Advantage and Part D Payment Policies and Final Call Letter. These 
measures reflect the following performance:
     Concurrent Use of Opioids and Benzodiazepines (COB) (Part 
D)--analyzes the percentage of Medicare Part D beneficiaries 18 years 
and older with concurrent use of prescription opioids and 
benzodiazepines.
     Polypharmacy Use of Multiple Anticholinergic Medications 
in Older Adults (Poly-ACH) (Part D)--analyzes the percentage of 
Medicare Part D beneficiaries, 65 years or older, with concurrent use 
of two or more unique ACH medications during the measurement period.
     Polypharmacy Use of Multiple Central Nervous System-Active 
Medications in Older Adults (Poly-CNS) (Part D)--analyzes the 
percentage of Medicare Part D beneficiaries, 65 years or older, with 
concurrent use of three or more unique CNS-active medications during 
the measurement period.
    These are important areas of focus for the Medicare Part D 
population. Concurrent use of opioids and benzodiazepines can increase 
the risk of respiratory depression and fatal 
overdoses.189 190 In addition, concurrent use of two or more 
unique anticholinergic medications in older adults was associated with 
an increased risk of cognitive decline, and the concurrent use of three 
or more unique CNS active medications in older adults was associated 
with increased risk of falls and fractures.\191\ Therefore, we 
initially monitored these measures starting with the 2021 display page 
(2019 measurement year) and now propose to transition them to the Star 
Ratings. We anticipate that the COB, Poly-ACH, and Poly-CNS measures 
will continue to help plans identify enrollees who are at risk of 
respiratory depression or fatal overdoses, cognitive decline, or falls 
and fractures, respectively, and facilitate plans to encourage 
appropriate prescribing when clinically necessary.
---------------------------------------------------------------------------

    \189\ US Food and Drug Administration. FDA Drug Safety 
Communication: FDA warns about serious risks and death when 
combining opioid pain or cough medicines with benzodiazepines; 
requires its strongest warning [internet]. 2016 [2016 Nov 9]. 
Available at http://www.fda.gov/Drugs/DrugSafety/ucm518473.htm.
    \190\ Centers for Disease Control and Prevention. Drug Overdose 
Deaths. N.d. Available at https://www.cdc.gov/drugoverdose/data/prescribing/overdose-death-maps.html.
    \191\ American Geriatrics Society 2019 Beers Criteria Update 
Expert Panel. Updated AGS Beers Criteria[supreg] for Potentially 
Inappropriate Medication Use in Older Adults. J Am Geriatr Soc. 2019 
Apr;67(4):674-694. PMID: 30693946.
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    We observed that the overall rates for the COB measure have 
slightly improved from 2021 to 2022 display page for both MA-PD and PDP 
contracts from 17 percent to 16 percent. For the Poly-CNS measure, MA-
PD and PDP contract rates remained the same at 6 percent. Lastly in the 
Poly-ACH measure, we found that the MA-PD and PDP contract rates 
slightly increased from 8 percent to 9 percent. There is room for 
further improvement for all three measures. Per Sec. Sec.  
423.184(c)(3) and (4), new Part D measures added to the Star Ratings 
program must be on the display page for a minimum of 2 years prior to 
becoming a Star Ratings measure. In addition, the measures, as 
previously discussed, were submitted through the 2021 Measures Under 
Consideration (MUC) process, a pre-rulemaking process for the selection 
of quality and efficiency measures under section 1890A of the Act. 
These measures were reviewed by the Measure Applications Partnership 
(MAP) for input and recommendations to HHS on measure selection for CMS 
programs. All three measures received conditional approval.
    We propose to add the COB, Poly-ACH, and Poly-CNS measures for the 
2026 Star Ratings (based on 2024 measurement year). We will also align 
these three measures with the PQA measure specifications to use 
continuous enrollment (CE) and no longer adjust for member-years (MYs) 
to account for beneficiaries who are enrolled for only part of the 
contract year. On the display page, these three measures currently use 
the MY methodology; however, when the measures are transitioned to Star 
Ratings, the measures will not be calculated based on MY adjustment but 
will be calculated based on CE measure specifications defined by PQA. 
Based on the 2022 PQA Measure Manual, the beneficiary's index 
prescription start date (IPSD) begins on the earliest date of service 
for an opioid, ACH, or CNS-active medication, respectively, during the 
measurement year. Beneficiaries are continuously enrolled during the 
measurement year with one allowable gap of up to 31 days in enrollment 
during the measurement year. The change to use CE for these measures, 
compared to the measures as they have been used for the display page 
since 2021 with the MY adjustment, would be a non-substantive update 
under Sec.  423.184(d)(1) because the updates do not modify the intent 
of the measure or the target population but may narrow the denominator 
population. We described these non-substantive updates here to provide 
complete information on the measures we propose to add to the Star 
Ratings and will describe the non-substantive updates in the 
Announcement of Calendar Year (CY)

[[Page 79620]]

2024 Medicare Advantage (MA) Capitation Rates and Part C and Part D 
Payment Policies as required by Sec.  423.184(d)(1).
    We solicit comments on adding the three Part D measures to the Star 
Ratings.
    Table 4 summarizes the additional and updated measures addressed in 
this proposed rule for the 2026 Star Ratings, unless otherwise noted. 
The measure descriptions listed in this table are high-level 
descriptions. The annual 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. 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, Stars Ratings for the year 
2026 are produced in the fall of 2025. If a measurement period is 
listed as ``the calendar year 2 years prior to the Star Ratings year'' 
and the Star Ratings year is 2026, the measurement period is 
referencing the January 1, 2024 to December 31, 2024 period.

[[Page 79621]]

[GRAPHIC] [TIFF OMITTED] TP27DE22.012


[[Page 79622]]


[GRAPHIC] [TIFF OMITTED] TP27DE22.013

    We welcome comments on the measure updates and additions.
4. Revising the Rule for Non-Substantive Measure Updates (Sec. Sec.  
422.164(d) and 423.184(d))
    We are proposing to add collection of survey data through another 
mode of survey administration to the non-exhaustive list of non-
substantive measure updates that can be made without rulemaking. The 
rules CMS adopted to address measure updates based on whether an update 
is substantive or non-substantive are specified at Sec. Sec.  
422.164(d) and 423.184(d). As described at 83 FR 16534, we incorporate 
updates without rulemaking for measure specification changes that do 
not substantively change the nature of the measure. In paragraphs 
(d)(1)(i)-(v) of Sec. Sec.  422.164 and 423.184, we provided a non-
exhaustive list of circumstances that would constitute a non-
substantive update. Currently, paragraph (d)(1)(v) of each regulation 
identifies the addition of an alternative data source as a non-
substantive update; the proposed additional example is the collection 
of alternative data sources or expansion of modes of data collection. 
These two examples are similar but not exactly the same, so we are 
proposing to clarify in the regulation that an expansion in the data 
sources used, whether by adding an alternative source of data or adding 
an alternative way to collect the data, is a non-substantive change in 
measure specifications. The expansion of how data are collected is non-
substantive because there would be no change to the information that is 
being collected; the only change would be the way in which it is 
collected. For example, if a web mode of survey administration is added 
to the current mail with telephone follow-up of non-respondents survey 
administration that is currently used for CAHPS and HOS, this would be 
considered a non-substantive change that could be announced through the 
process described for changes in and adoption of payment and risk 
adjustment policies in section 1853(b) of the Act since this does not 
change what is being measured, but just expands the way the data can be 
collected.
    We propose to revise the regulation text at Sec. Sec.  
422.164(d)(1)(v) and 423.184(d)(1)(v) by adding that another example of 
a non-substantive change would include a new mode of data collection.
    We welcome comments on this proposal.
5. Measure Removal (Sec. Sec.  422.164(e)(1) and 423.184(e)(1))
    CMS proposes adding a new rule for measure removal. We propose that 
CMS will have the authority to remove a measure from calculations of 
Star Ratings when a measure steward other than CMS retires the measure. 
CMS continually reviews measures that are used in calculations of Star 
Ratings. As codified at Sec. Sec.  422.164(e)(1) and 423.184(e)(1), CMS 
may remove a measure (1) when the clinical guidelines associated with 
the specifications of the measure change such that the specifications 
are no longer believed to align with positive health outcomes, or (2) 
when a measure shows low statistical reliability. See also 83 FR 16533-
16537. In both of these circumstances, as codified at Sec. Sec.  
422.164(e)(2) and 423.184(e)(2), CMS will announce the removal of any 
measure in advance of the measurement period through the process 
described for changes in and adoption of payment

[[Page 79623]]

and risk adjustment policies in section 1853(b) of the Act.
    We propose adding a rule at Sec. Sec.  422.164(e)(1)(iii) and 
423.184(e)(1)(iii) to allow removing a Star Ratings measure for another 
reason. We propose that when a measure steward other than CMS (for 
example, NCQA or PQA) retires a measure, CMS will have the authority to 
remove the measure from calculations of Star Ratings through the 
process described at Sec. Sec.  422.164(e)(2) and 423.184(e)(2). When a 
measure steward such as NCQA retires a measure, they go through a 
process that includes extensive review by their various measurement 
panels and they solicit public comment regarding proposed measure 
retirements so health plans, purchasers, consumers and other 
stakeholders have an opportunity to weigh in on the relevance and 
scientific soundness of any changes to the HEDIS measurement set. This 
proposal will allow CMS to respond more quickly to measure removals by 
external measure stewards to ensure that measures included in Star 
Ratings are clinically meaningful, reliable, and up-to-date. We solicit 
comment on this proposal.

E. Measure Weights (Sec. Sec.  422.166(e) and 423.186(e))

1. Patient Experience/Complaints and Access Measures (Sec. Sec.  
422.166(e)(1)(iii) and (iv), 423.186(e)(1)(iii) and (iv))
    CMS is proposing to lower the weight of patient experience/
complaints and access measures to 2 beginning with the 2026 Star 
Ratings covering the 2024 measurement period. The weight for the 
patient experience/complaints and access measures is codified at 
Sec. Sec.  422.166(e)(1)(iii) and (iv) and 423.186(e)(1)(iii) and (iv). 
Process measures receive a weight of 1, outcome measures receive a 
weight of 3, and the Part C and D Improvement measures receive a weight 
of 5. In the April 2018 final rule, we finalized an increase in the 
weight of patient experience/complaints and access measures from 1.5 to 
2, starting with the 2021 Star Ratings. (83 FR 16575-77). These 
measures include the patient experience of care measures collected 
through the CAHPS survey, Members Choosing to Leave the Plan, Appeals, 
Call Center, and Complaints measures. We also stated in the April 2018 
final rule (83 FR 16575-16576) that, given the importance of hearing 
the voice of patients when evaluating the quality of care provided, CMS 
intended to further increase the weight of patient experience/
complaints and access measures in the future. In the June 2020 final 
rule, CMS finalized an additional increase in the weight of patient 
experience/complaints and access measures from 2 to 4 for the 2023 Star 
Ratings. At that time, we said we were putting more weight on this 
category of measures that primarily reflect patient experience of care 
measures to put patients first and to emphasize CMS's goal of listening 
to the voice of the patient to identify opportunities to improve care 
delivery. (85 FR 33837) We still believe these measures focus on 
critical aspects of care such as care coordination and access to care 
from the perspective of enrollees, but taking into consideration 
additional stakeholder feedback we have received and the effect of the 
policy on the 2023 Star Ratings, we have reconsidered our position from 
the June 2020 final rule and now believe these measures currently 
receive an undue weight in the Star Ratings program.
    One of the guiding principles of the Part C and Part D Star Ratings 
program is to align with the CMS Quality Strategy (83 FR 16521). As 
part of the current CMS Quality Strategy, CMS is trying to create a 
resilient, high-value health care system that promotes quality 
outcomes, safety, equity, and accessibility for all individuals, as 
described at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy. One 
of the goals of the CMS Quality Strategy is to increase alignment 
across the CMS quality programs to improve value. Currently, the 
measure weight of 4 for the patient experience/complaints and access 
measures is not consistent with the contribution of these types of 
measures in the overall performance scores for other CMS quality 
measurement programs. For example, in the hospital value-based 
purchasing program, person and community engagement measures which are 
measures collected through the Hospital CAHPS Survey account for 25 
percent of the total performance score for hospitals (https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/hospitalqualityinits/hospital-value-based-purchasing-). As 
another example, one-sixth of the global score for the Quality Rating 
System for QHPs is based on enrollee experience (https://www.cms.gov/files/document/2022-qrs-and-qhp-enrollee-survey-technical-guidance.pdf). In contrast, for the 2023 Star Ratings, with a weight of 
4, the patient experience/complaints and access measures account for 
approximately 58 percent of the overall rating for MA-PDs. For the Part 
C and Part D Star Ratings, we include a broader set of measures related 
to person and community engagement relative to other CMS quality 
programs. For example, we include appeals measures given the importance 
of access to care and services for Part C plan enrollees. However, if 
the patient experience/complaints and access measures had a weight of 
2, these measures would account for 41 percent of the overall rating. 
Reducing the weighting to 2 for this category of measures would align 
the patient experience/complaints and access measures more closely with 
other programs, without exactly matching the lower influence measures 
of this type have on the overall (that is, total performance or global) 
score in these other programs. We are not proposing to reduce the 
weight further than 2 given the important link between patient 
experience, adherence, and health outcomes. Reducing the weight for 
these measures from 4 to 2 is a significant change and a more extensive 
change may be too much to adopt at this time. Prior to the April 2018 
final rule, the weight of 1.5 given to the patient experience/
complaints and access measures in the Part C and Part D Stars Ratings 
had been in place since the 2012 Star Ratings, so we have extensive 
experience with how using a weight lower than 2 for these categories of 
measures influence plan behavior. We continue to believe that a weight 
higher than 1.5 is appropriate.
    The weighting of measures within the Star Ratings program is 
important as not all measures contribute equally to the goals of the 
program. Patient experience, complaints, and access to care have been 
linked to improved clinical outcomes and are important aspects of 
health care. For example, patient experience is associated with better 
patient adherence to recommended treatment, better clinical processes, 
better hospital patient safety culture, better clinical outcomes, 
reduced unnecessary health care use, and fewer inpatient complications 
(Anhang Price et al., 2014; Anhang Price et al., 2015; Quigley et al., 
2021).\192\ We also

[[Page 79624]]

recognize that whether clinicians acknowledge patient preferences \193\ 
may be another factor that is important to measure and include in the 
Star Ratings program; consequently, we are currently testing a question 
for the CAHPS survey related to whether an enrollee's personal doctor 
dismisses symptoms that are important to them for potential 
incorporation in the survey and Star Ratings in the future. CMS 
continues to believe, as we stated in the April 2018 final rule at 83 
FR 16576, that we must listen to the perceptions of care from people 
with Medicare, as well as ensure they have access to needed care. While 
focusing on patient experiences of care and ensuring that care is 
person-centric are critical, health and drug plans also have a 
responsibility to consider and work toward improving clinical outcomes. 
Improving clinical outcomes is an important goal for the Part C and 
Part D programs to meet the CMS Quality Strategy goal of promoting the 
highest quality outcomes and safest care for all individuals. High-
value care does not always align with patient experiences of care, and 
we must take this into consideration as we consider how to weight the 
different Star Ratings measures. Clinical quality measures, for 
example, are also important in that they measure health outcomes, 
clinical processes and adherence to clinical guidelines. They measure 
whether plans are following the best practices for healthcare delivery, 
including providing preventive care such as immunizations and cancer 
screenings and caring for enrollees with ongoing health problems such 
as diabetic enrollees who need blood sugar tests, eye exams and blood 
pressure monitoring. It is also important to create incentives for 
health and drug plans to continuously focus on quality improvement by 
giving sufficient weight to the Health Plan Quality Improvement and 
Drug Plan Quality Improvement measures relative to the patient 
experience/access and complaints measures. We believe the weight given 
to measures in the Part C and Part D Star Ratings program should be in 
line with the how the measures are linked to health care and the value 
they have in improving health care.
---------------------------------------------------------------------------

    \192\ Anhang Price, R., Elliott, M.N., Zaslavsky, A.M., Hays, 
R.D., Lehrman, W.G., Rybowski, L., Edgman-Levitan, S., & Cleary, 
P.D. (2014). Examining the role of patient experience surveys in 
measuring health care quality. Medical Care Research and Review, 
71(5), 522-554.
    Anhang Price, R., Elliott, M.N., Cleary, P.D., Zaslavsky, A.M., 
& Hays, R.D. (2015). Should health care providers be accountable for 
patients' care experiences? Journal of General Internal Medicine, 
30(2), 253-256.
    Quigley D.D., Reynolds K., Dellva S., & Anhang Price, R. (2021). 
Examining the business case for patient experience: a systematic 
review. Journal of Healthcare Management, 66(3), 200-224.
    \193\ Cohen, Marc A., Hwang, Ann and Hawes, Frances M. (July 13, 
2022). Could Person-Centered Care Be The Secret To Achieving the 
Triple Aim? Health Affairs Forefront.
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    Subsequent to finalizing the weight of 4 for patient experience/
complaints and access measures in the June 2020 final rule, we have 
received significant stakeholder feedback on this issue through the 
Part C and D Advance Notices, the 2023 Part C and D proposed rule (CMS-
4192-P), the COVID-19 interim final rules (CMS-1744-IFC and CMS 3401-
IFC), letters sent to CMS and meetings with plans. A number of concerns 
have been raised by stakeholders related to a weight of 4, including 
devaluing measures of health outcomes, encouraging plans to abandon 
efforts to drive clinically appropriate care, sending the message that 
preventive care such as cancer screenings are not important, and not 
balancing appropriately clinical excellence and patient experience. 
Stakeholders have also raised concerns around disproportionately 
overweighting patient experience measures which in turn diminishes the 
importance of other measures. MedPAC noted in their response to the CY 
2021 and 2022 proposed rule (CMS-4190-P) that the increased weight 
would give disproportionate weight to patient experience measures 
relative to outcome measures and create an imbalance between the two 
most important measure groupings--outcome and patient experience 
measures. Stakeholders have continued to raise concerns about the 
disproportionate weight given to patient experience/complaints and 
access measures. Stakeholders have continued to suggest that clinical 
outcomes should count more than patient experience of care measures. 
Additionally, we have received feedback that cancer screenings, 
medication reconciliation, and other Star Ratings measures are critical 
areas of focus in particular in underserved communities but have a 
diminished role in the Star Ratings program due to the high weight of 
patient experience/complaints and access measures.
    Given these concerns, as well as the impact of the weighting policy 
on the 2023 Star Ratings, CMS is re-evaluating its decision to weight 
these measures higher than outcome measures. We are concerned that the 
higher weight of 4 may create incentives for plans to not focus as much 
on patient outcomes, screenings, and preventive care. This could lead 
to ineffective or inappropriate care and increased costs if providers 
primarily focus on patient experiences. Although patient experience/
complaints and access to care measures have been linked to improved 
clinical outcomes and are important aspects of health care, we are 
proposing to move back to a weight of 2 to more appropriately balance 
the value these measures contribute to achieving high quality care 
without weighting them higher than clinical outcome measures and to 
better align the total contribution of patient experience and outcome 
measures with other CMS quality reporting programs.
    To better align the Part C and Part D Star Ratings with the current 
CMS Quality Strategy and other CMS quality programs and to better 
balance the contribution of the different types of measures in the Star 
Ratings program, we propose to modify Sec.  422.166 at paragraphs 
(e)(1)(iii) and (iv) and Sec.  423.186 at paragraphs (e)(1)(iii) and 
(iv) to decrease the weight of patient experience, complaints, and 
access measures from 4 to 2 beginning with the 2026 Star Ratings. At a 
weight of 2, the patient experience, complaints, and access measures 
would be weighted higher than process measures but not as high as 
outcome measures. This is in line with the value these measures add to 
achieving high quality care without weighting them higher than clinical 
outcome measures. In addition, this would align more closely with the 
weight these types of measures are given in other CMS quality programs.
    We welcome feedback on this change.
2. Weight of Measures With Substantive Updates (Sec. Sec.  
422.166(e)(2) and 423.184(e)(2))
    We are proposing to adopt regulation text clarifying how we treat 
measures with substantive updates when they return to the Star Ratings 
program. The general rules that govern updating measures are specified 
at Sec. Sec.  422.164(d) and 423.184(d), including rules for non-
substantive and substantive measure updates. As described at 83 FR 
16534, the process for adopting substantive measure specification 
updates is similar to the process for adopting new measures. 
Historically, we have treated measures with substantive updates as new 
measures when they are added back to the Star Ratings following two or 
more years on the display page and adoption through rulemaking.
    Currently, new measures receive a weight of 1 for their first year 
in the Star Ratings program as specified at Sec. Sec.  422.166(e)(2) 
and 423.186(e)(2). We propose to add language to Sec. Sec.  
422.166(e)(2) and 423.186(e)(2) to clarify that when a measure with a 
substantive update moves back to Star Ratings from the display page 
following rulemaking, it is treated as a new measure for weighting 
purposes and therefore would receive a weight of 1 for its first year 
back in the Star Ratings program. This is consistent with our current 
and prior practice and with the explanation provided in the January 
2021 final rule about the weight

[[Page 79625]]

provided to substantively updated measures for the first year they are 
returned to the Star Ratings (86 FR 5919). In subsequent years, the 
measure (both new measures and substantively updated measures) would be 
assigned the weight associated with its category, which is what happens 
with new measures as well. In addition, we are proposing to revise the 
heading for paragraph (e)(2) to reflect how the provision addresses the 
weight of both new and substantively updated measures.
    We welcome comments on this proposal.

F. Guardrails (Sec. Sec.  422.166(a)(2)(i) and 423.186(a)(2)(i))

    In the April 2019 final rule, we amended Sec. Sec.  
422.166(a)(2)(i) and 423.186(a)(2)(i) by adding guardrails, which are 
measure-specific caps to Star Ratings cut points in both directions so 
that the measure-threshold-specific cut points do not increase or 
decrease more than the value of the cap from one year to the next. The 
intent of this change in methodology was to increase the predictability 
and stability of cut points. As described in the April 2019 final rule 
at 84 FR 15754, a trade-off of increasing the predictability of cut 
points is the inability to keep pace with any unanticipated changes in 
industry performance. Based on recent experience with calculating Star 
Ratings during the COVID-19 PHE and analyses of the data for the 2022 
Star Ratings, we are proposing to modify the current hierarchical 
clustering methodology that is used to set cut points for non-CAHPS 
measure stars at Sec. Sec.  422.166(a)(2)(i) and 423.186(a)(2)(i) by 
eliminating the guardrails that restrict the maximum allowable movement 
of non-CAHPS measure cut points.
    When we initially proposed guardrails so that the cut points for 
non-CAHPS measures do not increase or decrease more than the cap from 
one year to the next, we recognized that with guardrails there may be 
an inability for thresholds to fully keep pace with changes in 
performance across the industry. A cap on upward movement can inflate 
the measure-level Star Ratings if true improvements in performance 
cannot be fully incorporated in the current year's ratings. If overall 
industry performance shifts upward on a measure, the Star Ratings cut 
points affected by a cap for that measure may not fully take into 
account this upward shift in industry performance. While we recognized 
the possibility at the time we finalized the guardrails policy, we now 
have evidence from the 2022 and 2023 Star Ratings that shows that 
unintended consequence of the policy. For example, for the 2023 Star 
Ratings for Part C Osteoporosis Management in Women who had a Fracture, 
the four star threshold without the cap was greater than or equal to 60 
percent, but this threshold was reduced to greater than or equal to 55 
percent when guardrails were applied. In effect, the cap makes it 
easier for contracts to receive four stars than it would have been if 
there was no cap. In this example, because of the cap, a contract with 
performance of 57 percent would receive a four star rating when, 
without the cap, the contract would receive a three star rating. This 
is diluting the value of receiving four stars for contracts that would 
have received four stars without the cap since some contracts received 
four stars for performance that ordinarily would not qualify for four 
stars. Conversely, a cap on downward movement can decrease the measure-
level Star Ratings when industry performance overall shifts downward, 
since the ratings cannot be adjusted fully for downward shifts in 
performance. For example, for the 2023 Star Ratings for Colorectal 
Cancer Screening, the one star cut point was higher (43 percent) than 
it would have been without a cap (38 percent), and therefore more 
contracts received a one star rating on that measure than they would 
have if there were no cap. During the COVID-19 PHE, we saw that 
industry performance declined on some measures included in the 2022 
Star Ratings and for other measures industry performance increased. In 
order to allow non-CAHPS cut points to move with these changes in 
industry performance, we adopted a delay in the implementation of 
guardrails in the interim final rule titled ``Medicare and Medicaid 
Programs; Policy and Regulatory Revisions in Response to the COVID-19 
Public Health Emergency'' which appeared in the Federal Register on 
April 6, 2020 with a March 31, 2020 effective date \194\ at Sec. Sec.  
422.166(a)(2)(i) and 423.186(a)(2)(i).
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    \194\ www.federalregister.gov/documents/2020/04/06/2020-06990/medicare-and-medicaid-programs-policy-and-regulatory-revisions-in-response-to-the-covid-19-public.
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    The intent of guardrails was to improve predictability and 
stability of cut points from one year to the next. At the time the 
addition of guardrails to the Star Ratings methodology was finalized, 
we also finalized the addition of mean resampling to the hierarchical 
clustering methodology to reduce the sensitivity of the clustering 
algorithm to outliers and reduce the random variation that contributes 
to fluctuations in cut points. Mean resampling was implemented 
beginning with the 2022 Star Ratings. Since the addition of guardrails 
was finalized, we also finalized in the June 2020 final rule at 
Sec. Sec.  422.166(a)(2)(i) and 423.186(a)(2)(i) adding Tukey outlier 
deletion to the hierarchical clustering methodology to improve the 
predictability and stability of cut points. (85 FR 33833-36). Tukey 
outlier deletion will be implemented beginning with the 2024 Star 
Ratings and will remove extreme outliers before the clustering 
algorithm is applied; this will improve the predictability and 
stability of cut points, which in turn minimizes the need for the 
guardrails to achieve such goals and weakens the rationale of the 
guardrails policy at the time the policy was finalized.
    After the April 2019 final rule was published, we have learned 
during the COVID-19 pandemic that it is important for cut points to 
adjust for unforeseen circumstances that may cause overall industry 
performance to either increase or decrease. During the 2020 measurement 
year, we saw both significant increases and significant decreases in 
scores across some of the Star Ratings measures.\195\ As an example, 
there was a significant shift downward in performance for the Breast 
Cancer Screening measure during the 2020 measurement year. For Breast 
Cancer Screening, the 5-star cut point for the 2021 Star Ratings was 
greater or equal to 83 percent, while for the 2022 Star Ratings it was 
greater or equal to 76 percent. This drop in the 5-star cut point 
reflects the change in industry performance. If bi-directional 
guardrails had been applied for the 2022 Star Ratings, this cut point 
would have been 78 percent rather than 76 percent, resulting in more 
contracts earning 4 stars rather than the 5 stars that they would have 
earned when compared to the performance of their peers in the absence 
of guardrails. Similarly, there was a significant shift downward in 
performance for the Diabetes Care--Eye Exam measure during the 2020 
measurement year. For Diabetes Care--Eye Exam the 1-star cut point for 
the 2021 Star Ratings was less than 63 percent, while for the 2022 Star 
Ratings it was less than 52 percent. This significant drop in the 1-
star cut point reflects the downward shift in industry performance. If 
bi-directional guardrails had been applied for the 2022 Star Ratings, 
this cut point would have been 58 percent, resulting in some contracts 
earning 1 star for this measure rather

[[Page 79626]]

than 2 stars when compared to the performance of their peers in the 
absence of guardrails. There was also a significant shift upward in 
performance for the MTM Program Completion Rate for CMR for PDPs during 
the 2020 measurement year. The MTM 5-star cut point for the 2021 Star 
Ratings was greater than or equal to 61 percent, while for the 2022 
Star Ratings it was greater than or equal to 74 percent. This increase 
in the 5-star cut point reflects the change in industry performance. If 
bi-directional cut points had been applied for the 2022 Star Ratings, 
this cut point would have been 66 percent rather than 74 percent 
resulting in more contracts receiving 5 stars. These examples from the 
2020 measurement year have led us to believe that bi-directional 
guardrails can inappropriately limit the ability of cut points to shift 
when there are unanticipated shifts in industry performance, causing 
misclassification in the measure-level Star Ratings assignments.
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    \195\ 2022 Star Ratings Fact Sheet. https://www.cms.gov/files/document/2022-star-ratings-fact-sheet1082021.pdf.
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    In addition, the combination of mean resampling and Tukey outlier 
deletion, with Tukey outlier deletion being finalized after the bi-
directional guardrails policy, will provide sufficient predictability 
and stability of cut points from one year to the next when there are 
not significant changes in overall industry performance, but at the 
same time allow cut points to adjust when there are significant changes 
in performance as there was during the COVID-19 pandemic. We believe it 
is important for cut points to be allowed to shift by more than 5 
percentage points when there are unanticipated, large changes in 
industry performance in the future. We are proposing at Sec. Sec.  
422.166(a)(2)(i) and 423.186(a)(2)(i) to modify the language so that 
guardrails for non-CAHPS measures will only be effective through the 
2025 Star Ratings released in October 2024, and not apply for the 2026 
Star Ratings or beyond.
    We welcome feedback on these changes.

G. Health Equity Index Reward (Sec. Sec.  422.166(f)(3) and 
423.186(f)(3))

    As discussed in section III.A of this proposed rule, advancing 
health equity is the first pillar of the 2022 CMS Strategic Plan and a 
goal of the CMS national quality strategy. In reports on accounting for 
Social Risk Factors (SRFs) in value-based purchasing programs, the 
National Academies of Sciences, Engineering, and Medicine (NASEM) 
define Social Risk Factors (SRFs) as factors related to health outcomes 
that are evident before care is provided, are not consequences of the 
quality of care, and are not easily modified by healthcare 
providers.\196\ CMS agrees with the NASEM definition of SRFs because it 
captures the elements we consider important in defining SRFs. There are 
often disparities in health care and outcomes between groups with and 
without social risk factors (SRFs). For example, the within-contract 
LIS/DE and non-LIS/DE differences in performance for Part C and D Star 
Ratings measures can be found at: 2022 Categorical Adjustment Index 
Measure Supplement Dec 10 2020 (cms.gov).
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    \196\ Social Risk Factors: Definitions and Data  
Accounting for Social Risk Factors in Medicare Payment The 
National Academies Press [verbar] https://nap.nationalacademies.org/read/23635/chapter/4.
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    The current approach to addressing SRFs in the Part C and Part D 
Star Ratings program has focused on adjusting for the average within-
contract disparities in performance through the Categorical Adjustment 
Index (CAI), as described at Sec. Sec.  422.166(f)(2) and 
423.186(f)(2), in order to not inappropriately penalize or reward 
health and drug plans for factors that are difficult for plans to 
control. For certain current Star Ratings measures, it may be more 
difficult for most plans to achieve the same level of care for groups 
that are socioeconomically disadvantaged, disabled, or more complex due 
to a variety of issues, including transportation issues, lower health 
literacy, communication challenges, and residential instability. The 
CAI is a factor that can be positive or negative and is added to a 
contract's overall and summary Star Ratings that adjusts for the 
average within-contract performance disparity based on a contract's 
composition of Low Income Subsidy/Dual Eligible (LIS/DE) and disability 
status enrollees.
    The CAI was implemented in the Part C and Part D Star Ratings 
program to address SRFs while measure stewards evaluated adjustment on 
a measure-specific basis. The CAI is a data-driven approach to account 
for within-contract disparities in performance associated with SRFs in 
Star Ratings measures that are not already adjusted according to the 
measure specifications developed by measure stewards. The CAI does not 
incentivize contracts to focus on reducing disparities. Although all 
contracts have incentives in the Star Ratings program to improve 
performance, there are currently no methodological adjustments that 
specifically create incentives to address disparities of care among a 
contract's enrollees.
    In addition to adjusting for within-contract disparities through 
the CAI, we also want to encourage MA organizations, cost plans, and 
Part D plan sponsors to better identify and then address disparities in 
care provided to enrollees with a particular SRF, with the ultimate 
goal of reaching equity by eliminating health disparities or 
differences in contract performance by SRFs, consistent with CMS 
efforts to advance health equity.
    CMS has developed a health equity index (HEI) that we are proposing 
for use in the Part C and Part D Star Ratings that would reward 
contracts for obtaining high measure-level scores for the subset of 
enrollees with specified SRFs. Our intent in implementing an HEI is to 
improve health equity by incentivizing MA, cost plan, and PDP contracts 
to perform well among enrollees with specified SRFs. The CAI is 
designed to improve the accuracy of performance measurement, while not 
masking true differences in performance between contracts; in contrast, 
our proposed HEI reward is specifically designed to create an incentive 
to reduce disparities in care. The HEI, therefore, does not replace the 
CAI but rather assists plan sponsors in better identifying and then 
addressing disparities in care provided to members with a particular 
SRF, with the ultimate goal of reaching equity in the level and quality 
of care provided to enrollees with SRFs. There would be no changes to 
the current CAI with the implementation of the proposed HEI reward.
    We are proposing to replace the current reward factor described at 
Sec. Sec.  422.166(f)(1) and 423.186(f)(1) with the new HEI reward at 
proposed Sec. Sec.  422.166(f)(3) and 423.186(f)(3) starting with the 
2027 Star Ratings; the HEI for the 2027 Star Ratings would be 
calculated using data collected or used for the 2026 and 2027 Star 
Ratings. The current reward factor was included in the Part C and Part 
D Star Ratings program beginning with the 2009 Star Ratings with the 
purpose of creating additional incentives for high and stable relative 
performance across measures by discouraging contracts from having a lot 
of variation in performance across measures (that is, a mix of low 
performance and high performance across measures). At the beginning of 
the Star Ratings program, the distribution of ratings across contracts 
looked very different, with overall performance much lower than it is 
today. Over time, we have established additional methodological 
enhancements to incentivize performance improvement across

[[Page 79627]]

measures, such as the addition of the Health Plan Quality Improvement 
and the Drug Plan Quality Improvement measures as described at 
Sec. Sec.  422.164(f) and 423.184(f). MA organizations have also 
responded to the incentive to perform well across measures as a result 
of the link between Star Ratings and Quality Bonus Payment ratings for 
MA contracts. CMS believes if we finalize the removal of the current 
reward factor from the Star Ratings methodology, contracts would still 
have incentives to perform well and improve because high performance on 
individual Star Ratings measures, including the Health Plan Quality 
Improvement and the Drug Plan Quality Improvement measures, translates 
into better overall and summary ratings. The removal of the current 
reward factor is contingent on finalizing the addition of the proposed 
HEI reward.
    CMS is proposing to add the HEI reward as a methodological 
enhancement to the Part C and Part D Star Ratings program starting with 
the 2027 Star Ratings because, similar to the current reward factor, it 
provides a summary of how performance varies across existing Star 
Ratings measures. The proposal to add the HEI reward is a 
methodological enhancement using data from existing Star Ratings 
measures; it is not a proposal to add a new measure with additional 
burden for contracts. In the case of our proposed HEI, however, this 
summary of performance would be based on performance related to a 
subset of enrollees with specified SRFs. Adding the HEI as a reward 
also allows for the methodology to include a performance threshold 
below which contracts will not be eligible for the HEI reward, which 
will incentivize improved performance by contracts for their enrollees 
with the specified SRFs and help reduce disparities. CMS could also 
potentially increase this performance threshold over time to 
incentivize continued efforts to reduce disparities in care.
    In developing the proposed HEI reward, we considered a number of 
goals to ensure the incentives of the HEI and the associated reward 
were in line with our intent. We aim to improve health equity by 
incentivizing MA plans, cost plans, and Part D plan sponsors to perform 
well among enrollees with certain SRFs. These goals include:
     Avoiding rewarding large contracts over small contracts 
that may be providing high quality care for enrollees with the SRFs 
included in the HEI but lack the number of enrollees needed to reliably 
calculate the HEI.
     Avoiding rewarding contracts that may do well among 
enrollees with the SRFs included in the HEI but serve very few 
enrollees with those SRFs, making it easier to do well.
     Only rewarding contracts that have high relative 
performance among enrollees with the SRFs included in the HEI compared 
to other contracts to incentivize high performance for enrollees with 
the SRFs included in the HEI.
     Ease of use and understanding for contracts and other 
stakeholders.
     Minimizing the number of years of data needed to calculate 
the HEI and HEI reward such that the data used are as current as 
possible.
     Allowing for updates to the measure set included in the 
HEI and updates to accommodate the addition of other SRFs to the HEI 
over time.
     Promoting improvement in performance and enrollment of 
individuals with certain SRFs in MA plans, cost plans, and Part D 
plans.
     Accurately reflecting true performance among contracts 
serving enrollees with certain SRFs and minimizing sensitivity to 
measurement error.
    The proposed HEI would summarize contract performance in relation 
to enrollees with certain SRFs across multiple existing Star Ratings 
measures into a single score using data from the most recent two 
measurement years. We propose at Sec. Sec.  422.166(f)(3)(i)(A) and 
423.186(f)(3)(i)(A) to initially include receipt of the LIS or being 
dually eligible (LIS/DE) or having a disability as the group of SRFs 
used to calculate the HEI. Prior research has shown that dual 
eligibility is one of the most influential predictors of poor health 
outcomes, and disability is also an important risk factor linked to 
health outcomes.\197\ The SRFs included in the HEI may be expanded over 
time. For purposes of the HEI, we propose to define an LIS/DE 
beneficiary as one who was designated as a full-benefit or partial-
benefit dually eligible individual or who received a low-income subsidy 
(LIS) at any time during the applicable measurement period, as we do 
currently for the calculation of the CAI. If a person meets the 
criteria for only one of the two measurement years included in the HEI, 
the data for that person for just that year are used. We intend to use 
the original reason for entitlement to the Medicare program to identify 
enrollees with a disability for purposes of the HEI as we do for the 
calculation of the CAI.
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    \197\ https://www.aspe.hhs.gov/sites/default/files/migrated_legacy_files/171041/ASPESESRTCfull.pdf?_ga=2.49530854.1703779054.1662938643-470268562.1638986031.
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    We are interested in feedback on potential additional ways to 
identify enrollees who have a disability that could be incorporated 
over time and whether the same process and standards should be used for 
the CAI adjustment as well. In particular, we are interested in how we 
could expand the definition to include enrollees who develop a 
disability after aging into the Medicare program. LIS/DE and disability 
are the SRFs that have been used in the CAI for many years and are 
included in the confidential Part C and D Stratified Reports provided 
to MA and Part D contracts in HPMS as of 2022. As currently proposed, 
enrollees with these SRFs will be identified for the HEI the same way 
they are identified for the CAI at Sec. Sec.  422.166(f)(2)(i)(B) and 
423.186(f)(2)(i)(B).
    We also considered including the Area Deprivation Index (ADI) in 
the HEI at this time. The ADI is a measure of socioeconomic 
neighborhood deprivation, including measures of income, employment, 
housing, education, social environment, and readmissions. However, 
consistent with literature on the ADI, and other neighborhood-based 
indices,\198\ our analyses showed the ADI explains very little of the 
variation in the quality of care received beyond enrollee-level LIS/DE 
and disability information. We will continue to explore the feasibility 
of adding other SRFs to the HEI over time. The addition of other SRFs 
or other mechanisms to identify enrollees with one or more of the SRFs 
that are part of the proposed HEI would be proposed through future 
notice-and-comment rulemaking.
---------------------------------------------------------------------------

    \198\ Beckett MK, Martino SC, Agniel D, Mathews M, Hudson 
Scholle S, James C, Wilson-Frederick S, Orr N, Darabidian B, Elliott 
MN. (2021). ``Distinguishing neighborhood and individual social risk 
factors in health care'' Health Services Research: 1-14.
---------------------------------------------------------------------------

    The proposed HEI would examine performance among those with certain 
SRFs for all Star Ratings measures unless they meet one of the 
specified exclusions. As provided in proposed Sec. Sec.  
422.166(f)(3)(ii)(A)-(D) and 423.186(f)(3)(ii)(A)-(D), measures would 
be excluded from the HEI if one or more of the following criteria are 
met:
     The focus of the measurement is not the enrollee but 
rather the plan or provider (for example, the appeals and call center 
measures focus on the plan and its operations rather than on the 
enrollee). Measures meeting this criterion would be excluded because 
enrollee-level SRF information for these

[[Page 79628]]

measures is not available for inclusion in the HEI.
     The measure is retired, moved to display, or has a 
substantive specification change in either year of data used to 
construct the HEI. Measures meeting these criteria would be excluded 
because there is not enough data to calculate the HEI for these 
measures.
     The measure is applicable only to SNPs. Measures meeting 
this criterion would be excluded because these measures are not 
relevant for all contracts.
     At least 25 percent of contracts are unable to meet the 
criteria described at proposed paragraph (f)(3)(iv), which provides 
that a measure is only included for the HEI for a contract if the 
measure has a reliability of at least 0.7 for the contract when 
calculated for the subset of enrollees with the specified SRF(s) and 
the contract meets the measure denominator requirement when the measure 
is calculated for only the enrollees with the specified SRF(s) (that 
is, the SRFs included in the HEI). For Part D measures, this criterion 
is assessed separately for MA-PDs and cost contracts, and PDPs. We are 
proposing to exclude any measures from the HEI that less than 25 
percent of contracts can have reliably calculated because scores would 
be missing for most contracts.
    As proposed at Sec. Sec.  422.166(f)(3)(iii) and 
423.186(f)(3)(iii), the measures being evaluated for inclusion in the 
HEI would be announced annually in the process described for changes in 
and adoption of payment and risk adjustment policies in section 1853(b) 
of the Act. These announcements (of the measures being evaluated for 
inclusion in the HEI) will not include the final list of measures used 
in the HEI for the upcoming Star Ratings because the data to determine 
that final set would not yet be available. In general, measures from 
HEDIS, HOS, and CAHPS would be included unless they meet one of the 
exclusion criteria, as previously described. Additionally, medication 
adherence, MTM Program Completion for CMR, and Statin Use in Persons 
with Diabetes measures would be included as long as they meet the 
requirements for inclusion for more than 25 percent of contracts.
    In this section of this rule, we propose each of the five steps 
that CMS would take to analyze the measure-level scores for each 
contract and to roll up to the HEI scores in order to assess when an 
adjustment is available for a contract's ratings.
    Step 1: For each measure included in the HEI, measure-level scores 
calculated for each contract among enrollees with the included SRFs 
(that is, all enrollees who are DE, LIS, or disabled combined into one 
group) would be combined over the two most recent measurement years. 
CMS carefully considered the number of years of data needed for the 
proposed HEI. We believe that using 2 years of data allows for a 
balance between increasing measure-level reliability so that smaller 
contracts may still have enough data to have the HEI calculated and 
minimizing the number of years of data used. As outlined in our goals 
in designing the HEI, it is important to minimize the number of years 
of data used to avoid carrying forward very old data in the Star 
Ratings and to allow new measures and newer contracts to more quickly 
be included in the HEI.
    As proposed at Sec. Sec.  422.166(f)(3)(i)(B) and 
423.186(f)(3)(i)(B), the scores for the subset of enrollees with SRFs 
of interest included in the HEI would be calculated using a modeling 
approach that includes year (that is, an indicator for whether the data 
are from year 1 or year 2) as an adjustor to account for potential 
differences in performance across years and to adjust the data to 
reflect performance in the second of the 2 years of data used. Scores 
are adjusted for year to account for situations where mean scores were, 
for the average contract, different in the 2 years (for example, higher 
in year 2 than year 1, or vice versa) and for contracts that have 
measure sample sizes that differ across years. Data will be used for 
contracts that have data for only the most recent year of the 2 years, 
but data will not be used for contracts that have data for only the 
first of the 2 years in order to ensure use of the most current data 
possible.
    Step 2: Measures that are case-mix adjusted in the Star Ratings 
would be adjusted using all standard case-mix adjustors for the measure 
except for those adjusters that are the SRFs of interest in the index, 
are strongly correlated with the SRFs of interest, or are conceptually 
similar to the SRFs of interest. The CAHPS measures included in the 
Star Ratings are currently adjusted for DE and LIS. For the proposed 
HEI, for the subset of enrollees who are DE, LIS, or disabled in Step 
1, we would not include the case-mix adjustment for DE and LIS when 
calculating the scores over the 2-year period for the CAHPS measures. 
If the proposal to implement risk adjustment for the three Star Ratings 
medication adherence measures based on the PQA specifications in 
section V.D.2.c. of this proposed rule is finalized, then we would not 
include risk adjustment for DE, LIS, and disabled enrollees when 
calculating the scores over the 2-year period as described in Step 1.
    Step 3: For a measure to be included in the HEI for a specific 
contract, both of the following inclusion criteria in proposed 
Sec. Sec.  422.166(f)(3)(iv) and 423.186(f)(3)(iv) would need to be 
met: (1) reliability of at least 0.7 when the measure is calculated for 
the combined subset of enrollees with the specified SRFs across 2 years 
of data, and (2) measure-specific denominator criterion (for example, 
HEDIS measures require a minimum denominator of at least 30) is met 
when the measure is calculated for the combined subset of enrollees 
with the specified SRFs across 2 years of data. We are proposing at 
paragraph (f)(3)(vi) that contracts would also need to have at least 
500 total enrollees at the contract level in the most recent 
measurement year used in the HEI. We are proposing a minimum in order 
to have reliable measure-level scores. For many of the Star Ratings 
measures (for example, HEDIS and HOS measures) at least 500 enrollees 
are needed to have a sufficient number of enrollees to reliably measure 
the performance of the contract.
    Step 4: As we propose in Sec. Sec.  422.166(f)(3)(v) and 
423.186(f)(3)(v), to calculate the HEI score assigned to a contract, 
the distribution of contract performance on each eligible measure among 
enrollees with the specified SRFs (that is, all enrollees who are DE, 
LIS, or disabled combined into one group) would be calculated and 
separated into thirds, with the top third of contracts receiving 1 
point, the middle third of contracts receiving 0 points, and the bottom 
third of contracts receiving -1 point for each measure. For example, 
for the Breast Cancer Screening measure, we would calculate performance 
for all contracts for the enrollees with one or more of the specified 
SRFs (that is, for the enrollees who are DE, qualify for LIS, and/or 
are disabled) using the two most recent measurement years. We would 
then look at the distribution of scores for this measure for all 
contracts that have at least 0.7 reliability and meet the minimum 
denominator size for the measure. Contracts that score in the top third 
of all contracts would receive 1 point for this measure, the middle 
third of contracts would receive 0 points for this measure, and the 
bottom third of contracts would receive 1 negative point for this 
measure. The same analysis would be repeated for each measure included 
in the HEI.
    Step 5: For each contract, the HEI would then be calculated as the 
weighted average of these points using the Star Ratings measure weights 
and

[[Page 79629]]

including only measures for which the contract met all of the inclusion 
criteria specified at Sec. Sec.  422.166(f)(3)(iv) and 
423.186(f)(3)(iv). The weighted average would be the weighted sum of 
points across all included measures divided by the weighted sum of the 
number of included measures. We propose to use the weight for the 
measure in the current Star Ratings year. For example, if the HEI were 
being calculated using data from the 2026 and 2027 Star Ratings year, 
the measure weight used would be the weight for the 2027 Star Ratings. 
To ensure that the HEI is not driven by a very small number of measures 
for some contracts, we are proposing at Sec. Sec.  422.166(f)(3)(vi) 
and 423.186(f)(3)(vi) that a contract must meet the reliability and 
denominator criteria for at least half of the measures included in the 
HEI in order to have the HEI calculated for the contract. Contract 
performance on the HEI would vary from -1.0 (performance was in the 
bottom third for each included measure) to 1.0 (performance was in the 
top third for each included measure).
    Table 5 is a high-level summary of the steps CMS is proposing to 
take to calculate the HEI.
[GRAPHIC] [TIFF OMITTED] TP27DE22.014

    The HEI would be calculated separately for the overall and summary 
ratings, as proposed at Sec. Sec.  422.166(f)(3)(vi) and 
423.186(f)(3)(vi), since the set of included measures differs for the 
overall, Part C summary, and Part D summary ratings. Four types of 
health equity indices would be calculated, with up to three health 
equity indices for each contract, as applicable, one for the overall 
rating for MA-PDs; the Part C summary rating for MA-only, MA-PD, and 
cost contracts; the Part D summary rating for MA-PD and cost contracts; 
and the Part D summary rating for PDP (that is standalone Part D) 
contracts. The HEI calculated for the overall rating would be based on 
all of the Part C and Part D measures that meet the inclusion criteria 
for the HEI for each MA-PD contract. The HEI for the Part C summary 
rating would include all of the Part C measures that meet the inclusion 
criteria for the HEI for the contract. The HEI for the Part D summary 
rating would be calculated separately for MA-PD (including cost) and 
PDP contracts and would include all of the Part D measures that meet 
the inclusion criteria for the HEI for the contract.
    In order to qualify for an HEI reward, we propose at Sec. Sec.  
422.166(f)(3)(vii) and 423.186(f)(3)(vii) that contracts must have a 
minimum rating-specific HEI score of greater than zero. We also propose 
a tiered HEI reward structure based on the percentage of enrollees in 
each contract who have the specified SRFs. Requiring both a minimum HEI 
score and a minimum percentage of enrollees in a contract with the

[[Page 79630]]

specified SRFs is intended to avoid rewarding contracts that serve very 
few enrollees with the specified SRFs or do not perform well among 
enrollees with the specified SRFs relative to other contracts. This 
proposed HEI reward structure supports our goals for the HEI reward in 
that it avoids rewarding contracts that do not serve many enrollees 
with SRFs included in the HEI, making it easier for them to do well, 
and encourages MA, cost, and PDP contracts to enroll individuals with 
SRFs.
    We propose that contracts that have percentages of enrollees with 
any of the specified SRFs in a given year that are greater than or 
equal to one-half of the contract-level median percentage of enrollees 
with the specified SRFs up to, but not including, the contract-level 
median would qualify for one-half of the HEI reward. Contracts that 
have percentages of enrollees with any of the specified SRFs greater 
than or equal to the contract-level median would qualify for the full 
HEI reward. Table 6 is a high-level summary of how the HEI score is 
converted into the HEI reward.
[GRAPHIC] [TIFF OMITTED] TP27DE22.015

    We are also considering an alternative non-tiered HEI reward 
structure, where all contracts with percentages of enrollees with any 
of the specified SRF greater than or equal to one-half of the contract-
level median would qualify for the full HEI reward. Both the tiered and 
non-tiered HEI reward structures align with our goals of promoting 
enrollment of enrollees with SRFs and not rewarding contracts that may 
do well among enrollees with SRFs but serve very few enrollees in this 
population, although the tiered HEI reward structure goes further in 
aligning with these goals. The non-tiered HEI reward structure aligns 
better with the goal of ease of use and understanding for contracts and 
other stakeholders.
    We propose at Sec. Sec.  422.166(f)(3)(vii) and 423.186(f)(3)(vii) 
that the contract percentages of enrollees with SRFs included in the 
HEI would be based on enrollment in the most recent of the 2 years of 
data used to calculate the HEI. For example, if the HEI includes data 
from measurement years 2024 and 2025, enrollment would be from 2025. We 
recognize D-SNP only contracts would meet the enrollment thresholds 
under either the tiered or non-tiered HEI reward structure; however, 
other plans that do not initially meet the thresholds can also work to 
increase enrollment of people with SRFs to meet the enrollment 
thresholds, which aligns with the goal of promoting enrollment of 
enrollees with SRFs. D-SNP only contracts would also need to perform 
sufficiently well among enrollees with the specified SRFs to qualify 
for a reward based on the HEI. One consideration in developing the 
proposed thresholds for the minimum percentages of enrollees with SRFs 
included in the HEI needed to qualify for an HEI reward is that higher 
thresholds could potentially create geographic barriers in certain 
parts of the country to qualifying for the HEI reward because there is 
variation by State in the percent of enrollees who are LIS/DE or 
disabled. Both the tiered HEI reward and non-tiered HEI reward 
structures account for this as all states have percentages of LIS/DE/
disabled enrollees that are greater than one-half the contract-level 
median based on 2019 data, although the non-tiered structure goes 
further in addressing this concern, as many states do not have 
percentages of LIS/DE/disabled enrollees that are greater than the 
contract-level median. As specified at Sec. Sec.  422.166(f)(3)(vii) 
and 423.186(f)(3)(vii) the contract-level median and half of the 
contract-level median would be calculated and assessed separately for 
MA and standalone Part D (that is, PDP) contracts.
    Because enrollees in Puerto Rico are not eligible for LIS, we 
believe that a different approach is necessary for contracts with 
services areas wholly located in Puerto Rico. We propose at Sec. Sec.  
422.166(f)(3)(vii)(A) and (B) and 423.186(f)(3)(vii)(A) and (B) to use 
a modified calculation to determine the percentage of enrollees with 
SRFs included in the HEI for contracts with service areas wholly 
located in Puerto Rico. We propose to limit this treatment to contracts 
with service areas wholly in Puerto Rico because our analysis indicates 
that for plans with services areas that include Puerto Rico and other 
locations, only a small portion of the enrollment is in Puerto Rico. We 
propose to estimate the number of enrollees with the specified SRFs in 
these contracts differently. We would start with the percentage of DE/
disabled enrollees calculated from administrative data, and then add 
the estimated percentage LIS by taking the LIS/DE percentage calculated 
for the CAI for contracts with service areas wholly in Puerto Rico at 
Sec. Sec.  422.166(f)(2)(vi) and (vii) and 423.186(f)(2)(vi) and (vii) 
and subtracting the percentage of DE enrollees. We need to estimate the 
number of LIS enrollees because LIS is not available in Puerto Rico; we 
are using the estimated LIS/DE information from the CAI calculations 
since these

[[Page 79631]]

are the only data available on the estimated percentage of enrollees in 
Puerto Rico contracts that would qualify for LIS. We would then add the 
estimated LIS percentage to the DE/disabled percentage calculated from 
administrative data to get the LIS/DE/disabled percentage of enrollees 
in Puerto Rico. This calculation could result in a slight overestimate 
since some disabled enrollees may also be captured in the estimated LIS 
percentage; therefore, contracts with service areas wholly in Puerto 
Rico would be excluded from our calculations to determine one-half of 
the contract-level median and the contract-level median of enrollees 
with SRFs included in the HEI. We believe that this approach would 
ensure equitable treatment of contracts with service areas outside of 
Puerto Rico. In our simulations of the HEI, we found that the slight 
overestimate had little impact on whether contracts with service areas 
wholly in Puerto Rico met the one-half of the contract-level median or 
contract-level median thresholds.
    We also propose that contracts would need to have an HEI score 
greater than zero on the HEI calculated for the given rating (overall 
or summary rating) to qualify for a reward for that rating. As 
specified at proposed Sec. Sec.  422.166(f)(3)(i) and 423.186(f)(3)(i), 
the HEI score for the overall rating would include the applicable Part 
C and D measures, the HEI score for the Part C summary rating would 
include only the applicable Part C measures, and the HEI score for the 
Part D summary rating would include only the applicable Part D 
measures. An HEI score of greater than zero means that the contract on 
average scored in the middle third or better across measures included 
in the HEI for enrollees with the SRF(s). HEI scores closer to 1.0 
indicate better performance for enrollees with the SRFs included in the 
HEI. While we are initially proposing to require a minimum HEI score of 
greater than zero for contracts to receive an HEI reward, we may 
consider increasing this minimum score over time to continue to 
encourage improved contract performance for enrollees with SRFs 
included in the HEI. Any such increase to the minimum HEI score would 
be proposed through subsequent notice-and-comment rulemaking.
    We propose at Sec. Sec.  422.166(f)(3)(viii) and 
423.186(f)(3)(viii) that the HEI reward would vary from 0 to 0.4 on a 
linear scale for contracts that meet the threshold for the median 
percentage of enrollees with SRFs included in the HEI, with a contract 
receiving 0 reward if the contract received a score of 0 or less on the 
HEI and a 0.4 reward if the contract received a score of 1 on the HEI. 
Similarly, the HEI reward would vary from 0 to 0.2 on a linear scale 
for contracts that meet the threshold for one-half of the contract-
level median percentage of enrollees with SRFs included in the HEI, but 
do not meet or exceed the contract-level median percentage of enrollees 
with SRFs included in the HEI. Contracts that cannot have an HEI score 
calculated (that is, contracts that do not have reliable measure scores 
or do not meet the denominator criteria for at least half of the 
measures included in the HEI or contracts that do not have at least 500 
enrollees) would not receive an HEI reward.
    As an example, if a contract meets the contract-level median 
percentage of LIS/DE/disabled enrollees and receives an HEI score of 
0.722325, this would translate on a linear scale to a reward of 
0.288930. That is, the size of the HEI reward would equal 0.4 times the 
difference between the HEI score and the threshold, divided by the 
difference between the maximum HEI score and the threshold 
(0.4*(0.722325-0)/(1-0), which equals 0.288930). As another example, if 
a contract meets one-half the contract-level median percentage of LIS/
DE/disabled enrollees but does not meet the contract-level median 
percentage of LIS/DE/disabled enrollees and receives an HEI score of 
0.722325, this would translate on a linear scale to a reward of 
0.144465. That is, the size of the HEI reward would equal 0.2 times the 
difference between the HEI score and the threshold, divided by the 
difference between the maximum HEI score and the threshold 
(0.2*(0.722325-0)/(1-0), which equals 0.144465). The HEI reward would 
be rounded and displayed with 6 decimal places similar to how the CAI 
values are displayed.
    As proposed at Sec. Sec.  422.166(f)(3)(ix) and 423.186(f)(3)(ix), 
once each of the HEI rewards are calculated, the applicable HEI reward 
would be added to the unrounded overall and Part C and D summary 
ratings after the addition of the CAI and the application of the 
improvement measures described in Sec. Sec.  422.166(g)(1) and 
423.186(g)(1) and before the final overall and Part C and D summary 
ratings are calculated by rounding to the nearest half star. For 
example, if the HEI reward was 0.288930, as previously described in the 
example, and the unrounded overall rating was 4.234210 after the 
addition of the CAI and the application of the improvement measure hold 
harmless rule, the unrounded overall rating would be 4.523140 (4.234210 
+ 0.288930) resulting in a final, rounded overall rating of 4.5.
    We also propose changes in the following sections to revise 
references to the existing reward factor or to limit application of the 
current reward factor to the Star Ratings through the 2026 Star 
Ratings: Sec. Sec.  422.166(c)(1), 422.166(d)(1) 422.166(f)(1), 
422.166(f)(2)(i), 422.166(g)(1), 423.186(c)(1), 423.186(d)(1) 
423.186(f)(1), 423.186(f)(2)(i), and 423.186(g)(1). The new HEI reward 
would be implemented for the 2027 Star Ratings covering primarily the 
2024 and 2025 measurement years. The existing reward factor would 
continue to be calculated through the 2026 Star Ratings.
    We simulated the impact of removing the current reward factor and 
adding the proposed HEI reward. In simulations using data from the 2020 
and 2021 Star Ratings,\199\ the median percentage of LIS, DE, and 
disabled enrollees was 41.645 percent and one-half the median was 
20.822 percent for MA and cost contracts. Half of MA and cost contracts 
were at or above the median, 33 percent were at or above one-half the 
median up to but not including the median, and 17 percent were below 
one-half the median. In the simulations, 88 percent of MA-PD contracts 
that received an overall rating received an HEI score, 42 percent 
received an HEI score greater than zero, and 34 percent received an HEI 
reward. The range of HEI scores among MA-PD contracts for the overall 
rating was -0.888889 to 1.000000. The average reward for the overall 
rating among MA-PD contracts with an HEI score greater than zero was 
0.109. When simulating the removal of the current reward factor and 
addition of the proposed new HEI reward, 7 (1.7 percent) MA-PD 
contracts gained one-half star on the overall rating and 54 (13.4 
percent) MA-PD contracts lost one-half star on the overall rating 
compared to the 2021 Star Ratings. Among PDP contracts, the median 
percentage of LIS, DE, and disabled enrollees was 13.848 percent and 
one-half the median was 6.924 percent. Fifty-one percent of PDP 
contracts were at or above the median, 39 percent were at or above one-
half the median up to but not including the median, and eleven percent 
were below one-half the median. Among PDP contracts that received a 
Part D Summary Star Rating, 91 percent received an HEI score, 47 
percent received an HEI score greater than zero, and 40 percent 
received an

[[Page 79632]]

HEI reward. The range of HEI scores among PDP contracts was -1.000000 
to 1.000000. The average reward among PDP contracts with an HEI score 
greater than zero was 0.160. Compared to the 2021 Star Ratings, 3 (5.3 
percent) PDP contracts gained one-half star on the Part D Summary 
Rating and 7 (12.3 percent) PDP contracts lost one-half star on the 
Part D Summary Rating.
---------------------------------------------------------------------------

    \199\ Since data collections for HEDIS and CAHPS were curtailed 
for the 2021 Star Ratings due to the COVID-19 pandemic (CMS-1755-
IFC), these simulations used HEDIS and CAHPS measure data from the 
2019 and 2020 Star Ratings.
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    We solicit comment on these proposals.

H. Improvement Measure Hold Harmless (Sec. Sec.  422.166(g)(1) and 
423.186(g)(1))

    In the April 2018 final rule, we discussed that one of the goals of 
the Part C and Part D Star Ratings program is to drive quality 
improvement for plans and providers (83 FR 16521). In that final rule, 
CMS adopted, at Sec. Sec.  422.166(g)(1) and 423.186(g)(1), a hold 
harmless provision for the inclusion of the Part C and/or Part D 
improvement measures for contracts with 4 or more stars for the highest 
rating. Under this provision, the highest rating is calculated both 
with and without the improvement measures; contracts with 4 or more 
stars without including the improvement measures are held harmless from 
having the highest rating reduced by the addition of the improvement 
measures. The original intent of this hold harmless provision was to 
recognize that higher performing contracts have less room to improve 
(83 FR 16578).
    Our experience with the Part C and Part D Star Ratings program 
since this policy was finalized suggests that contracts with 4 or 4.5 
stars for their highest rating still have room for improvement. For 
example, based on a review of data from the 2020 Star Ratings, MA-PD 
contracts with 4 stars for the overall rating received 5 stars on 42 
percent of measures on average, those with 4.5 stars for the overall 
rating received 5 stars on 55 percent of measures on average, and those 
with 5 stars for the overall rating received 5 stars on 79 percent of 
measures on average. PDP contracts with 4 stars for the Part D summary 
rating received 5 stars on 26 percent of measures on average, those 
with 4.5 stars for the Part D summary rating received 5 stars on 28 
percent of measures on average, and those with 5 stars for the Part D 
summary rating received 5 stars on 57 percent of measures on average.
    We believe that the hold harmless provision for the highest rating 
is not needed for 4 and 4.5 star contracts because they still have the 
potential to increase scores across measures and thus their Star 
Ratings. In order to encourage continued improvement across all 
measures for contracts with 4 and 4.5 stars for their highest rating, 
we propose to modify Sec.  422.166 at paragraphs (g)(1)(i) and (ii) and 
Sec.  423.186 at paragraphs (g)(1)(i) and (ii) to apply the improvement 
measure hold harmless provision to only contracts with 5 stars for 
their highest rating beginning with the 2026 Star Ratings.
    We welcome feedback on this proposal.

I. Extreme and Uncontrollable Circumstances (Sec. Sec.  422.166(i) and 
423.186(i))

1. 60 Percent Rule
    Currently, the Star Rating for each non-CAHPS measure score is 
determined by applying a clustering algorithm to the numeric value 
scores from all contracts required to submit the measure. The cut 
points for non-CAHPS measures are derived from this clustering 
algorithm. As discussed in the April 2019 final rule and described at 
Sec. Sec.  422.166(i)(9), 422.166(i)(10), 423.186(i)(7), and 
423.186(i)(8), we exclude from this clustering algorithm and from the 
reward factor calculations (under Sec. Sec.  422.166(f)(1) and 
423.186(f)(1)) the numeric values for affected contracts with 60 
percent or more of their enrollees in Federal Emergency Management 
Agency (FEMA) designated Individual Assistance areas at the time of an 
extreme and uncontrollable circumstance (84 FR 15776-15777). Affected 
contracts are contracts that meet all of the criteria in Sec. Sec.  
422.166(i)(1) and 423.166(i)(1). We generally call this the ``60 
percent rule'' to distinguish it from the adjustments provided under 
Sec. Sec.  422.166(i) and 423.186(i) for affected contracts with 25 
percent of their enrollment residing in a Federal Emergency Management 
Agency (FEMA)-designated Individual Assistance area at the time of the 
extreme and uncontrollable circumstance.
    This exclusion ensures that any impact of the extreme and 
uncontrollable circumstance on certain affected contracts' measure-
level scores does not have an impact on the cut points or reward factor 
for other contracts. When this rule was first implemented, the concern 
was that a contract impacted by an extreme and uncontrollable 
circumstance would have significantly different scores than other 
contracts and that these significantly different scores would shift the 
cut points and/or reward factor thresholds for non-affected contracts. 
Our analyses since the rule was implemented show the measure scores for 
affected contracts do not tend to be outliers and that this 60 percent 
rule can have adverse effects when extreme and uncontrollable 
circumstances affect nearly all contracts, as we saw with the COVID-19 
PHE.
    We are proposing to limit to the 2025 and earlier Star Ratings, 
application of the rule at Sec. Sec.  422.166(i)(9)(i), 
422.166(i)(10)(i), 423.186(i)(7)(i), and 423.186(i)(8)(i) that excludes 
numeric values for affected contracts with 60 percent of their 
enrollees residing in FEMA-designated Individual Assistance areas at 
the time of an extreme and uncontrollable circumstance from cut point 
calculations and reward factor determinations. During the COVID-19 
pandemic, we adopted a change to remove these rules temporarily since 
all contracts qualified for the extreme and uncontrollable 
circumstances policy as a result of COVID-19 in 2020; this change was 
adopted in the interim final rule titled ``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'' which appeared in the Federal Register and effective on 
September 2, 2020, and the final rule titled ``Medicare Program; 
Contract Year 2023 Policy and Technical Changes to the Medicare 
Advantage and Medicare Prescription Drug Benefit Programs; Policy and 
Regulatory Revisions in Response to the COVID-19 Public Health 
Emergency; etc.'' which appeared in the Federal Register on May 9, 2022 
and effective on June 28, 2022 (hereinafter referred to as the May 2022 
final rule). The removal of the 60 percent rule was necessary to 
calculate measure stars for most measures for the 2022 Star Ratings and 
for HEDIS measures that are based on the Health Outcomes Survey (HOS) 
(HEDIS-HOS measures) for the 2023 Star Ratings. Without the removal of 
the rule, CMS would not have been able to calculate stars for most 
measures for 2022 Star Ratings and for the HEDIS-HOS measures for the 
2023 Star Ratings because all contracts qualified for the extreme and 
uncontrollable circumstances policy as a result of COVID-19 in 2020.
    Beginning with the 2024 Star Ratings, measure scores that are 
extreme outliers will be removed through Tukey outlier deletion, a 
standard statistical method to remove extreme outliers, as codified at 
Sec. Sec.  422.166(a)(2)(i) and 423.186(a)(2)(i), prior to applying the 
clustering methodology to determine the cut points. The combination of 
mean

[[Page 79633]]

resampling (implemented with the 2022 Star Ratings and described at 
Sec. Sec.  422.166(a)(2)(i) and 423.186(a)(2)(i)) and Tukey outlier 
deletion will alleviate the impact of any extreme outliers. Thus, if a 
contract is impacted by an extreme and uncontrollable circumstance and 
as a result has a significantly lower score on a measure, the score 
would be removed if it is an extreme outlier. Removing extreme outliers 
will eliminate the concern that other contracts are inappropriately 
impacted by changes in scores for contracts impacted by disasters. By 
removing the 60 percent rule, we will also simplify the Star Ratings 
calculations and continue to allow measure-level Star Ratings to be 
calculated if all or most contracts qualify for an extreme or 
uncontrollable circumstance in the future.
    We are proposing to amend sections Sec. Sec.  422.166(i)(9)(i), 
422.166(i)(10)(i), 423.186(i)(7)(i), and 423.186(i)(8)(i) to remove the 
60 percent rule beginning with the 2026 Star Ratings for non-CAHPS 
measures, including the Health Outcomes Survey measures even though the 
measurement period is slightly different for these measures. We welcome 
comments on this proposal.
2. Health Outcomes Survey (HOS) Measures
    We adopted regulations for how Star Ratings would be calculated in 
the event of extreme and uncontrollable circumstances in the April 2019 
final rule. We explained in the April 2019 final rule (CMS-4185-F) that 
for most measures, the extreme and uncontrollable circumstance 
adjustment applies for disasters from 2 years prior to the Star Ratings 
year (that is, a disaster that begins \200\ during the 2020 measurement 
period results in a disaster adjustment for the 2022 Star Ratings). For 
Part C measures derived from HOS, the disaster adjustment is delayed an 
additional year due to the timing of the survey and 1 year recall 
period. That is, for measures derived from the HOS, the disaster policy 
adjustment is for 3 years after the extreme and uncontrollable 
circumstance. For example, we noted at 84 FR 15772-15773 that the 2023 
Star Ratings would adjust measures derived from the HOS for 2020 
extreme and uncontrollable circumstances. We are proposing to clarify 
in Sec.  422.166(i)(3)(iv) the timing for HOS measure adjustments for 
extreme and uncontrollable circumstances. We welcome comments on this 
proposal.
---------------------------------------------------------------------------

    \200\ We use the start date of the incident period to determine 
which year of Star Ratings could be affected, regardless of whether 
the incident period lasts until another calendar year.
---------------------------------------------------------------------------

J. Quality Bonus Payment Rules (Sec.  422.260)

    Sections 1853(n) and 1853(o) of the Act require CMS to make QBPs to 
MA organizations that achieve at least 4 stars in a 5-star quality 
rating system. In addition, section 1854(b)(1)(C) of the Act ties the 
share of savings that MA organizations must provide to enrollees as the 
beneficiary rebate to the level of an MA organization's QBP rating. The 
administrative review process for a MA contract to appeal their QBP 
status is laid out at Sec.  422.260(c). As described in the final rule 
titled ``Medicare Program; Changes to the Medicare Advantage and the 
Medicare Prescription Drug Benefit Programs for Contract Year 2012 and 
Other Changes,'' which was published in the Federal Register on April 
15, 2011 (76 FR 21490-91), Sec. Sec.  422.260(c)(1) and (2) create a 
two-step administrative review process that includes a request for 
reconsideration and a request for an informal hearing on the record, 
and Sec.  422.260(c)(3) imposes limits on the scope of requests for an 
administrative review. 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. We propose to 
clarify in Sec.  422.260(c)(3)(iii) some additional aspects of that 
administrative review process for appeals of QBP status determinations. 
These clarifications are how we have historically administered the 
appeals process so we are not proposing changes to how the appeals 
process has previously been administered.
    When an MA organization requests an administrative review of its 
QBP status, permissible bases for these requests include a calculation 
error (miscalculation) or a data inaccuracy (incorrect data). A 
calculation error could impact an individual measure's value or the 
overall Star Rating. Historically, if an MA organization believes the 
wrong set of data was used in a measure (that is, following a different 
timeframe than the one in the measure specifications as adopted in the 
applicable final rule), this is considered a calculation error.
    Currently, Sec.  422.260(c)(3)(i) provides that CMS may limit the 
measures or bases for which an MA organization may request an 
administrative review. As described in 76 FR 21490, the appeals process 
is limited to data sets that have not been previously subject to 
independent validation. We propose to add a new paragraph in Sec.  
422.260(c)(3)(iii) to clarify that certain data sources would not be 
eligible for requesting an administrative review. We are proposing to 
clarify at Sec.  422.260(c)(3)(iii) that an administrative review 
cannot be requested based on data accuracy for the following data 
sources: HEDIS, CAHPS, HOS, Part C and D Reporting Requirements, PDE, 
Medicare Plan Finder pricing files, data from the Medicare Beneficiary 
Database Suite of Systems, MARx system, and other Federal data sources. 
The listed data sources have either already been validated or audited 
or come from the CMS system of record for that type of data such as 
enrollment data, which make it inappropriate to use the QBP appeal 
process to challenge the accuracy of the data. For example, HEDIS 
measures and measures collected through the Part C and D reporting 
requirements have previously been audited or validated for accuracy; 
NCQA has a formal audit process for all HEDIS measures to check for 
accuracy, and MA plans sign off on the accuracy of the data following 
the audit and prior to the data being submitted to CMS. Similarly, data 
from the Part C and D reporting requirements are validated through an 
independent contractor (see 42 CFR 422.516(g) and Sec.  423.514(j)) 
before the data are submitted by MA organizations and Part D plan 
sponsors to CMS and used for Star Ratings measures. (With regard to 
Part D data and measures, the MA organization offering an MA-PD must 
comply with the applicable Part D regulations under Sec.  422.500.) 
Because the MA organization bears the responsibility of data accuracy 
as well as signs off on audit findings in these situations, it is 
inappropriate to use the QBP appeal process to challenge the accuracy 
of these data. Organizations would have ample opportunity to raise any 
concerns about these data prior to submission to CMS for use in the 
Star Ratings.
    We are also proposing that MA organizations cannot appeal measures 
that are based on feedback or surveys that come directly from plan 
enrollees. Measures derived from CAHPS and HOS data are not appealable 
because plans cannot challenge the validity of an enrollee's response 
since that is the enrollee's perspective. MA and PDP contracts contract 
with the CMS-approved vendor of their choice to conduct CAHPS and HOS, 
and these independent survey vendors conduct the surveys for contracts 
using detailed specifications provided by CMS and in some cases 
contract-specific information

[[Page 79634]]

such as telephone numbers and language preference information provided 
directly by the MA and PDP contract. There are detailed specifications 
for data collection \201\ for vendors to follow; CMS conducts oversight 
of the data collection efforts of the approved survey vendors.
---------------------------------------------------------------------------

    \201\ MA and PDP CAHPS Survey administration protocols are 
contained in the MA & PDP CAHPS Survey Quality Assurance Protocols & 
Technical Specifications and are available at https://ma-pdpcahps.org/en/quality-assurance/. The HOS Quality Assurance 
Guidelines and Technical Specifications manual details the 
requirements, protocols, and procedures for the HOS administration 
and are available at https://www.hosonline.org/en/program-overview/survey-administration/.
---------------------------------------------------------------------------

    Measures derived from Prescription Drug Event (PDE) data, Medicare 
Beneficiary Database Suite of Systems, enrollment data from Medicare 
Advantage Prescription Drug (MARx) system, and other Federal data 
sources (for example, FEMA disaster designations) also cannot be 
appealed for data accuracy because we are pulling data from the system 
of record or authoritative data source. Part D sponsors submit PDE to 
CMS via the Drug Data Processing Systems (DDPS), which processes and 
validates the data. Sponsors must meet the PDE submission deadline to 
be included in the annual Part D payment reconciliation, and sponsors 
must certify the claims data (42 CFR 423.505(k)(3)). As another 
example, enrollment data used in the Star Ratings are also used for the 
monthly payment of contracts and any discrepancies would have been 
resolved through retroactive adjustments as needed. Similarly, Medicare 
Plan Finder (MPF) pricing files cannot be appealed. Plans use the 
Health Plan Management System (HPMS) Part D Pricing File Submission 
(PDPFS) module to submit their drug pricing and pharmacy data for 
posting on the MPF. After the data are submitted, CMS performs a multi-
step validation. Validation results are provided to sponsors to correct 
their data or to attest to the accuracy of the data prior to display on 
MPF. Part D sponsors are required to perform their own quality 
assurance checks before submission to ensure that the files are 
complete and accurate.\202\
---------------------------------------------------------------------------

    \202\ See May 28, 2021 HPMS memorandum, Contract Year (CY) 2022 
Part D Pricing Data Submission Guidance. https://www.cms.gov/files/document/cy2022drugpricingsubmissionguidelines05282021final.pdf
---------------------------------------------------------------------------

    Further, in conducting the reconsideration under Sec.  422.260(c), 
the reconsideration official reviews the QBP determination, the 
evidence and findings upon which it was based, and any other written 
evidence submitted by the organization or by CMS before the 
reconsideration determination is made. Currently, Sec.  
422.260(c)(1)(i) provides that the request for reconsideration must 
specify the given measure(s) in question and the basis for the MA 
organization's reconsideration request; the alleged error could impact 
a measure-level score or Star Rating, or the overall Star Rating. The 
request must include the specific findings or issues with which the MA 
organization disagrees and the reason for the disagreement, as well as 
any additional evidence that the MA organization would like the 
reconsideration official to consider, as the basis for reconsideration. 
Currently, Sec.  422.260(c)(2)(v) provides that the MA organization 
must provide clear and convincing evidence that CMS's calculations of 
the measure(s) and value(s) in question were incorrect; in other words, 
the burden is on the MA organization to prove an error was made in the 
calculation of their QBP rating. We are proposing to revise this 
standard to require the MA organization to prove by a preponderance of 
evidence that CMS's calculations of the measure(s) and value(s) in 
question were incorrect and to add additional language at Sec.  
422.260(c)(2)(v) clarifying that the burden of proof is on the MA 
organization to prove an error was made in the calculation of the QBP 
status. We believe that the appropriate standard of proof is the 
preponderance of the evidence.
    If the hearing officer's decision is in favor of the MA 
organization, the MA organization's QBP status is recalculated using 
the corrected data and applying the rules at Sec. Sec.  422.160 through 
422.166. Under our current implementation of Sec.  422.260, 
recalculation could cause the requesting MA organization's QBP rating 
to go higher or lower. In some instances, the recalculation may not 
result in the Star Rating rising above the cut-off for the higher QBP 
rating. We are proposing additional language at Sec.  422.260(c)(1)(i) 
to clarify that ratings can go up, stay the same, or go down based on 
an appeal of the QBP determination.
    Under Sec.  422.260(d), CMS may revise an MA organization's QBP 
status at any time after the initial release of the QBP determinations 
through April 1 of each year on the basis of any credible information, 
including information provided during the administrative review 
process, requested by a different MA organization, that demonstrates 
that the initial QBP determination was incorrect. CMS issues annual 
guidance to MA organizations about the QBP appeal process available 
under Sec.  422.260 each November titled, for example, ``Quality Bonus 
Payment Determinations and Administrative Review Process for Quality 
Bonus Payments and Rebate Retention Allowances.'' We interpret and 
implement Sec.  422.260 through this guidance and our administration of 
the annual administrative review process.
    When the reconsideration official or hearing officer's decision for 
a particular appeal or other credible information suggests that there 
was a systematic error impacting all or a subset of contracts, the QBP 
status of all contracts is re-calculated using the corrected data and 
applying the rules at Sec. Sec.  422.160 through 422.166. If the re-
calculated QBP rating for a contract other than the appealing contract 
results in a lower rating, the original preliminary QBP rating will be 
used. Thus, a contract's QBP rating will not be decreased by CMS as a 
result of a systematic re-calculation for the current Star Ratings and 
associated QBP year to correct a systematic calculation error; however, 
the issue identified will be addressed in the next year's Star Ratings. 
However, if the QBP rating is higher for a contract after the 
systematic re-calculation, the new rating will be used. For example, if 
CMS has to do a systematic re-calculation for the 2023 Star Ratings 
following the release of the preliminary 2024 QBP ratings, a contract's 
2023 Star Ratings used for the 2024 QBP ratings will not be decreased 
but the change that caused a systematic recalculation will be addressed 
when the 2024 Star Ratings are calculated. If the re-calculation of the 
2023 Star Ratings results in a higher rating for a contract, the higher 
rating will be used. We propose to add language at Sec.  422.260(d) to 
clarify that a reopening of a QBP determination to address a systemic 
calculation issue that impacts more than the MA organization that 
submitted an appeal would only be updated if it results in a higher QBP 
rating for other MA organizations that did not appeal. This is how we 
have historically noted how we would handle this type of systemic 
calculation error as described in our annual HPMS memo released in 
November each year.
    We welcome comments on this proposal.

K. Calculation of Star Ratings (Sec. Sec.  422.166(a)(2)(i) and 
423.186(a)(2)(i))

    In the June 2020 final rule, we finalized use of Tukey outlier 
deletion effective for the Star Ratings issued in October 2023 and 
subsequent years. (85 FR 33833-36) In the rulemakings since that time, 
we have not proposed to eliminate the Tukey outlier deletion aspect of 
the Star Ratings methodology.

[[Page 79635]]

As we stated in May 2022 final rule (87 FR 27766), we will implement 
Tukey outlier deletion beginning with the 2024 Star Ratings to help 
improve stability of cut points and prevent cut points from being 
influenced by outliers. We further stated that with Tukey outlier 
deletion, extreme outliers will be removed from measure scores prior to 
clustering to prevent outliers from impacting cut points for all 
contracts. However, it appears that the sentence in Sec. Sec.  
422.166(a)(2)(i) and 423.186(a)(2)(i) (``Effective for the Star Ratings 
issued in October 2023 and subsequent years, prior to applying mean 
resampling with hierarchal clustering, Tukey outer fence outliers are 
removed.'') was inadvertently removed from the codified regulation 
text. We are proposing a technical amendment to fix this codification 
error from the May 2022 final rule. In addition, although the provision 
regarding application of the Tukey outlier deletion policy was 
originally at the end of paragraph (a)(2)(i) in each regulation, we are 
also proposing a non-substantive technical change to move the sentence 
about removal of Tukey outer fence outliers earlier in Sec. Sec.  
422.166(a)(2)(i) and 423.186(a)(2)(i) since Tukey outlier deletion is 
applied prior to the other steps. We believe that this makes the 
regulation text clearer.
    We welcome comment on this proposal.

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

A. Contract Year Definition (Sec.  460.6)

    Sections 1894(a)(9) and 1934(a)(9) of the Act define the trial 
period for PACE organizations as the first 3 contract years operating a 
PACE program under a PACE program agreement. Sections 1894(e)(4) and 
1934(e)(4) of the Act require CMS, in cooperation with the State 
administering agency, to conduct a comprehensive annual review of the 
PACE organization's operation of the PACE program during the trial 
period to assure compliance with all significant requirements. The rule 
titled ``Medicare and Medicaid Programs; Programs of All-Inclusive Care 
for the Elderly (PACE)'', which appeared in the November 24, 1999 issue 
of the Federal Register (64 FR 66234) (hereinafter referred to as the 
1999 PACE interim final rule) defined a contract year at Sec.  460.6 as 
the term of the PACE program agreement, which is a calendar year, 
except that a PACE organization's initial contract year may be from 12 
to 23 months, as determined by CMS. This enables CMS to adjust the 
length of the initial contract year so that it always ends on December 
31 and subsequent contract years align with a standard annual calendar 
year consisting of 12 months (64 FR 66236). For example, for a PACE 
organization that signs a program agreement in March 2022, CMS would 
extend the organization's initial contract year through December 31, 
2023, so that all future contract years would align with calendar 
years.
    As previously stated, CMS is required to conduct comprehensive 
reviews during a PACE organization's trial period to assess all 
significant regulatory requirements, and these reviews must be 
conducted on an annual basis for the first 3 contract years. Currently 
the first trial period contract year may include up to 23 months, but 
the subsequent two trial period contract years are limited to 12 
months, each beginning on January 1 and ending on December 31. CMS has 
developed audit protocols to comprehensively assess PACE organizations 
which require the availability of multiple months of program data and 
typically take 6 to 9 months to complete, including pre-audit data 
collection, audit fieldwork, and the corrective action period which 
allows time for PACE organizations to correct deficiencies identified 
during audits. CMS must conduct the first trial period audit within the 
first contract year in order to comply with the statutory and 
regulatory requirements. However, our ability to schedule and conduct 
the first trial period audit is limited by when a PACE organization 
enters into a program agreement, the current contract year definition 
in Sec.  460.6, and when the PACE organization begins enrolling 
participants during their first contract year. Depending on when the 
program agreement is signed, the first trial period audit may be 
required within 12 months from the contract start date which we believe 
is not a sufficient length of time for new PACE organizations to 
establish their operations before undergoing an audit.
    In order to have enough data to conduct a comprehensive audit, CMS 
has found it necessary to allow a PACE organization to operate with 
enrollees for at least 6 months before conducting its first trial 
period audit, which may not occur until the latter half or end of their 
first contract year. However, unless the first trial period audit is 
scheduled early in the calendar year, we encounter significant 
operational challenges conducting subsequent audits for the second and 
third years of the trial period in accordance with statutory and 
regulatory requirements, while still giving PACE organizations 
sufficient time between audits to ensure they are able to fully correct 
the deficiencies identified during an audit before CMS collects data 
for the next audit. Specifically, delaying the first trial period audit 
until later in the calendar year to ensure adequate PACE organization 
operational experience, reduces the time between audits, which creates 
overlap between timeframes to correct deficiencies and the data 
collection period for subsequent trial period audits. For example, 
under the current contract year definition, a PACE organization that 
enters into a program agreement on January 1, 2023 must receive its 
first comprehensive trial period audit by December 31, 2023, its second 
trial period audit in 2024, and its third trial period audit in 2025. 
If CMS first audits the PACE organization in early 2023, we would not 
have enough data to conduct a comprehensive review. However, waiting to 
schedule the first audit until later in 2023 reduces the timeframe 
within which CMS can schedule the second and third trial year audits 
required in 2024 and 2025. Given that a PACE organization may need 9 
months to complete the first trial period audit initiated in 2023, and 
multiple months of data are required for each audit, it is 
operationally challenging for CMS to schedule and complete the next 2 
annual audits within the trial period while still affording PACE 
organizations a sufficient amount of time between audits to correct 
identified deficiencies.
    CMS therefore proposes to amend the definition of contract year at 
Sec.  460.6 to state that a PACE organization's initial contract year 
may be 19 to 30 months, as determined by CMS, but in any event will end 
on December 31. Under the proposed contract year definition, although 
the duration of the initial contract year of the trial period would 
change, the initial contract year would continue to begin when the 
program agreement is signed and end on December 31 to ensure subsequent 
contract years follow the standard annual calendar year cycle. For PACE 
organizations with an initial contract year start date of January 1 
through June 1, CMS would extend the initial contract year through the 
following year. For example, for a program agreement signed on January 
1, 2024 or up until June 1, 2024, the initial contract year would end 
December 31, 2025. The second and third contract years would begin on 
January 1, 2026 and January 1, 2027, respectively. Additionally, for 
PACE organizations with an initial contract year start date of July 1 
through December 1, CMS would

[[Page 79636]]

extend the initial contract year through the second succeeding year. 
For example, for a program agreement signed on July 1, 2024, the 
initial contract year would end December 31, 2026. The second and third 
contract years would begin on January 1, 2027 and January 1, 2028, 
respectively. This would allow CMS to continue adjusting the length of 
the initial contract year so that subsequent contract years align with 
the calendar year, but it would provide greater flexibility around 
scheduling the first trial period audit. We believe that making the 
minimum length of time 19 months (as opposed to 12 months) would ensure 
organizations have sufficient time both to enroll participants and gain 
adequate program experience before their initial audit, while still 
allowing time to address deficiencies and implement improvements before 
engaging in another audit. In addition, this change would enable CMS to 
conduct the first trial period audit early enough in a calendar year 
that it does not adversely impact the second and third trial period 
audits. While we anticipate that this modification would allow us more 
flexibility in scheduling the first trial period audit, we intend to 
maintain our commitment to conducting first contract year audits as 
expeditiously as possible. For example, if a contract were signed on 
January 1, 2024, the initial contact year would extend to December 31, 
2025 and CMS could potentially schedule the first trial period audit 
early in the 2025 calendar year. This would ensure that the PACE 
organization has sufficient time to operate before the start of the 
data collection period for the first trial period audit, and it would 
still allow CMS operational flexibility in scheduling the next two 
audits in 2026 and 2027.
    We solicit comment on whether CMS should consider a different 
timeframe for the initial contract year. Specifically, we are seeking 
feedback on whether CMS should consider defining the initial contract 
year as 25 to 36 months to allow organizations additional time to 
implement and operate a PACE program before undergoing their first 
audit.
    Since the effect of the proposed change would be to provide CMS 
with more flexibility when scheduling initial trial period audits 
without placing new requirements on CMS or PACE organizations, we 
believe this change would create no additional burden for PACE 
organizations. Additionally, we do not expect this change to have 
economic impact on the Medicare Trust Fund.

B. Determining That a Substantially Incomplete Application Is a 
Nonapplication (Sec. Sec.  460.12 and 460.20)

    Sections 1894(e)(8) and 1934(e)(8) of the Act established CMS' 
authority regarding PACE provider application requirements. Based on 
this authority, we are proposing to strengthen the PACE regulations at 
Sec. Sec.  460.12(a) and (b) and 460.20(b), which pertain to 
application requirements, by further defining what constitutes a 
complete and valid application.
    CMS accepts PACE applications from entities seeking to establish a 
PACE program (initial applicants) or to expand an existing PACE 
program's service area (including both expansion of a PACE programs' 
geographic service area and/or the addition of a new PACE center), on 
designated quarterly submission dates.
    In order to receive funds under Part D to provide prescription drug 
benefits, PACE organizations must qualify as Part D sponsors under 
Sec.  423.502(c)(1) by submitting an application in the form and manner 
required by CMS. Therefore, as a matter of necessity, initial PACE 
applicants that provide the Part D benefit to eligible beneficiaries 
must submit a separate Part D application. Effective March 31, 2017, 
CMS requires organizations to submit all applications electronically 
via the Health Plan Management System (HPMS). The PACE application 
includes attestations and certain required documents to ensure 
compliance with established PACE regulations, including but not limited 
to: policies and procedures related to enrollment, disenrollment, 
grievances and appeals; information regarding the legal entity and 
organizational structure; and State-based documents, including a State 
assurances document. The State assurances document is a template that 
includes standard statements regarding the State's roles and 
responsibilities and includes the physical address of the proposed PACE 
center, geographic service area, or both, as applicable, depending on 
the type of application. This document must be signed by an official 
within the applicable State Administering Agency (SAA), the designated 
agency for the PACE program in the State in which the program is to be 
located, and serves as confirmation of the State's support for the 
application. It is imperative that the applicant demonstrate the 
State's support as part of the application since the State is a party 
to the PACE program agreement, which, once approved and finalized, is a 
3-way contract between CMS, the State, and the PACE organization.
    Section 460.12 sets forth the application requirements for an 
organization that wishes to qualify as a PACE organization, and for an 
active PACE organization that seeks to expand its geographic service 
area and/or add a new PACE center site. Paragraph (a) of Sec.  460.12 
states that an individual authorized to act for an entity that seeks to 
become a PACE organization or a PACE organization that seeks to expand 
its approved service area and/or add a new center site must submit a 
complete application to CMS in the form and manner specified by CMS. 
Furthermore, Sec.  460.12(b)(1) specifies that an entity's application 
to become a PACE organization must include an assurance from the SAA of 
the State in which the program is to be located indicating that the 
State considers the entity qualified to be a PACE organization and is 
willing to enter into a PACE program agreement with the entity. 
Similarly, an existing PACE organization's application to expand its 
service area and/or add a PACE center site must include an assurance 
from the SAA of the State in which the program is located indicating 
that the State is willing to amend the signed PACE program agreement to 
include the expanded service area and/or new center site (Sec.  
460.12(b)(2)).
    We indicated in the final rule titled ``Medicare and Medicaid 
Programs; Programs of All-Inclusive Care for the Elderly (PACE)'', 
which appeared in the June 3, 2019 issue of the Federal Register (84 FR 
25610) (hereinafter referred to as the June 2019 final rule) that 
applications received without the required State assurances document 
would not be considered a complete application and would therefore, not 
be reviewed (see 84 FR 25615 and 25671).
    Section 460.20(a) provides that within 90 days, or 45 days in the 
case of an application to expand a service area or add a PACE center, 
after an entity submits a complete application to CMS, CMS takes one of 
the following actions in the form and manner specified by CMS: (1) 
approves the application or (2) denies the application and notifies the 
entity in writing of the basis for the denial and the process for 
requesting reconsideration of the denial. An application is considered 
complete only when CMS receives all information necessary to make a 
determination regarding approval or denial (Sec.  460.20(b)).
    As part of annual training sessions and resources available at: 
https://www.cms.gov/Medicare/Health-Plans/PACE/Overview, CMS has stated 
that the only required application document

[[Page 79637]]

that may not be available and submitted as part of the initial 
application submission on CMS' designated quarterly date is the State 
readiness review (SRR) of a center site, as applicable. The SRR is 
conducted by the State at the applicant's PACE center, and the 
accompanying report certifies that the PACE center satisfies all 
applicable local, State and Federal requirements and is ready for 
operations. CMS has instructed PACE applicants that this document may 
be uploaded when responding to a CMS request for additional 
information.
    The application is not considered complete and valid without the 
required documentation from the applicable SAA that provides clear 
evidence of the State's support. However, in our experience, some PACE 
organizations submit a State assurances document that is not signed by 
the State, is provided after the designated submission date, or has 
changed the location of the proposed PACE center or included the 
corporate address as a placeholder. Should any of the aforementioned 
occur, the applicant is instructed to withdraw the application.
    Under this proposal, we would treat any PACE application that does 
not include a signed and dated State assurances document that includes 
accurate service area information and the physical address of the PACE 
center as incomplete and invalid and therefore not subject to review or 
reconsideration. Entities that submit an application without a complete 
and valid State assurances document would have their application 
withdrawn from HPMS. They would then have to wait until the next 
quarterly submission date to submit the application with the State 
assurances included. We propose to add paragraph Sec.  460.12(b)(3) to 
specify that any PACE application that does not include the proper 
State assurances documentation associated with the application would be 
considered incomplete and invalid.
    In the June 2019 final rule, we added the phrase ``in the form and 
manner specified by CMS'' to Sec.  460.12(a) when describing the 
submission to CMS of a complete application, to allow for submission of 
applications and supporting information in formats other than paper, 
which was the required format at the time the proposed rule was issued 
(84 FR 25671). We propose to amend Sec.  460.12(a), which states that 
an individual authorized to act for an entity that seeks to become a 
PACE organization or a PACE organization that seeks to expand its 
approved service area (through a geographic service area expansion and/
or addition of a new center site) must submit a complete application to 
CMS ``in the form and manner specified by CMS'' by adding a 
parenthetical with the words ``including timeframes for submission'' 
after ``manner'', in order to make clear that CMS will only accept 
applications that are submitted within the timeframes established by 
CMS.
    We propose to establish at Sec.  460.20(c) that any application 
that, upon submission, is determined to be incomplete under proposed 
Sec.  460.12(b)(3) because it does not include a signed and dated State 
assurances document with accurate service area information and the 
physical address of the PACE center, as applicable, would be withdrawn 
by CMS, and the applicant would be notified accordingly. Proposed Sec.  
460.20(b)(1) would further specify that the applicant would not be 
entitled to a hearing if the application is withdrawn based on that 
determination. Without the necessary evidence of support for the 
application by the SAA, the application would not be valid and 
therefore not subject to reconsideration. We note this proposal would 
be consistent with how CMS addresses MA or Part D applicants that 
submit substantially incomplete applications. Such applications are 
considered invalid applications and applicant organizations are not 
entitled to a hearing per Sec.  422.660 or Sec.  423.650.
    Finally, we are proposing to establish at Sec.  460.12(a)(2) that 
an individual authorized to act for an entity that seeks to become a 
PACE organization (initial PACE applicant) is required to submit a 
separate Part D application that complies with the applicable 
requirements under Part 423 Subpart K. This is consistent with our 
current practice, under which initial PACE applicants must submit a 
Part D application. By contrast, existing PACE organizations seeking to 
expand their service area are not required to complete a Part D 
application. Therefore, consistent with our existing practice, we are 
not proposing to establish Part D application requirements for PACE 
organizations seeking to expand their existing service area. We also 
intend to continue our current practice of following the timeframes for 
PACE applications, including submission deadlines and review periods, 
for Part D applications associated with PACE applications--that is, we 
will continue to accept Part D applications from initial PACE 
applicants on a quarterly basis. We believe it is important to continue 
to align application and review and submission deadlines for PACE 
applicants to the extent practicable in order to promote consistency.
    Consistent with current practice, we propose to treat an initial 
PACE application that does not include responsive materials for one or 
more sections of its Part D application as substantially incomplete, 
and those applications would not be reviewed or subject to 
reconsideration. Should this proposal be finalized, if the Part D 
application associated with an initial PACE application is deemed 
substantially incomplete, that would render the PACE application 
incomplete and therefore not subject to review or reconsideration.

C. PACE Past Performance (Sec. Sec.  460.18 and 460.19)

    Sections 1894(e)(4) and 1934(e)(4) of the Act establish CMS' 
authority to oversee the PACE program. To effectively oversee the PACE 
program, we are proposing to amend the PACE regulation at Sec.  460.18 
(CMS evaluation of applications) to incorporate an evaluation of past 
performance into the review of applications submitted by PACE 
organizations that seek to offer a PACE program or expand an approved 
program by adding a geographic service area and/or PACE center site or 
sites. Our evaluation of past performance would be a criterion CMS 
would use to review a PACE organization's application. The addition of 
this proposed evaluation criterion at Sec.  460.18(c) would permit CMS 
to deny applications from PACE organizations based on the 
organization's past performance. Our past performance proposal takes 
into account any compliance letters received by an organization. We are 
also proposing to establish at Sec.  460.18(d) that CMS may deny a PACE 
application if the PACE organization's agreement was terminated or not 
renewed during the 38 months preceding the date the application was 
first submitted to CMS.
    The past performance of an organization is an important criterion 
for CMS to review when considering a PACE application because it 
provides valuable information about the ability of an organization to 
effectively operate a new program or expand an existing program. 
Organizations that have performed well are more likely to continue 
their high performance while organizations that have not may have 
difficulty meeting regulatory requirements in operating a new or 
expanded PACE program. This could pose a risk to the health and safety 
of the PACE participants they enroll. It is important for CMS to ensure 
that the legal entities with whom we hold

[[Page 79638]]

program agreements are able to appropriately provide services and 
benefits to PACE participants.
    In the Medicare Advantage (MA) and Part D programs, CMS considers 
an organization's past performance during the evaluation of the 
application. We are modeling the PACE past performance proposal after 
the MA and Part D review regulations at 42 CFR parts 422 and 423, using 
applicable evaluation criteria in our proposal. We believe modeling the 
PACE past performance review criteria after the criteria that appear in 
the MA and Part D regulations is appropriate given that consideration 
of past performance has been a long-standing part of application 
reviews under the MA and Part D programs, resulting in the denial of 
applications of poor performing plans. CMS' goal is the same for PACE 
as it is in MA and Part D, which is to prohibit poor performing 
organizations from entering into new agreements, or expanding their 
service areas in the program.
    In addition, we believe modeling past performance reviews in PACE 
on past performance reviews in MA and Part D is appropriate since PACE 
organizations that provide Part D benefits are subject to the 
regulations at 42 CFR 423, with the exception of those regulations CMS 
has waived in accordance with Sec.  423.458(d). In addition, modeling 
after MA and Part D reduces burden by not having a different set of 
criteria for the non-Part D PACE benefits. In keeping with this 
requirement, our proposal would ensure that all entities that submit 
PACE applications would be subject to past performance reviews, the 
same as other entities that submit Part D applications.
    In the January 2021 final rule (86 FR 5864), CMS established in 
regulation the methodology and criteria used to decide to deny an MA or 
Part D application based on prior contract performance (Sec.  Sec.  
422.502(b) and 423.503(b)). We noted in the final rule that we 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 (86 FR 5999). In the January 
2021 final rule and through subsequent rulemaking, CMS adopted the 
following factors as the bases for denying an MA or Part D application: 
(A) the organization was subject to an intermediate sanction; (B) the 
organization failed to maintain a fiscally sound operation; (C) the 
organization filed for bankruptcy or is under bankruptcy proceedings; 
(D) the organization had low Star Ratings for two or more consecutive 
years; or (E) the organization exceeded CMS' threshold for compliance 
actions (see 86 FR 6000 and 87 FR 27704). Each of these factors, on its 
own, represents significant non-compliance with an MA or Part D 
contract; therefore, the presence of any of these factors in an 
applicant's record during the past performance review period could 
allow CMS to deny its MA or Part D application.
    CMS is now proposing to apply a past performance methodology to 
entities that seek to offer a new PACE program or expand an existing 
program. Our proposal would modify the regulations at Part 460 to 
permit CMS to consider an entity's past performance in determining 
whether to approve or deny a new application or an application to 
expand a current program. The proposed methodology for this evaluation 
would be similar to the methodology CMS uses when deciding whether to 
deny MA and Part D applications based on past performance. As with our 
MA and Part D past performance reviews, the purpose of our proposed 
PACE past performance reviews is to prevent organizations from 
expanding their PACE operations where the organization's past conduct 
indicates that allowing the organization to expand would pose a high 
risk to the success and stability of PACE and PACE participants. Like 
MA organizations and Part D sponsors, PACE organizations that have been 
under sanction, failed to meet fiscal soundness requirements, or been 
issued compliance actions above a certain threshold have demonstrated 
that they have had significant failures in operating their program. 
Consistent with the past performance standards for MA and Part D, and 
as we discuss in detail later in this proposed rule, we are proposing 
that CMS would deny an initial or service area expansion (SAE) 
application based on the same factors (other than low Star Ratings) 
that serve as the basis for denying an MA or Part D application. CMS 
does not propose to include Star Ratings in the past performance review 
for PACE because CMS does not calculate these measures for PACE 
organizations.
    CMS accepts applications on designated quarterly submission dates 
from entities seeking to either establish a PACE program or expand an 
existing program. Similar to MA applications, and in accordance with 
Sec.  460.18, CMS evaluates a PACE application based on information 
contained in the application itself, as well as information obtained by 
CMS (or the applicable State Administering Agency (SAA), which serves 
as the designated State agency for PACE), through on-site visits or any 
other means. If an organization meets all application requirements, CMS 
approves the application.
    CMS is proposing to incorporate past performance reviews into the 
PACE application process to safeguard the program and ensure PACE 
participants are protected from the expansion of poorly performing 
organizations. The PACE program has seen significant growth in recent 
years, with increased numbers of both initial and expansion 
applications and steady increases in overall enrollment. This growth 
can be attributed in part to a legislative change that took effect in 
2015 that allowed for-profit entities to operate PACE programs (see 
sections 1894(h) and 1934(h) of the Act). Prior to that change, only 
not-for-profit entities were eligible to offer PACE programs. At the 
end of calendar year 2016, a total of 121 approved PACE organizations 
were in operation, serving 37,584 predominantly dually-eligible 
participants. In calendar year 2021, CMS received 22 initial 
applications and 22 expansion applications. As of September 2022, there 
were 149 PACE organizations serving 54,643 participants in 32 states.
    PACE participants are some of our most vulnerable beneficiaries. In 
order to enroll in a PACE program, the SAA must determine that the 
beneficiary needs the level of care required under the State Medicaid 
plan for coverage of nursing facility services (Sec.  460.150(b)(2)). 
Beneficiaries who need this level of care are generally frail, may have 
multiple conditions, and require extensive assistance with activities 
of daily living. The 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 (Sec.  460.98(a)). Each PACE 
organization must have a center, which PACE participants can visit 
weekly or even daily, based on each participant's needs and 
preferences. The PACE center must provide primary care services, 
nursing services, social services, restorative therapies (including 
physical therapy and occupational therapy), personal care and 
supportive services, nutritional counseling, recreational therapy, and 
meals (Sec.  460.98(c)).
    Given the recent and anticipated future growth in PACE and the 
vulnerable populations that PACE organizations serve, CMS believes that 
the past performance of a PACE organization should be reviewed as part 
of the application process. Past performance evaluations would enhance

[[Page 79639]]

CMS' ability to ensure that initial PACE applications and applications 
for service area expansions from low performing organizations are 
denied. The ability to deny initial PACE applications or service area 
expansion applications submitted by organizations that we determine are 
poor performers helps to ensure that the organizations with which we 
have an agreement will be able to provide health care services to 
beneficiaries in a high-quality manner.
    The PACE application review process is unique, and we have 
developed these proposals with that process in mind. Per the 
regulations at Sec.  460.20(a) and (c), upon receipt of a complete PACE 
application, CMS must: (1) approve the application; (2) deny the 
application; or (3) issue a request for additional information (RAI) in 
the event there are deficiencies. CMS' deadline for these actions is 
within 90 days of submission of an initial application or for a service 
area expansion (SAE) application that includes both a proposed 
geographic expansion and a new center site, or within 45 days of 
submission of an SAE application that includes either a proposed 
geographic expansion or a new center site. If CMS issues an RAI, the 
applicant must respond to the RAI only when ready and able to submit a 
complete response that addresses all deficiencies cited in the RAI, 
which includes a complete State readiness review (SRR) report, as 
applicable. If CMS issues an RAI, the first review clock ends and the 
second and final review clock does not begin until the applicant 
submits a complete RAI response, which starts the second and final 45- 
or 90-day review clock, as applicable. As part of the application 
process, the applicable SAA must conduct an SRR at the applicant's 
proposed PACE center site (if applicable) to ensure that the PACE 
center meets the State's regulatory requirements. Applicants are 
required to submit documentation of the completed SRR report to CMS for 
applications that include a new PACE center site (see Sec.  
460.12(b)(2)). Per application instructions, the SRR report is the only 
required document that may be uploaded after the initial application 
submission, in response to CMS' RAI. In our experience, a response to a 
RAI may take anywhere from a few weeks to more than a year to receive, 
often because of the renovation or construction of a center site, 
attainment of building permits, and/or the need for a readiness review 
to be completed. The MA and Part D past performance review currently 
has a 12-month look back period which is defined as the most recent 12 
months preceding the application deadline (see Sec.  422.502(b) and 
423.503(b)). Since MA and Part D applications are generally due in 
February of each year, this review period results in a 12-month look 
back period that covers the previous March through February of the year 
the applications are due. Similar to MA and Part D, we propose to use a 
12-month review period under this PACE proposal, resulting in a review 
of an organization's past performance for the 12 months preceding the 
deadline established by CMS for the submission of PACE applications but 
also propose to apply the 12-month look back review upon receipt of the 
applicant's response to CMS' RAI. A 12-month look back period provides 
recent information on the operations of a PACE organization, which we 
believe is the best indicator of the PACE organization's current and 
future performance.
    We propose, at Sec.  460.18(c)(1)(i), to evaluate the following 
components of an applicant organization's past performance starting 
with the March 2024 quarterly application submission cycle: whether the 
organization was subject to an enrollment or payment sanction under 
Sec.  460.42(a) or (b) for one or more of the violations specified in 
Sec.  460.40, even if the reasons for the sanction have been corrected 
and the sanction has been lifted; whether the organization failed to 
maintain fiscal soundness; whether the organization has filed for or is 
under State bankruptcy proceedings; and whether the organization has 
exceeded CMS' proposed 13-point threshold for compliance actions with 
respect to the PACE program agreement. We are proposing that, if any of 
those circumstances applies to the applicant organization, CMS may deny 
its initial or expansion application.
    Specifically we propose at Sec.  460.18(c)(1)(i)(A) to include the 
imposition of enrollment or payment sanctions under Sec.  460.42 for 
one of the violations listed in Sec.  460.40 as a reason for which CMS 
may deny a PACE application, as noted in the paragraph above. 
Currently, Sec.  460.42 authorizes CMS to impose a suspension of 
enrollment or payment if a PACE organization commits one or more of the 
violations listed in Sec.  460.40. Violations in Sec.  460.40 include 
the failure of the PACE organization to provide medically-necessary 
services, discrimination in enrollment or disenrollment of individuals 
eligible to enroll in a PACE program based on health status or need for 
health services, and involuntary disenrollment of a PACE participant in 
violation of Sec.  460.164. These violations are serious and egregious 
actions by the PACE organization. Organizations that have been 
sanctioned (enrollment or payment) based on their failure to comply 
with CMS' regulations have either admitted they failed to comply with 
PACE requirements or have appealed and a third party has upheld CMS' 
determination that the PACE organization has failed to comply with 
requirements. Because of the egregiousness of the actions that led to 
the PACE organizations' sanctions, we do not believe these 
organizations should be permitted to enter into new agreements, add new 
PACE sites, or expand their service area until the PACE organization 
corrects the issues that resulted in the sanction and ensures that such 
issues are not likely to recur.
    We propose at Sec.  460.18(c)(1)(i)(B) to include, as a basis for 
application denial, the failure to maintain a fiscally sound operation 
after the end of the trial period. For purposes of fiscal soundness, 
the trial period ends when CMS has reviewed independently audited 
annual financial statements covering three full 12-month financial 
reporting periods. The regulation at Sec.  460.80(a) requires a PACE 
organization to have a fiscally sound operation. Under Sec.  
460.80(a)(1), a PACE organization must have a positive net worth as 
demonstrated by total assets greater than total unsubordinated 
liabilities. To monitor compliance with Sec.  460.80(a)(1), CMS 
requires PACE organizations to submit certified financial statements on 
a quarterly basis during the trial period, and annually thereafter, 
unless CMS or the SAA determines that the organization requires more 
frequent monitoring and oversight due to concerns about fiscal 
soundness, in which case the organization may be required to submit 
certified financial statements on a monthly or quarterly basis (or 
both) (Sec.  460.208). Fiscal soundness is a key factor in CMS' 
evaluation of past performance because CMS has a responsibility to 
ensure the organizations that provide health care services to our 
beneficiaries have sufficient funds to allow them to pay providers and 
otherwise maintain operations. The failure of an organization to have a 
positive net worth puts PACE participants in jeopardy of not receiving 
necessary health care. In addition, organizations that are not fiscally 
sound may not be able to continue operations, causing the organization 
to close doors, leaving all their PACE participants without PACE 
coverage. Based on this, CMS believes it

[[Page 79640]]

is in the best interest of the program to add failure to maintain a 
fiscally sound operation--specifically, failure to have a positive net 
worth as demonstrated by total assets greater than total unsubordinated 
liabilities--to the list of reasons CMS may deny a new application or 
an expansion application from a PACE organization.
    We propose to establish at Sec.  460.18(c)(1)(i)(C) that CMS may 
deny the application of an organization that has filed for or is 
currently in State bankruptcy proceedings. Similar to an organization 
that lacks fiscal soundness, an organization that has filed for or 
currently is in State bankruptcy proceedings is at great risk of not 
having sufficient funds to cover costs associated with running a PACE 
program. In circumstances where an organization has filed for 
bankruptcy or is currently in State bankruptcy proceedings, the outcome 
often results in the closure of an organization's operations, putting 
beneficiaries at great risk. Examples of participants being at risk may 
include the inability to find adequate and timely care, care 
coordination issues, loss of providers (especially primary care 
providers who are employed by the PACE organization), as well as loss 
of the social and emotional support the PACE organization provides. 
Thus, permitting an organization to expand while under bankruptcy 
proceedings is not in the best interest of the PACE program and CMS 
should be able to deny an application from any organization that has 
filed for or is in State bankruptcy proceedings.
    Finally, we propose to establish at Sec.  460.18(c)(1)(i)(D) that 
CMS may deny an initial application or an expansion application for a 
PACE organization that exceeds the proposed 13-point threshold with 
respect to CMS-issued compliance actions. Proposed Sec.  460.19(a) 
would specify that CMS may take compliance actions as described at 
proposed Sec.  460.19(c) (discussed in this section of this proposed 
rule) if CMS determines that a PACE organization has not complied with 
the terms of a current or prior PACE program agreement with CMS and an 
SAA. PACE organizations are required to adhere to requirements in 
sections 1894 and 1934 of the Act and in CMS regulations at 42 CFR part 
460. Proposed Sec.  460.19(a)(1) would provide that CMS may determine 
that a PACE organization is non-compliant with requirements if the PACE 
organization fails to meet set performance standards articulated in 
sections 1894 and 1934 of the Act, regulations at 42 CFR chapter IV, 
and guidance. In addition, proposed Sec.  460.19(a)(2) would establish 
that if CMS has not previously articulated a measure for determining 
compliance, CMS may determine that a PACE organization is non-compliant 
if its performance in fulfilling requirements represents an outlier 
relative to the performance of other PACE organizations.
    Currently, CMS issues three types of compliance actions: Notices of 
Non-Compliance (NONCs), Warning Letters (WLs), and Corrective Action 
Plans (CAPs).\203\ These actions are CMS' formal way of recording an 
organization's failure to comply with statutory and regulatory 
requirements as well as providing notice to the organization to correct 
its deficiencies or risk further compliance and/or enforcement actions. 
They also serve to document the problem and, in some instances, request 
details on how the organization intends to address the problem.
---------------------------------------------------------------------------

    \203\ The CAPs CMS proposes to issue for purposes of compliance 
and take into account during past performance evaluations to 
determine whether to deny PACE organizations' applications would be 
separate and distinct from CAPs issued under Sec.  460.194(a)(2), 
which are corrective action plans that are requested and received in 
the course of audits.
---------------------------------------------------------------------------

    CMS proposes to specify at new Sec.  460.19(c) the types of 
compliance actions we currently issue. First, CMS proposes to specify 
that NONCs may be issued for any failure to comply with the 
requirements of the PACE organization's current or prior PACE program 
agreement. CMS typically uses NONCs to document small or isolated 
problems. They are the lowest form of a compliance action issued by 
CMS. CMS typically issues NONCs for the least egregious failures, such 
as a first-time offense, a failure that affects only a small number/
percentage of participants, or issues that have no participant impact. 
An example of a failure that would lead to an NONC would be a failure 
to upload or correctly upload marketing materials.
    Second, CMS proposes to specify that WLs may be issued for serious 
and/or continued noncompliance with the requirements of the PACE 
organization's current or prior program agreement. CMS typically issues 
WLs as an intermediate level of compliance action, between a NONC and a 
CAP. They are issued either when an organization has already received a 
NONC, yet the problem persists, or for a first offense for larger or 
more concerning problems, such as failure to provide medically 
necessary services. Unlike NONCs, these letters contain warning 
language about the potential consequences to the organization should 
the non-compliant performance continue. Similar to CAPs, WLs are issued 
for more egregious instances of non-compliance or continued non-
compliance. However, they are issued when the egregiousness or 
continued non-compliance may not warrant a CAP. For example, a WL might 
be issued when a PACE organization has failed to have the full 
interdisciplinary team (IDT) involved in the review of participant care 
plans, which may have or did result in participants not receiving 
necessary care. CMS might determine, based on a review of factors such 
as the types of care not received, that the PACE organization's non-
compliance does not warrant a CAP, and issue a WL instead.
    Third, CMS proposes to specify that the last type of compliance 
action, the CAP, is the most serious type of compliance action and may 
be issued for particularly egregious or continued noncompliance. CMS 
may determine that the PACE organization has repeated, not corrected, 
or has a new deficiency which substantially impacts beneficiaries. In 
these cases, CMS requires the PACE organization to implement a CAP.
    The CAPs described in this proposed provision are not the same as 
corrective actions issued under Sec.  460.194(a)(2). CAPs issued under 
Sec.  460.194(a)(2) require PACE organizations to take action to 
correct deficiencies identified by CMS or the State administering 
agency through reviews and audits of the PACE organization (Sec.  
460.194(a)(2)). CMS has a formal audit process, which identifies non-
compliance. CMS issues CAPs under 460.194(a)(2) as a result of reviews 
or audits. These CAPs are routinely requested and PACE organizations 
submit them to CMS as a means of addressing deficiencies identified 
during reviews or audits. CMS expects to continue to request CAPs as 
necessary under 460.194(a)(2) in response to deficiencies identified 
through reviews or audits; nothing about this proposal would change 
that process.
    Consistent with the past performance methodology applicable to MA, 
we propose to assign points to each type of compliance action taken by 
CMS against PACE organizations. We then propose to apply a compliance 
action threshold to determine if the PACE organization that submitted 
the application exceeds the threshold and should be denied. The 
following points would be assigned: CAP--6 points, WL--3 points, NONC--
1 point. CMS will then total the points accrued by the applicant 
organization, and if the total meets or exceeds 13 points during the 
12-month review

[[Page 79641]]

period, CMS may deny the organization's new or expansion application on 
the basis of past performance.
    With the proposed addition of compliance actions as a basis for the 
denial of applications, CMS is also proposing to specify at new Sec.  
460.19(b)the factors we currently use to determine whether to issue a 
compliance action and the level of compliance action that should be 
issued.
    At Sec.  460.19(b)(1) through (6), we propose to put in regulations 
the factors we currently use when determining whether to issue a 
compliance action and what level of compliance action to issue. As 
discussed in the paragraphs that follow, CMS considers the following 
factors: the nature of the conduct, the degree of culpability of the 
PACE organization, the actual or potential adverse effect on 
participants which resulted or could have resulted from the conduct of 
the PACE organization, the history of prior offenses by the PACE 
organization or PACE organization's contractors or subcontractors, 
whether the non-compliance was self-reported, and other factors which 
relate to the impact of the underlying non-compliance or to the PACE 
organization's inadequate oversight of the operations that contributed 
to the non-compliance.
    Proposed Sec.  460.19(b)(1) would establish that CMS considers the 
nature of the PACE organization's non-compliant conduct. The nature of 
the conduct is relevant to CMS' determination of whether to issue a 
compliance action and the level of compliance action to take because 
failure to comply can range from an administrative issue to failure to 
provide necessary health care. Compliance issues that are less 
egregious in nature generally result in lower-level compliance actions.
    Proposed Sec.  460.19(b)(2) would provide that CMS considers the 
degree of culpability of the PACE organization. This factor is relevant 
because the PACE organization's failure may have been avoided if the 
PACE organization had performed differently. For example, if the PACE 
organization failed to properly train or failed to hire properly 
trained staff to assist participants in activities of daily living, 
such as bathing, and a participant fell and injured themself in the 
shower, the PACE organization would be more culpable than if staff were 
properly trained and the participant still injured themself. The PACE 
organization has a responsibility to do everything possible to ensure 
the safety of the participants, and its failure, either intentional or 
unintentional (for example, lack of training, lack of oversight, lack 
of staff) would be a factor in CMS' decision about the type of 
compliance action to take.
    Proposed Sec.  460.19(b)(3) would provide that CMS considers the 
effects or potential effect of a PACE organization's conduct on PACE 
participants. This factor is relevant because a PACE organization's 
failure to comply may have very different effects (or potential 
effects) on PACE participants and may affect varying numbers of 
participants. For example, an organization's failure to timely arrange 
for primary care could affect the vast majority of participants 
enrolled with that organization. However, an organization's failure to 
timely arrange for a very specific type of specialty care may affect 
only a few participants.
    Proposed Sec.  460.19(b)(4) would specify that CMS considers the 
history of prior offenses of a PACE organization or its related 
entities. A PACE organization's (or its related entity's) failure to 
comply is relevant because the PACE organization should have ongoing 
processes in place to correct deficiencies as they occur and ensure 
that deficiencies are not likely to recur. As mentioned later in this 
section, organizations that have had recurrent compliance issues may be 
subject to a higher level of compliance action. For example, a PACE 
organization that failed to provide transportation to participants one 
year ago may have received a NONC at that time. If the organization 
fails to correct this deficiency after first being cited with a NONC 
for the deficiency, CMS may escalate the continued failure to comply by 
issuing a WL, based on the PACE organization's past history and 
continued failure to correct the deficiency.
    Proposed Sec.  460.19(b)(5) would provide that CMS considers 
whether an organization self-reported a compliance failure. A PACE 
organization that self-reports that the organization has found the 
deficiency, such as through an internal audit, generally indicates that 
the organization is actively engaged in identifying and correcting 
compliance issues, and likely has initiated the corrective action to 
address the deficiency prior to CMS being made aware of the matter. CMS 
considers issues that are identified through specific requests made by 
CMS, the review of data CMS either has or has requested, or complaints 
that have come into CMS through sources such as 1-800-Medicare that or 
complaints that CMS has asked the PACE organization to provide as 
issues that are not self-reported. If an organization has self-reported 
a compliance issue, CMS may decide to lower the level of noncompliance 
(for example, issuing a NONC instead of a WL) because of the 
organization's transparency with respect to the non-compliant behavior, 
since it is possible CMS would not have found the deficiency if not for 
the self-reporting. However, even if the organization did self-report 
the issue, CMS may decide against lowering the level of compliance 
action if, depending on the factors identified above, to warrant a 
higher-level compliance action.
    Finally, proposed Sec.  460.19(b)(6) would provide that CMS 
considers the PACE organization's failure to adequately oversee its 
operations. For instance, if an organization fails to properly pay 
claims, is aware of the issue, and fails to correct it (for example, by 
processing the claims accurately), or if the organization fails to do 
any monitoring or auditing of its own systems to ensure proper claims 
payment is occurring, CMS could take that into account in determining 
whether to issue a compliance action and, if so, the level of 
compliance action.
    As previously mentioned, CMS proposes in a new Sec.  
460.18(c)(1)(i)(D) that CMS would have authority to deny a new 
application or an expansion application if a PACE organization 
accumulates 13 or more compliance action points during the applicable 
proposed 12-month look back period. This would be the equivalent of 
just over two CAPs. Any organization whose performance results in 
issuance of two CAPs and a NONC, or whose performance results in any 
combination of compliance actions that add up to 13 points, should not 
be permitted to expand.
    CMS is proposing at Sec.  460.18(c)(1)(ii) that CMS could also deny 
an application from an organization that does not hold a PACE program 
agreement at the time of the submission, if the applicant's parent 
organization or another subsidiary of the same parent organization 
meets the past performance criteria for denial proposed in Sec.  
460.18(c)(1)(i). Specifically, if an initial applicant is a legal 
entity under a parent organization that has a PACE program agreement, 
or if there are other organizations under the same parent that have a 
PACE program agreement, and the parent's PACE application or the other 
related organizations' PACE applications would be denied based on any 
of the factors proposed in Sec.  460.18(c)(1)(i), we would also deny 
the new entity's application based on the

[[Page 79642]]

past performance of other members of its corporate family. It is likely 
that similar structures, policies, and procedures are used across legal 
entities that are part of the same parent organization, increasing the 
likelihood that any part of a parent organization that has at least one 
poorly performing legal entity may be at increased risk of poor 
performance. In addition, using other legal entities' performance when 
the new applicant has no history would also prevent organizations from 
manipulating CMS'past performance methodology by establishing new legal 
entities and using those to submit PACE applications in order to avoid 
having CMS take into account the troubled performance history of the 
parent organization or its subsidiaries when reviewing the new legal 
entity's PACE application.
    It would be especially important, when CMS reviews a new 
application from a legal entity that does not have activity that would 
constitute the past performance of that legal entity as a PACE 
organization, for CMS to be able to consider information from the 
current or prior PACE program agreements of the parent organization of 
the applicant, and from members of the same parent organization as the 
applicant. We are more frequently seeing initial PACE applications that 
represent unique and distinct legal entities that are part of a broader 
parent organization. In one recent instance, we reviewed an initial 
PACE application for a new legal entity under a parent organization 
that already had created a number of separate and unique legal sub-
entities. In this case, in accordance with Sec.  460.18(a) and (b), CMS 
considered the known adverse audit findings of other legal entities 
that were under the same parent organization, and which resulted in 
formal enrollment sanctions for the other legal entities. In the review 
of the new legal entity's application, we determined that the new legal 
entity was under the same ``umbrella'' as the legal entities that had 
been sanctioned, because many of the key members of the executive 
leadership team were served in similar roles for both the sanctioned 
entities and the new applicant. CMS denied the application due to the 
nature of the deficiencies that led to formal sanctions for the related 
organizations.
    We are also proposing one exception to this policy. A PACE 
organization that acquires an organization that would have an 
application denied based on any of the factors in Sec.  460.18(c)(i) 
would have a 24 month ``grace'' period that would extend only to the 
acquiring parent organization. This means that the acquiring 
organization would still be able to enter into new agreements or expand 
its programs under other agreements for which there are no performance 
issues for 24 months following the acquisition. It is in the best 
interest of the PACE program to allow PACE organizations that are 
meeting CMS' requirements to acquire poor performing PACE organizations 
without being penalized based solely on their acquisition. As stated in 
proposed Sec.  460.18(c)(ii), this ``grace'' period would be limited to 
24 months from the date of acquisition. We believe this 24-month grace 
period would give an acquiring PACE organization sufficient time to 
``turn around'' a poor performing organization.
    Finally, we propose to add a new paragraph Sec.  460.18(d) to 
provide CMS the explicit authority to consider prior termination 
history as part of the evaluation of an initial PACE or expansion 
application. Specifically, we propose that if CMS has terminated a PACE 
organization's program agreement under Sec.  460.50(a), or did not 
renew the program agreement, and that termination or non-renewal took 
effect within the 38 months prior to the submission of an application 
by the PACE organization, CMS would be able to deny the PACE 
organization's application based on the applicant's substantial failure 
to comply with the requirements of the PACE program, even if the 
applicant satisfies all other application requirements. The 38-month 
period is consistent with the Part D regulations at 42 CFR part 423. 
Because PACE organizations that offer Part D are subject to 42 CFR 
parts 423 and 460, we believe a 38 month period is appropriate. This 
ensures PACE applicants are not unduly burdened by having two different 
sets of past performance requirements, resulting in two different 
timeframes. CMS does not unilaterally terminate PACE organizations' 
program agreements without significant failures, which are often 
failures affecting the furnishing or quality of care provided to PACE 
participants. Furthermore, a PACE organization whose program agreement 
has been terminated may appeal. If the PACE organization chooses to 
appeal and the termination is subsequently upheld through the appeals 
process, the organization has been found to have committed an action or 
actions that are egregious enough to warrant a termination. If the 
organization does not appeal, then the organization is acknowledging 
CMS' ability to terminate its PACE program agreement. Allowing 
organizations to come back into the PACE program when they have failed 
to adequately implement a prior agreement would be contrary to CMS' 
purpose of ensuring that high quality care is provided to PACE 
participants. However, we believe that an organization, after a 38-
month period, may have improved its operations sufficiently for us to 
consider its submission of an initial application.

D. Clarification of PACE Enforcement Authority for Civil Money 
Penalties and Intermediate Sanctions (Sec.  460.40(b))

    In the final rule titled ``Medicare and Medicaid Programs; Programs 
of All-Inclusive Care for the Elderly (PACE)'' (84 FR 25610), which 
appeared in the June 3, 2019 issue of the Federal Register, CMS amended 
Sec.  460.40 by adding paragraph (b), which establishes that CMS has 
the discretion to take alternative enforcement actions in the form of 
civil money penalties (CMP) or a suspension of enrollment of Medicare 
beneficiaries by, or payment to, a PACE organization if CMS makes a 
determination that could lead to a termination of a PACE program 
agreement under Sec.  460.50. In order to terminate a contract under 
paragraph (b) of Sec.  460.50, CMS or the State administering agency 
must determine that both of the following circumstances exist: (1) 
there are significant deficiencies in the quality of care furnished to 
participants; or the PACE organization failed to comply substantially 
with conditions for a PACE program or PACE organization under this 
part, or with terms of its PACE program agreement, including making 
payment to an individual or entity that is included on the preclusion 
list, defined in Sec.  422.2; and (2) within 30 days of the date of the 
receipt of written notice of a determination made under paragraph Sec.  
460.50(b)(1), the PACE organization failed to develop and successfully 
initiate a plan to correct the deficiencies, or failed to continue 
implementation of the plan of correction.
    In circumstances where CMS has made a determination under Sec.  
460.50 that could lead to termination, CMS would likely impose a CMP or 
suspension of enrollment and/or payment on a PACE organization prior to 
terminating the PACE organization, as authorized by Sec.  460.40(b) 
(unless there was imminent risk to a PACE participant). This is because 
CMS views CMPs and suspensions of enrollment and/or payment as 
corrective in nature, since they are imposed when the PACE organization 
has been found noncompliant, and they provide time for the PACE 
organization to correct the issue(s) that led to the noncompliance

[[Page 79643]]

with the ultimate goal of mitigating any actual or potential harm for 
PACE participants.
    As previously stated, in order for CMS to take any enforcement 
action (CMP, suspension of enrollment or payment, termination) on a 
PACE organization based on the grounds for termination set forth in 
Sec.  460.50(b), the PACE organization must fail to develop and 
successfully initiate a plan to correct the deficiencies, or fail to 
continue implementation of the plan of correction within 30 days of 
receiving notice. Given that CMPs and suspensions of enrollment and/or 
payment are corrective in nature and imposed prior to termination, CMS 
believes that providing PACE organizations an opportunity to correct 
prior to imposing a CMP or suspensions of enrollment and/or payment is 
unnecessary and most importantly an impediment to CMS' ability to 
protect PACE participants from potential harm.
    For these reasons, CMS proposes to revise Sec.  460.40(b) by adding 
the following: ``If CMS or the State administering agency determines 
that the circumstances in Sec.  460.50(b)(1) exist, neither CMS nor the 
State administrating agency has to determine that the circumstances in 
460.50(b)(2) exist prior to imposing a CMP or enrollment and/or payment 
suspension.''

E. Personnel Medical Clearance (Sec.  Sec.  460.64 and 460.71)

    Sections 1894(f)(4) and 1934(f)(4) of the Act grant CMS broad 
authority to issue regulations to ensure the health and safety of 
individuals enrolled in PACE. The PACE regulations at Sec. Sec.  460.64 
and 460.71 protect participants' health and safety by requiring PACE 
staff to be medically cleared of communicable diseases before engaging 
in direct participant contact.
    In the 1999 PACE interim final rule (64 FR 66242), CMS added Sec.  
460.64, which sets forth certain personnel qualification requirements 
for PACE staff. When drafting these regulations, CMS reviewed the 
personnel requirements of other Medicare and Medicaid providers that 
serve populations similar to PACE participants (for example, home 
health agencies, nursing facilities, intermediate care facilities) 
(Id.). CMS also explained that in drafting these provisions we took a 
flexible approach that relied on State requirements as much as possible 
(Id.).
    In the 2002 interim final rule, titled ``Medicare and Medicaid 
Programs; Programs of All-inclusive Care for the Elderly (PACE); 
Program Revisions'', which appeared in the Federal Register October 1, 
2002 (67 FR 61496), CMS added Sec.  460.71, which sets forth oversight 
requirements for PACE employees and contractors with direct patient 
care responsibilities. CMS noted the importance of adding this new 
section due to the vulnerable frail population served by the PACE 
program and the increased opportunity for a PACE organization to 
contract out participant care services due to the amendment in the 2002 
interim final rule which allowed PACE organizations to provide PACE 
Center services through contractual arrangements (67 FR 61499). One of 
the new requirements that the 2002 interim final rule adopted was the 
requirement at Sec.  460.71(b)(4) for PACE organizations to develop a 
program to ensure that all staff furnishing direct participant care 
services be ``free of communicable diseases.'' In the rule titled 
``Medicare and Medicaid Programs; Programs of All-Inclusive Care for 
the Elderly (PACE); Program Revisions'', which appeared in the Federal 
Register on December 8, 2006 (71 FR 71243), herein after referred to as 
the 2006 PACE final rule, CMS amended Sec.  460.64 to align with Sec.  
460.71(b)(4) by adding the requirement at Sec.  460.64(a)(5) that 
employees and contractors with direct participant contact ``[b]e 
medically cleared for communicable diseases and have all vaccinations 
up-to-date before engaging in direct participant contact.'' When adding 
this requirement at Sec.  460.64(a)(5), CMS noted, ``It is standard 
practice in the health care industry that an individual must be cleared 
as free of communicable disease prior to employment'' and ``this is 
even more important with a frail elderly population considering their 
complex medical conditions and increased susceptibility'' (71 FR 
71267). CMS also indicated in the 2006 PACE final rule that we were 
amending Sec.  460.71 ``to be consistent with the general personnel 
qualifications'' (71 FR 71328); as amended, Sec.  460.71(b)(4) 
specified that all direct participant care staff and contractors must 
be ``free of communicable diseases and have all immunizations up to 
date before performing direct participant care.'' In the June 2019 
final rule, CMS amended the language in Sec.  460.71(b)(4), which 
referred to staff being ``free of communicable disease'' so that it 
instead referred to staff being ``medically cleared for communicable 
disease'', which is the phrasing used in Sec.  460.64(a)(5) (84 FR 
25636). CMS explained that this inconsistency in language had caused 
confusion among PACE organizations about whether to attach the same 
meaning to ``medically cleared for communicable diseases'' and ``free 
of communicable diseases.'' CMS amended Sec.  460.71(b)(4) to use the 
phrase ``medically cleared for communicable disease'' that appears in 
Sec.  460.64(a)(5) so that the two provisions would be consistent and 
contain the same language (84 FR 25636).
    Based on our audit and oversight experience, we have found that 
PACE organizations have many varied interpretations of what it means 
for staff to be ``medically cleared for communicable disease.'' As a 
result, PACE organizations do not implement consistent methods for 
assessing or detecting communicable diseases. For example, some 
organizations require individuals to have a physical examination by a 
physician, physician assistant, or nurse practitioner, whereas others 
allow for an assessment to be conducted by staff who are not licensed 
to evaluate individuals' medical conditions, and still other 
organizations only require a self-assessment completed by the 
individual seeking employment. While a physical examination by a 
physician, physician assistant, or nurse practitioner is sufficient for 
clearing an individual of a communicable disease, CMS does not believe 
that assessments conducted by unlicensed staff or self-assessments are 
sufficient to meet the requirement.
    For the last 2 years, the COVID-19 pandemic has demonstrated a need 
for a more comprehensive approach to infectious disease management and 
prevention. The elderly population was hit particularly hard by the 
pandemic, which highlighted the insufficiency of existing safeguards in 
nursing homes and similar care environments. While PACE participants 
live independently unless care is needed in a specific setting, they 
still require nursing home-equivalent levels of care. That care is 
typically provided in participants' homes and in the PACE centers, and 
participants interact with many different types of staff in those 
settings. We believe that the inconsistent approach to medical 
clearance that has been noted on audit has led to insufficient medical 
clearance, which places PACE participants at risk of exposure to 
communicable diseases including, but not limited to, COVID-19. 
Therefore, we are proposing to amend Sec. Sec.  460.64 and 460.71 to 
require all PACE organizations to develop and implement a comprehensive 
medical clearance process with minimum conditions that CMS deems 
acceptable to meet the requirement of medical clearance and to better 
protect the frail

[[Page 79644]]

and vulnerable population served by PACE.
    We are proposing several modifications to the requirement at Sec.  
460.64(a)(5). Currently, the language states that staff must ``be 
medically cleared for communicable diseases and have all immunizations 
up-to-date before engaging in direct participant contact.'' First, we 
propose to separate the requirement to be medically cleared for 
communicable diseases from the requirement to have all immunizations up 
to date. We believe these are two separate and distinct requirements, 
and each serves a unique and important purpose. Specifically, we 
propose to create a new paragraph (a)(6) that would specify that each 
member of the PACE organization's staff (employee or contractor) who 
has direct contact with participants must have all immunizations up to 
date before engaging in direct participant contact. Proposed paragraph 
(a)(6) would include language specifying that, at a minimum, 
vaccinations identified in Sec.  460.74 must be up to date. In response 
to the COVID-19 pandemic, we amended Sec.  460.74 by adding paragraph 
(d), which requires PACE organizations to develop and implement 
policies and procedures to ensure that all staff are fully vaccinated 
for COVID-19 (see 86 FR 61555 at 61618). We believe citing back to this 
immunization requirement in new Sec.  460.64(a)(6) would help ensure 
that PACE organizations are considering COVID-19 vaccination status 
when ensuring staff have received all immunizations. Currently, while 
the regulation requires that ``all immunizations are up to date'', CMS 
has not defined what those immunizations must include, other than the 
COVID vaccination referenced in Sec.  460.74. Rather, PACE 
organizations have historically set their own requirements for what 
vaccinations should be considered as ``required'' for their staff with 
direct participant contact. We considered defining all immunizations as 
including those recommended by the Advisory Committee on Immunizations 
Practices (ACIP) for health care workers, including when they are 
applicable based on individual criteria such as age or past 
infection.\204\ However, based on the PACE population we are 
considering limiting the required vaccinations for PACE staff with 
direct participant contact to the Flu vaccine, Measles, Mumps and 
Rubella (MMR); Varicella; Tetanus, Diphtheria, Pertussis (Tdap); and 
Hepatitis B.\205\ We solicit comment on whether any specific 
vaccinations other than the COVID-19 vaccination should be required for 
each member of a PACE organization's staff (employee or contractor) 
that has direct participant contact. We are particularly interested in 
commenters' views on the vaccinations recommended by ACIP and whether 
they should be included among the immunizations required for PACE staff 
with direct participant contact. We would also solicit comment on 
whether we should use the ACIP list without modifications, or whether 
we should only require this subset of vaccines; Flu vaccine, Measles, 
Mumps and Rubella (MMR); Varicella; Tetanus, Diphtheria, Pertussis 
(Tdap); and Hepatitis B.
---------------------------------------------------------------------------

    \204\ Vaccines Indicated for Adults Based on Medical Indications 
[verbar] CDC.
    \205\ Meningococcal vaccination is also a recommended 
immunization by ACIP; however, this immunization is recommended for 
microbiologists who are routinely exposed to Neisseria meningitidis, 
which we do not believe is relevant to the PACE population or PACE 
staff.
---------------------------------------------------------------------------

    At Sec.  460.64(a)(5), we propose to require that each member of a 
PACE organization's staff (employee or contractor) who has direct 
participant contact be medically cleared of communicable diseases both 
before engaging in direct participant contact and on an annual basis. 
Requiring staff to be medically cleared of communicable diseases 
annually will ensure that medical clearance is not a one-time 
requirement, but rather an ongoing responsibility. In our review of 
State requirements, we noted numerous states have some requirement for 
an ongoing or annual screening, and therefore it is reasonable to also 
propose that for PACE organizations. We are soliciting comment on 
adding this annual requirement into the medical clearance provision.
    We also propose adding requirements to define what would constitute 
an acceptable medical clearance process. When considering what to 
require for medical clearance we considered many different provider 
types, including hospital systems, and what different states require 
for medical clearance. We also considered the PACE population, and its 
vulnerability to communicable diseases. Based on these factors, we 
believe the best practice for PACE organizations is to have each 
individual with direct participant contact on a PACE organization's 
staff (employee or contractor) undergo a physical examination by a 
provider acting within the scope of their authority to practice. A 
physical examination requirement would ensure that staff are 
appropriately medically cleared prior to engaging in direct participant 
contact. We therefore propose at Sec.  460.64(a)(5)(i) to require that 
staff who engage in direct participant contact must be medically 
cleared for communicable diseases based on a physical examination 
performed by a licensed physician, nurse practitioner, or physician 
assistant acting within the scope of the practitioner's authority to 
practice. This exam could be done at the PACE center by the primary 
care provider already employed by the PACE organization, and therefore, 
it would not be difficult to operationalize. We also propose at Sec.  
460.64(a)(5)(ii) that as part of the initial physical examination, 
staff with direct participant contact must be determined to be free of 
active Tuberculosis (TB) disease. It is important for organizations to 
screen for TB because it is a deadly disease and baseline testing is 
recommended by the CDC for all health care professionals.\206\ Testing 
for TB is widely available and relatively simple and we believe that a 
TB test should be conducted as part of any initial physical examination 
that is screening for communicable disease. We are proposing to add 
``initial'' into this regulation text, because annual TB testing is not 
recommended by the CDC unless a risk assessment is performed which 
indicates it is necessary.\207\
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    \206\ https://www.cdc.gov/tb/topic/testing/healthcareworkers.htm.
    \207\ https://www.cdc.gov/tb/topic/testing/healthcareworkers.htm.
---------------------------------------------------------------------------

    However, we also understand that not all individuals who have 
direct participant contact have the same level of risk of having 
communicable diseases (through previous exposures), and requiring a 
physical examination may be overly burdensome. Therefore, we propose 
that, as an alternative to medically clearing all staff with direct 
participant contact for communicable diseases based on a physical 
examination, the PACE organization could opt to conduct an individual 
risk assessment as allowed under proposed Sec.  460.64(a)(5)(iii). If 
the results of the risk assessment indicate the individual does not 
require a physical examination in order to be medically cleared, then a 
physical examination would not be required. This proposal would allow 
organizations to medically clear staff with direct participant contact 
by either conducting a physical examination, or by conducting a risk 
assessment of the individual and determining based on the results that 
no physical exam is needed.
    Proposed Sec.  460.64(a)(5)(iii) would identify the minimum 
requirements that the PACE organization must satisfy if it chooses to 
conduct a risk assessment for medical clearance. First, we propose to

[[Page 79645]]

specify at Sec.  460.64(a)(5)(iii)(A) that the PACE organization must 
develop and implement policies and procedures for conducting a risk 
assessment on each individual with direct participant contact based on 
accepted professional standards of care, for example, standards of care 
for screening influenza. For example, a risk assessment may include 
questions about an individual's current symptoms (if any), past 
diagnoses (specifically in regard to communicable diseases), and/or 
recent travel to determine whether the individual is at risk of being 
infected with a communicable disease. While each organization should 
have the operational latitude to develop its own policies and 
procedures, consistent with these proposed requirements, to assess if 
an individual needs a physical examination, when drafting and 
implementing these policies and procedures, organizations should 
consider any applicable professional standards of care and/or any 
applicable State guidelines on medical clearance.
    Proposed Sec.  460.64(a)(5)(iii)(B) would specify that the purpose 
of the risk assessment is to determine if, based on the assessment, a 
physical examination is necessary for an individual. As previously 
mentioned, we believe that the best practice for medical clearance is a 
physical examination by a physician, nurse practitioner, or physician 
assistant acting within the scope of their authority to practice. 
However, by allowing PACE organizations to conduct a risk assessment to 
determine if some individuals on a PACE organization's staff who engage 
in direct participant contact (employee or contractor) may not need a 
full physical exam would provide some administrative flexibility for 
organizations.
    Proposed Sec.  460.64(a)(5)(iii)(C) would require that the results 
of the risk assessment be reviewed by a registered nurse, physician, 
nurse practitioner or physician assistant. We initially considered 
limiting these professions to primary care providers. However, we 
believe that because this risk assessment is used to screen staff to 
determine whether a physical exam is needed but is not itself a 
physical exam meant to diagnose an individual, it would be appropriate 
for a registered nurse to review those results and help triage staff 
that may need a more thorough exam. However, because registered nurses 
are not permitted to diagnose individuals, it would be inappropriate 
for a registered nurse to perform the physical examination.
    Finally, we propose to identify at Sec.  460.64(a)(5)(iii)(D) the 
minimum requirements we would expect to be included in a PACE 
organization's risk assessment. First, we propose to require that any 
risk assessment developed by a PACE organization would assess whether 
staff have been exposed to or have symptoms of the following diseases: 
COVID-19, Diphtheria,\208\ Influenza,\209\ Measles,\210\ 
Meningitis,\211\ Meningococcal Disease,\212\ Mumps,\213\ 
Pertussis,\214\ Pneumococcal Disease,\215\ Rubella,\216\ Streptococcal 
Infection,\217\ and Varicella Zoster Virus.\218\ When considering what 
communicable diseases to include in the risk assessment, we considered 
several resources, including State resources for reportable diseases, 
and we also considered information from the CDC on communicable 
diseases. We are proposing to include the aforementioned diseases in 
the risk assessment because they are commonly reportable and 
transmissible via air or through droplets. In addition to the 
aforementioned specific diseases, we are also proposing to include any 
other infectious disease noted as a potential threat to public health 
by the CDC in order to allow for situations such as the recent COVID-19 
pandemic where a new communicable disease creates a situation that 
poses a threat to public health, and is significant enough that the CDC 
notes the threat. We would expect in those situations for a PACE 
organization to update its risk assessment to include that new public 
threat in the screening process. While we would want to account for new 
threats to public health, we recognize that the proposed language is 
more open to interpretation than listing specific diseases that may 
arise in the future. When developing this proposal, we considered CDC's 
Health Alert Network, the agency's primary method of sharing cleared 
information about urgent public health incidents with public 
information officers; Federal, State, territorial, Tribal, and local 
public health practitioners; clinicians; and public health 
laboratories.\219\ It is likely that any threat to public health 
related to communicable diseases would be shared through this 
mechanism, but we solicit comment on whether this would be an 
appropriate source to consider, or whether there are other sources that 
CMS and PACE organizations should use. Because we recognize these 
sources may change over time, we are not inclined to add a specific 
source into regulation, but we solicit comment on that as well.
---------------------------------------------------------------------------

    \208\ https://www.cdc.gov/diphtheria/.
    \209\ https://www.cdc.gov/flu/.
    \210\ https://www.cdc.gov/measles/.
    \211\ https://www.cdc.gov/meningitis/.
    \212\ https://www.cdc.gov/meningococcal/index.html.
    \213\ https://www.cdc.gov/mumps/.
    \214\ https://www.cdc.gov/pertussis/.
    \215\ https://www.cdc.gov/pneumococcal/.
    \216\ https://www.cdc.gov/rubella/.
    \217\ https://www.cdc.gov/infectioncontrol/guidelines/healthcare-personnel/selected-infections/group-a-strep.html.
    \218\ https://www.cdc.gov/chickenpox/hcp/.
    \219\ https://emergency.cdc.gov/han/index.asp.
---------------------------------------------------------------------------

    We also propose to require that a PACE organization's initial risk 
assessment must determine whether staff are free of active TB disease. 
We considered adding TB into the list of diseases in Sec.  
460.64(a)(5)(iii)(D)(1), however, we believe screening for this disease 
through a series of questions about exposure or symptomatology would 
not be sufficient to rule out this condition when conducting an initial 
evaluation of an individual. As aforementioned, the availability of 
testing for TB is wide spread, and all staff should be determined to be 
free of active TB prior to having direct participant contact. In order 
to ensure staff are free from active TB, a PACE organization should 
conduct either a skin test (with a chest x-ray when indicated) and/or 
blood test, as well as a physical examination if indicated, during the 
initial risk assessment process.
    While we have proposed an alternative to requiring a physical 
examination for every employee or contractor with direct participant 
contact (that is, by allowing PACE organizations to conduct a risk 
assessment), we are soliciting comment on whether we should eliminate 
the risk assessment from this proposal, and require all staff who 
engage in direct participant contact (employee or contractor) to 
undergo a physical examination by a physician in order to be medically 
cleared. As indicated earlier in our discussion, we believe a 
physician, nurse practitioner, or physician assistant is best qualified 
to determine if an individual is medically cleared from communicable 
diseases.
    We discuss and account for the burden of updating the policies and 
procedures in the collection of information requirements section of 
this proposed rule.
    As we previously discussed, the requirement for medical clearance 
with respect to communicable diseases resides both in Sec. Sec.  
460.64(a)(5) and 460.71(b)(4). In section Sec.  460.71(b)(4), we 
propose to amend the current language to state that all employees and 
contracted staff furnishing care directly to participants must be 
medically

[[Page 79646]]

cleared for communicable diseases before engaging in direct participant 
contact and on an annual basis as required under Sec.  460.64(a)(5). We 
also propose to add language to a newly designated Sec.  460.71(b)(5) 
to require all employees and contracted staff to have all immunizations 
up-to-date before engaging in direct participant contact, including, at 
a minimum, the vaccine requirements identified in Sec.  460.74. Under 
our proposal, current paragraphs (b)(5) and (b)(6) would be 
redesignated as paragraphs (b)(6) and (b)(7). We believe that by 
modifying this provision as proposed we would not be increasing the 
burden on PACE organizations as they are already required to ensure 
employees and contractors have all immunizations up-to-date.

F. PACE Contracted Services (Sec.  460.70)

    Sections 1894(a)(2)(B) and 1934(a)(2)(B) of the Act require 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. 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.
    The 1999 PACE interim final rule (64 FR 66234) was a comprehensive 
rule that addressed eligibility, administrative requirements, 
application procedures, services, payment, participant rights, and 
quality assurance. As we noted in that rule, that rulemaking 
implemented the directive in sections 1894(f)(2) and 1934(f)(2) of the 
Act to incorporate into regulation the requirements applied to PACE 
demonstration programs under the Protocol,\220\ to the extent 
consistent with provisions of sections 1894 and 1934 of the Act. Among 
the required services included in the original PACE Protocol and the 
1999 PACE interim final rule were medical specialty services. 
Specifically, the PACE Protocol identified a minimum subset of services 
that a PACE organization must provide, which was used to create the 
regulation at Sec.  460.92. These medical specialty services included, 
but were not limited to, anesthesiology, audiology, cardiology, 
dentistry, dermatology, gastroenterology, gynecology, internal 
medicine, nephrology, neurosurgery, oncology, ophthalmology, oral 
surgery, orthopedic surgery, otorhinolaryngology, plastic surgery, 
pharmacy consulting services, podiatry, psychiatry, pulmonary disease, 
radiology, rheumatology, general surgery, thoracic and vascular 
surgery, and urology.
---------------------------------------------------------------------------

    \220\ The Protocol references the PACE protocol published by On 
Lok, Inc. A copy of the original PACE protocol is included as an 
attachment to the 1999 PACE interim final rule (see 64 FR 66298). 
This Protocol was later replaced by the PACE program agreement.
---------------------------------------------------------------------------

    In the 2006 PACE final rule (71 FR 71244), CMS reviewed and 
addressed comments concerning the list of required services in Sec.  
460.92. Some commenters had expressed the view that the list was too 
extensive and noted that it was longer than the list of required 
services for nursing facilities, which the commenters suggested 
presented a potential dilemma for states to establish the cost 
effectiveness of PACE compared to the cost for nursing facilities. 
Other commenters recommended that CMS reevaluate the list to ensure it 
included the minimum requirements necessary to protect the health, 
safety, welfare, and rights of consumers in the PACE program (71 FR 
71280).
    In response to these comments, CMS reiterated that the scope of 
benefits identified in sections 1894(b) and 1934(b) of the Act, and the 
requirement that PACE cover, at a minimum, all Medicare covered 
services, all Medicaid covered services, and any other services 
determined necessary by the IDT (71 FR 71280). However, following 
review of the comments, CMS determined it was not possible to provide a 
complete list of all inpatient, outpatient, physician specialty, care 
planning, and social support services that must be furnished to 
participants if ordered by the IDT (71 FR 71281). For this reason, CMS 
removed the listing of required services in Sec.  460.92, including 
medical specialties; not because those services are not required in 
PACE, but because the PACE benefit covers even more services than the 
ones that had been initially listed under Sec.  460.92, and we believed 
including an incomplete listing of specialties might be misunderstood 
to mean that specialties we did not list were not required services. 
Instead, CMS revised Sec.  460.92 to state that PACE organizations are 
required to cover all Medicare covered services, all Medicaid covered 
services included in the State plan, and any other services determined 
necessary by the IDT.
    While the list of specialties was removed from Sec.  460.92, CMS 
did not remove Sec.  460.112(c) which establishes that PACE 
participants have a right to a choice of providers, within the PACE 
organization's network, that is sufficient to ensure access to 
appropriate, high-quality health care. Specifically, CMS stated that 
each participant has the right to choose both their primary care 
provider and specialists within the PACE network (71 FR 71296). CMS 
stressed that ``consumers with complex or serious medical conditions 
who require frequent specialty care should have direct access to a 
qualified specialist of their choice within a plan's network of 
providers'' (Id.). CMS noted in that discussion that we expect the PACE 
organization to have contractual arrangements with primary care 
physicians (PCPs) and specialists to meet the needs of their 
participants, and that CMS and the SAA would determine compliance with 
the requirement as part of the application process and through ongoing 
monitoring. (Id.).
    Since making these changes, we have seen through our monitoring and 
oversight efforts that some PACE organizations are not providing timely 
access to medical specialists. For example, based on data collected 
during 2021 audits (the most recent complete year of audit data), 
approximately 70% of organizations that were cited for a failure to 
provide necessary services were cited, at least in part, based on not 
providing necessary access to medical specialists. These delays in 
access have, in some instances, contributed to adverse impacts to 
participants including injuries, hospitalizations and death. Based on 
our experience, we have found that delays in accessing medical 
specialists sometimes occur as a result of PACE organizations not 
having contracts in effect for the medical specialties commonly 
utilized by PACE participants, such as the types of medical specialties 
enumerated in the 1999 PACE interim final rule. Therefore, we are 
proposing to add back into the regulation the list of medical specialty 
services identified in the original PACE protocol that the PACE 
organizations must ensure access to as a minimum requirement. 
Specifically, we propose to amend by adding language to Sec.  
460.70(a)(1) that specifies that PACE organizations are required to 
execute and maintain a contract with the following medical specialties: 
anesthesiology, audiology, cardiology, dentistry, dermatology,

[[Page 79647]]

gastroenterology, gynecology, internal medicine, nephrology, 
neurosurgery, oncology, ophthalmology, oral surgery, orthopedic 
surgery, otorhinolaryngology, plastic surgery, pharmacy consulting 
services, podiatry, psychiatry, pulmonary disease, radiology, 
rheumatology, general surgery, thoracic and vascular surgery, and 
urology. We considered adding the medical specialties to Sec.  460.92, 
where it was originally located; however, the requirement is better 
suited in Sec.  460.70(a)(1) for several reasons. First, most, if not 
all, medical specialists do not work directly for the PACE 
organization, and rather are contracted providers that would need to 
adhere to the other requirements in Sec.  460.70. Second, by adding 
this requirement into the contracted services provision of the 
regulation, we believe it will allow CMS and State agencies to better 
assess PACE organizations' readiness to enroll by ensuring these 
contracts are in place prior to participants enrolling in the 
organization.
    While we are proposing to add a list of medical specialty services 
back into the PACE regulations, we continue to maintain that this is 
not an exhaustive list of all medical specialists that the PACE 
organization may be required to provide access to. For example, if the 
IDT determines that a participant needs to see a hematologist, the PACE 
organization would be required to provide access to that specialist in 
a timely manner. The specialties we are proposing to add in Sec.  
460.70(a)(1) would represent a minimum requirement for all PACE 
organizations; each PACE organizations should consider the needs of its 
participants to determine what additional medical specialists may be 
necessary for its network to be sufficient. While we are proposing to 
add back into regulation the 25 medical specialty services identified 
in the original PACE protocol, we solicit comment on whether CMS should 
include the following additional specialty services in the list of 
minimum required services: endocrinology, hematology, immunology, 
neurology, colorectal surgery, palliative medicine, infectious disease, 
physical medicine and rehabilitation. Additionally, while we consider 
psychiatry to be an important behavioral health specialist since they 
write prescriptions for psychiatric medicines, we are soliciting 
comment on whether there should be other behavior health specialists 
required in this list, such as psychologists or licensed clinical 
social workers. When submitting comments on this proposal, we ask that 
commenters indicate whether they have any concerns with CMS adding any 
or all of the, previously discussed, specialty services to the list. 
For commenters who do have such concerns, we ask that you describe your 
concerns with specificity, so that we can more fully understand the 
nature and basis of your concerns. We believe a PACE organization must 
be able to access all these specialty services when a participant needs 
them, and based on our oversight experience, that these additional 
specialty services are often necessary for the PACE population.
    We also propose at new Sec.  460.70(a)(2) to require a PACE 
organization to execute these contracts with specialists prior to 
enrollment of participants, and to require the PACE organization to 
maintain such contracts on an ongoing basis to ensure participants 
receive appropriate and timely access to all necessary care and 
services. We clarify that we are not requiring PACE organizations to 
contract with individual specialists in situations where the PACE 
organization has contracted with a provider or practice that offers 
multiple specialties. In an instance of a medical provider or practice 
offering multiple specialties, the contract between the practice or 
provider, such as a hospital group, and the PACE organization would 
meet the requirement to contract with whatever specialties were 
included in the practice or provider group. We believe it is 
appropriate for organizations to be able to demonstrate that they have 
sufficient and direct access to these commonly needed specialists prior 
to participants enrolling in the organization. Through our auditing and 
oversight efforts, we have seen lengthy delays in specialist referrals 
when an organization has to contract with a new specialist, and waiting 
until a participant enrolls or has need of the specialist may create 
unreasonable delays in the participant being able to access that 
specialist. Additionally, as we noted in the 2006 PACE final rule (71 
FR 71296), PACE organizations are financially responsible for all of 
their participants' health care needs, and delays in referrals for 
specialist services may have a significant impact on the PACE 
organization's financial viability. Failure to provide timely 
specialist referrals may lead to more expensive care, including the 
need for institutionalization, which can drive up operating costs for a 
PACE organization.
    At proposed Sec.  460.70(a)(3), we would establish that a PACE 
organization must make reasonable and timely attempts to contract with 
medical specialists. PACE organizations are responsible for ensuring 
that participants have reasonable and timely access to medical 
specialty services, and that PACE organizations are responsible for 
taking appropriate steps in ensuring that they have suitable contracts 
in place in order to facilitate timely access to medical specialty 
services. We are not proposing to establish specific criteria for 
determining whether ``reasonable'' attempts have been made for purposes 
of proposed Sec.  460.70(a)(3), as what is reasonable would depend on 
the facts and circumstances of the case. For example, in an area with 
multiple providers in a specific medical specialty, it would not be 
reasonable to only attempt to contract with a single provider, if that 
provider indicated they were unwilling to contract with the PACE 
organization.
    We further propose to establish at Sec.  460.70(a)(3)(i) that if at 
any time a PACE organization is unable to directly contract with a 
specific entity to provide specialist services to participants, the 
PACE organization must still ensure ongoing access to necessary care 
and services that would otherwise be provided to participants by a 
contracted specialist, and that the participant's needs are met, 
through a different mechanism which may include hospitalization. As 
noted in the 2006 PACE final rule (71 FR 71296), we understand that in 
certain circumstances executing multiple contracts for a specific 
specialty may be difficult due, in part, to a limited number of 
specialists in certain geographic areas; however, we stress that PACE 
organizations continue to be responsible for meeting all of the 
participant's needs, even if there is not a direct contract in place. 
Additionally, under our proposal at Sec.  460.70(a)(3)(ii) we would 
expect an organization to promptly report any contracting problems to 
CMS and the State Administering Agency (SAA), and include information 
on what attempts were made, the reason why the contract was not 
effectuated, and the PACE organization's plan to provide access to the 
necessary services. This reporting may be initiated by the PACE 
organization when reasonable attempts to contract have been made, and 
were unsuccessful; or it may be done in response to CMS or the SAA 
inquiring as to the status of the contracts. For example, during the 
State readiness review, the SAA may inquire as to the status of the 
PACE organization's contracts with medical specialists. When reporting 
these contracting issues to CMS or the SAA, the PACE organization 
should be prepared to

[[Page 79648]]

describe its attempts to contract with medical specialists, why a 
contract was not able to be effectuated, and how the PACE organization 
plans to ensure participants' needs are met. For example, if there is 
only one specialist in a service area, and they are not accepting new 
participants, the PACE organization must show its attempts to contract 
and how it will ensure participants are able to receive the care that 
the specialist would have provided. In other words, in this example, 
the PACE organization must show that they reached out to the one 
specialist in the area, attempted to contract with that specialist, and 
were unsuccessful in those attempts.
    Finally, in order to account for PACE organizations that may choose 
to employ some medical specialists directly, such as dentists and 
podiatrists, proposed Sec.  460.70(a)(4) would exempt a PACE 
organization from the contract requirements in Sec.  460.70(a)(1) and 
(2) with respect to a particular medical specialty if a PACE 
organization employs one or more individuals prior to contracting who 
are legally authorized and, if applicable, board certified, in the 
particular medical specialty. While we expect that most of the 
specialists in this list would be contracted by the organization, we 
understand that there are times when a PACE organization may directly 
employ one of these specialty providers. In those instances, assuming 
the participants have sufficient access to that type of specialist 
through that employment, the PACE organization would not be required to 
contract with additional providers in that specialty. However, the 
organization must have the specialist actively employed prior to 
enrollment of participants in order for the exception to be met and 
cannot rely on future employment to satisfy this requirement. We 
believe that by modifying this provision as proposed we would not be 
increasing the burden on PACE organizations as they are already 
required to either obtain and maintain contracts with or employ medical 
specialists.

G. Timeframes for Coordinating Necessary Care (Sec.  460.98(b)(4) and 
(c))

    Sections 1894(a)(2)(B) and 1934(a)(2)(B) of the Act specify 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. 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. 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, at Sec.  460.98(a), we require a PACE 
organization to be responsible for providing care that meets the needs 
of each participant across all care settings, 24 hours a day, every day 
of the year. In order to meet participants' needs, PACE organizations 
must provide necessary services as expeditiously as the participant's 
condition requires; however, there is no specific timeframe on the 
delivery of services in PACE. The creation of a specific timeframe for 
delivery of services has been contemplated since the 1999 PACE interim 
final rule, where we noted that it was critical that care not be 
delayed and that the participant receive comprehensive care that 
maintains his or her functional status (64 FR 66251). However, we also 
noted that we recognize that some changes in the participant's plan of 
care (for example, installing a wheelchair ramp at the participant's 
home) may require more time to accomplish, and therefore CMS did not 
specify a timeframe for delivering services (Id.). Although we chose 
not to specify a timeframe for delivering services in the 1999 PACE 
interim final rule, we solicited comment on the necessity of requiring 
a specific timeframe (64 FR 66251). In the 2006 PACE final rule, we 
noted that commenters were split on the topic of timeframes and 
indicated that further consideration of this issue was needed before 
CMS would propose to adopt a specific timeframe (71 FR 71292). We 
discussed this issue again in 2020 when publishing a proposed rule (85 
FR 9138) and when finalizing the January 2021 final rule (86 FR 6034). 
We stated at that time that we did not believe we could implement a 
specific timeframe given the vast array of service that PACE 
organizations provide (Id.). We also noted that 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 
(Id.). Therefore, we finalized Sec.  460.98(b)(4), which requires 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.
    Despite the difficulty in creating a specific timeframe for the 
delivery of services, we continue to identify through monitoring and 
oversight situations where PACE organizations are jeopardizing 
participant health and safety by not promptly providing necessary 
services and that the cause for these delays is sometimes related to 
organizations failing to promptly schedule or arrange a service 
following approval from the IDT. Based on data collected through 
audits, in the past 4 years, over 80% of audited PACE organizations 
have been cited for a failure to provide services in a way that is 
necessary to meet participant needs. To address these concerns, we 
propose to establish timeframes for arranging the provision of IDT 
approved services for PACE participants. Requiring PACE organizations 
to promptly act to arrange or schedule necessary services creates 
accountability for expeditious service delivery while offering 
flexibility for wide ranges of services and variation in urgency. These 
timeframes would allow the IDT to determine how quickly a service is 
needed based on the participant's condition, but would ensure that the 
services were quickly arranged and scheduled to ensure that they are 
not forgotten or neglected in the course of other business. In drafting 
this proposal, we considered both the MA regulations in Part 422 and 
Medicaid regulations in Part 438; however, because PACE is not only an 
insurer, but also a direct care provider, we do not believe that the 
timeframes in these programs are appropriate for use in PACE. We 
therefore also considered the long-term care regulations in Part 483. 
Under those regulations, skilled nursing facilities and nursing 
facilities are required to refer residents to a dentist within 3 
calendar days when a resident has lost or damaged their dentures (see

[[Page 79649]]

Sec. Sec.  483.55(a)(5) and 483.25(b)(3)). This requirement to refer 
residents to a dentist has a similar intent of ensuring the facility is 
promptly arranging for the necessary services for a resident.
    Presently, Sec.  460.98 specifies PACE program service delivery 
requirements related to access to services, provision of services, 
minimum services furnished at each PACE center, PACE center operation, 
and center attendance. We propose to amend Sec.  460.98 by, first, 
redesignating current paragraphs (c), (d), and (e) as paragraphs (d), 
(e), and (f), respectively. Next, we propose to add a new paragraph (c) 
with the heading ``Timeframes for Arranging and Providing Services.'' 
In addition, we propose to move the requirement in current paragraph 
Sec.  460.98(b)(4) to provide services as expeditiously as the 
participant's health condition requires, taking into account the 
participant's medical, physical, emotional, and social needs to new 
paragraph (c)(4). We also propose to redesignate paragraph (b)(5) as 
(b)(4).
    We propose that the new section Sec.  460.98(c) would have four 
subparagraphs related to the timeframes for arranging and providing 
services. A ``service'' as defined in Sec.  460.6 means all services 
that could be required under Sec.  460.92, including items and drugs. 
Given the vast array and differing availability of services in PACE, we 
considered creating one uniform timeframe for arranging all services, 
but ultimately determined that was not appropriate. Regarding the MA 
and Part D programs, we note that there are significant differences in 
the timeframes for approving and providing services under each program. 
In Part D, the timeframes for approving and providing coverage of 
medications are much shorter than the timeframes for approving and 
providing services in MA. Therefore, we believe it is appropriate in 
PACE to also create a distinct timeframe for medications.
    We propose at new Sec.  460.98(c)(1) to require PACE organizations 
to arrange and schedule the dispensing of medications as expeditiously 
as the participant's condition requires, but no later than 24 hours 
after the primary care provider orders the medication. We consider the 
use of the words ``arrange and schedule'' to mean that the PACE 
organization has notified the participant's pharmacy or pharmacy 
service of the approved medication order and has provided all necessary 
information for the pharmacy to fill the medication order and provide 
the participant with timely access to the medication. This timeframe 
would not require the medication to be delivered to the participant 
within that 24 hours, unless the participant's condition required 
delivery in that timeframe. Additionally, we believe that ``no later 
than 24 hours after the primary care provider orders the medication'' 
is a fair timeframe and critical to meet the immediate care needs of 
participants, as lack of prompt access to many medications could result 
in deterioration of a participant's condition. Additionally, as 
pharmacies are usually open seven days a week, and prescriptions can 
often be submitted electronically, we believe that there is limited 
burden on the organization in meeting this timeframe. We solicit 
comment on this proposal, including whether CMS should consider other 
maximum timeframes for PACE organizations to arrange and schedule the 
dispensing of medications, or exceptions to this requirement. An 
example of the type of comment we hope to receive would be one that 
addressed whether over-the-counter medications should be included in 
this timeframe, as those medications may have different methods of 
being filled. We solicit comment on alternative maximum medication 
authorization timeframes less than or greater than 24 hours after the 
primary care provider orders the medication and request that such 
comments address how the alternative timeframes would ensure 
participant health and safety.
    We propose to establish at new Sec.  460.98(c)(2) the requirement 
that PACE organizations arrange or schedule the delivery of IDT 
approved services, other than medications, as identified in proposed 
Sec.  460.98(c)(2)(i), as expeditiously as the participant's health 
condition requires, but no later than 7 calendar days after the date 
the IDT or a member of the IDT first approves the service, except as 
identified in proposed Sec.  460.98(c)(3). As previously noted, this 
requirement would apply to all services that are not medications. When 
developing this timeframe, we considered our experience with monitoring 
and auditing organizations, and feedback we have received from 
organizations in previous rules. In the 2006 PACE final rule (71 FR 
71292), we noted that in comments that were submitted in response to a 
comment solicitation we had included in the 1999 PACE interim final 
rule, in which we sought input on whether to impose a timeframe under 
which PACE organizations would be required to initiate services after a 
revision to a participant's plan of care, some commenters indicated 
that they believe a maximum timeframe of 5 calendar days should apply 
to initiating service delivery following an approved change in the plan 
of care. We considered, but decided not to propose a 5 calendar day 
timeframe, because a 5 calendar day timeframe may be operationally 
impractical for instances in which a PACE organization receives a 
request late in the business week that requires scheduling a service 
with a specialist or medical office closed on weekends and Federal 
holidays. We also considered whether other programs had timeframes we 
could draw from, but because PACE is both an insurer and provider and 
is required to provide such a broad range of services, we did not find 
a comparable program or provider directly applicable to PACE for 
purposes of scheduling services. We then considered the needs of the 
participant and the operational challenges of the organization when 
developing the timeframe. Based on all of these factors, we are 
proposing a 7-day timeframe, which we believe will balance the needs of 
the participant with the administrative responsibilities of a PACE 
organization. Based on our oversight efforts, we understand that some 
organizations already act to arrange services within a timeframe of 7 
calendar days or sooner, as the participant's health condition 
requires. We are also proposing to describe the action that the PACE 
organization must take within the proposed 7-day timeframe in terms of 
when services are arranged or scheduled with the expectation that the 
delivery of the service would not need to occur within this timeframe; 
instead, the PACE organization would be expected to take affirmative 
steps to make sure the approved service was set up, scheduled, or 
arranged within this timeframe, which may include scheduling 
appointments and/or purchasing the item the IDT approved. For example, 
if the IDT approved increasing a participant's physical therapy 
frequency from two to three times per week, we would expect the PACE 
organization to conduct outreach to the participant's physical 
therapist or the physical therapist's administrative support to set up 
a third weekly appointment within 7 calendar days of the IDT approval. 
If the IDT determines that the participant should see an 
ophthalmologist, the PACE organization would be required to schedule 
the appointment within 7 days of approval. We would not expect the 
delivery of the service (in this example, the actual appointment) to 
occur within 7 days, only that the appointment has been scheduled 
within that timeframe. Following the ophthalmologist

[[Page 79650]]

appointment, if the IDT determined that eyeglasses were necessary upon 
review of the provider's recommendation, the PACE organization would 
then be required to arrange for the provision of the eyeglasses within 
the timeframes proposed at Sec.  460.98(c)(2), which may include a 
purchase order for eyeglasses. The 7-day timeframe begins once approval 
is made by the IDT or a member of the IDT. We would again stress that 
this is a maximum timeframe, and if a participant's condition required 
the service more quickly, the PACE organization would be expected to 
act to arrange the service more quickly. Our proposal would require 
that the timeframe of 7 calendar days begin after the date the IDT or a 
member of the IDT approves the service. We invite comment on 
alternative maximum timeframes for arranging or scheduling IDT-approved 
services. In particular, we are interested in knowing if PACE 
organizations continue to believe that 5 days is an appropriate 
timeframe to schedule and arrange services, and if not, whether 
commenters recommend a different maximum timeframe that is between 6 to 
10 (that is, 6, 7, 8, 9 or 10) calendar days after the date the IDT or 
a member of the IDT approves the service. Additionally, we solicit 
comment on whether there are additional definitions of “arrange 
or schedule'' that CMS should consider. We request that such comments 
address how the alternative timeframes would ensure participant health 
and safety, especially if commenters advocate for a timeframe longer 
than 7 calendar days.
    We propose at Sec.  460.98(c)(2)(i)(A) through (D) to define which 
services are included in the definition of interdisciplinary team 
approved services. We propose to specify at Sec.  460.98(c)(2)(i)(A) 
that this includes services approved by the full IDT. These services 
would typically be the ones discussed and approved during the course of 
IDT meetings. This would be any service other than a medication. For 
example, if the IDT met and decided to approve physical therapy for six 
weeks, the date it made that approval would then trigger the timeframe 
of 7 calendar days. We propose to specify at Sec.  460.98(c)(2)(i)(B) 
that IDT approved services also include services approved by a member 
of the IDT. We believe this is important to emphasize to ensure that 
service determination requests that are immediately approved by a 
member of the IDT under Sec.  460.121(e)(2) are subject to this new 
timeframe. Additionally, we have seen instances where a member of the 
IDT, in the course of their duties, may approve a service as necessary 
for a participant. For example, a physical therapist may approve extra 
therapy sessions during the course of their treatment. Or, following a 
recommendation from a cardiologist, the PCP may approve a Holter 
monitor for the participant. In these instances, when a service is 
approved by a member of the IDT, we would expect the PACE organization 
to promptly arrange and schedule the approved service within the 7 
calendar days. We propose at Sec.  460.98(c)(2)(i)(C) that IDT approved 
services include services ordered by a member of the IDT. We routinely 
see PCPs ordering necessary services as a part of managing the 
participant's condition, including but not limited to specialist 
consults, labs, and medications. We would consider an IDT member 
ordering a service as approving that service for purposes of proposed 
Sec.  460.98(c)(2). For example, if a recommendation for a CT scan is 
made by an oncologist, and the PCP approves and orders the CT scan, we 
would expect the CT scan to be arranged within 7 calendar days from 
when the PCP approved/ordered the scan. We believe that it is important 
to specifically distinguish the types of approvals that could occur, as 
a part of the IDT's routine course of business, any one of which would 
trigger the timeframe of 7 calendar days to schedule or arrange for the 
delivery of services. We would also emphasize that under our proposal 
at Sec.  460.98(c)(2), the timeframe begins when the IDT or a member of 
the IDT first approves a service. Therefore, when any one of these 
approvals occurs, on that first instance, the timeframe would be 
initiated. For example, if the IDT determined that labs were required 
for a participant in order to test their kidney function, the timeframe 
to arrange those labs would begin on that date, even if the PCP did not 
write an order for the labs until a later date or time. We solicit 
comment on this provision, including additional considerations that 
could improve the definition of IDT approved services.
    We propose at the new Sec.  460.98(c)(3) to exclude routine or 
preventative services from the timeframe to requirement in Sec.  
460.98(c)(2) when certain requirements are met. We understand that PACE 
organizations may not be able to schedule every service within 7 
calendar days, especially when the service is a routine service and not 
needed until much later in time. In order to satisfy this exception, we 
propose at Sec.  460.98(c)(3)(i) through (iii) three requirements that 
would all need to be met in order for a PACE organization to be exempt 
from the timeframe included in Sec.  460.98(c)(2). First, we propose at 
Sec.  460.98(c)(3)(i) that the PACE organization must document that 
they were unable to schedule the appointment for the routine or 
preventative service due to circumstances beyond the control of the 
PACE organization. We believe that this is a reasonable exception, as 
we understand that for some routine appointments, for example, an 
annual eye exam, the specialist or contracted provider may limit how 
far out they are willing to schedule appointments. We would expect the 
PACE organization to document its efforts to arrange or schedule the 
appointment and that they were unable to schedule the appointment due 
to the specialist's availability. Second, we propose to establish at 
Sec.  460.98(c)(3)(ii) that the PACE organization is exempt from the 
timeframe as long the participant does not have a change in status that 
requires the service to be provided more quickly. We recognize that a 
participant's condition may change, and a routine appointment may 
become more urgent as the participant's condition deteriorates. The 
exception to the timeframes in Sec.  460.98(c)(2) only applies when a 
participant does not experience a change that would require the service 
to be provided more quickly. If the participant does experience a 
change in status that would warrant a faster appointment, the exception 
would no longer apply, and the PACE organization would be expected to 
schedule the service as necessary. Last, we propose at Sec.  
460.98(c)(3)(iii) that the PACE organization may be excepted from the 
timeframes to arrange a service if the PACE organization provides the 
service as expeditiously as the participant's condition requires. While 
we understand that there may be circumstances that prevent a PACE 
organization from scheduling some routine or preventative services, 
ultimately the PACE organization always remains responsible for 
ensuring the participant's needs are met. We believe it is in the best 
interest of participants and administratively reasonable to require all 
three of these factors in order to exempt PACE organizations from the 
maximum timeframes proposed at Sec.  460.98(c)(2) and to limit the 
exemption to services that are routine or preventative. We solicit 
comment on this provision, including suggestions of additional 
exceptions to the timeframes at Sec.  460.98(c)(1) and (2).

[[Page 79651]]

    We propose to redesignate Sec.  460.98(b)(4) as Sec.  460.98(c)(4) 
without further modification. Thus, the new Sec.  460.98(c)(4) would 
maintain the requirement that PACE organizations provide services as 
expeditiously as the participant's health condition requires, taking 
into account the participant's medical physical emotional, and social 
needs. The proposed timeframes in Sec.  460.98(c)(1) through (c)(3) are 
maximum timeframes for arranging the provision of services. PACE 
organizations must continue to provide or deliver services as 
expeditiously as the participant's health condition requires, taking 
into account the participant's medical, physical, emotional, and social 
needs, which may require the PACE organization to arrange or schedule 
services sooner than the timeframes proposed in Sec.  460.98(c). Under 
redesignated Sec.  460.98(c)(4), PACE organizations would continue to 
make determinations on how quickly to provide a service on a case-by-
case basis, and we would expect PACE organizations to demonstrate that 
services were provided as expeditiously as the participant's medical, 
physical, emotional, and social needs require during monitoring efforts 
by CMS.
    We estimate a one-time burden for PACE organizations to update 
their policies and procedures to reflect the proposed timeframes for 
arranging and providing services. We discuss and account for the one-
time burden for their policies and procedures to reflect the proposed 
timeframes for arranging and providing services in the Collection of 
Information Requirements section and through an update to the CMS-R-244 
PRA package.
    We solicit comments on this proposal.

H. Care Coordination (Sec.  460.102)

    Sections 1894(a)(2)(B) and 1934(a)(2)(B) of the Act require PACE 
organizations to provide 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. 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. 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. 
Additionally, sections 1894(b)(1)(C) and 1934(b)(1)(C) of the Act 
specify that PACE organizations must provide services to participants 
through a comprehensive, multidisciplinary health and social services 
delivery system which integrates acute and long-term care services in 
accordance to regulations, and specify the covered items and services 
that will not be provided directly by the entity, and to arrange for 
delivery of those items and services through contracts meeting the 
requirements of regulations.
    CMS has codified requirements pertaining to the interdisciplinary 
team (IDT) at Sec.  460.102. Although the PACE organization is 
ultimately responsible for providing comprehensive, multidisciplinary 
care that meets the needs of each participant across all care settings, 
24 hours a day, every day of the year, the IDT has a critical role in 
enabling the PACE organization to meet these responsibilities. As 
established in the 1999 PACE interim final rule (64 FR 66248), the IDT, 
then referred to as the multidisciplinary team, must comprehensively 
assess and meet the individual needs of each participant. In addition, 
the IDT is responsible for the initial assessment, periodic 
reassessments, the plan of care, and coordinating 24-hour care delivery 
(64 FR 66249). Through monitoring and oversight activities, CMS has 
determined that further specification of IDT responsibilities is 
necessary to ensure appropriate compliance with the program 
requirements. While many IDTs appropriately apply the multidisciplinary 
approach to providing care, our monitoring efforts have shown that some 
organizations do not ensure the IDT is fully involved in coordination 
of care for participants across all care settings. We have also seen 
organizations interpret IDT responsibilities to coordinate care 
narrowly. For example, an IDT may order care, but then fail to ensure 
that the care has been provided in accordance with those orders and 
that the participant's needs were met.
    Current Sec.  460.102(d)(1)(i) specifies that the IDT has 
responsibility for the initial assessment, periodic reassessments, plan 
of care, and coordination of 24-hour care delivery. Section 
460.102(d)(1)(ii) states that the IDT is responsible for 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). We propose several amendments to 
Sec.  460.102(d)(1). First, we propose to redesignate current paragraph 
(d)(1)(ii) as paragraph (d)(1)(iii), and to add a new paragraph 
(d)(1)(ii). We also propose to add a new paragraph (d)(1)(iv).
    We propose to modify Sec.  460.102(d)(1) to specify that the IDT is 
responsible for all activities as described at Sec.  460.102(d)(1)(i) 
through Sec.  460.102(d)(1)(iv) for each participant. The proposed 
regulation would include the words ``for each participant'' to 
emphasize that these responsibilities are not general requirements the 
IDT must fulfill, but rather specific responsibilities the IDT must 
fulfill for each participant. The 1999 PACE interim final rule (64 FR 
66288) established basic requirements for the IDT at Sec.  460.102(a), 
including that the IDT must comprehensively assess and meet the 
individual needs of each participant and that each participant be 
assigned an IDT at the PACE center that they attend. Since inception of 
PACE, CMS has considered the IDT responsibilities to apply to all 
participants at the individual level. CMS believes the current language 
in Sec.  460.102(d)(1) does not preclude the proposed requirements at 
Sec.  460.102(d)(1)(i) through Sec.  460.102(d)(1)(iv) from applying at 
the individual participant level. However, the addition of ``each 
participant'' more clearly emphasizes CMS' expectations.
    We propose to modify the requirement at Sec.  460.102(d)(1)(i) to 
include only the IDT's responsibility for the initial assessment, 
periodic assessment, and plan of care and to relocate the requirement 
pertaining to the IDT's responsibility to coordinate 24-hour care 
delivery to new Sec.  460.102(d)(ii). We believe the responsibility to 
coordinate 24-hour care delivery is a separate and distinct requirement 
from the requirements to conduct assessments and create or revise a 
plan of care. Additionally, we propose to add a paragraph heading at 
Sec.  460.102(d)(1)(i) to read ``Assessments and Plan of Care'' in 
order to reflect the proposed modified content of the paragraph.
    We propose to move IDT coordination of care requirements from Sec.  
460.102(d)(1)(i) to new Sec.  460.102(d)(1)(ii), because separating IDT 
coordination of care responsibilities at Sec.  460.102(d)(1)(ii) from 
the

[[Page 79652]]

assessment and care planning responsibilities at Sec.  460.102(d)(1)(i) 
improves the provision's readability. We also propose to modify the 
language of Sec.  460.102(d)(1)(ii) and to add 5 paragraphs at Sec.  
460.102(d)(1)(ii)(A) through (E) to further specify what coordination 
of 24-hour care delivery involves by defining what actions we consider 
care coordination to include.
    We propose at new Sec.  460.102(d)(1)(ii) to require that the IDT 
coordinate and implement 24-hour care delivery that meets participant 
needs across all care settings. We added language into this requirement 
about meeting the participant's needs across all care settings in order 
to clarify the scope of the IDT's care coordination for all 
participants, including, but not limited to, participants residing in 
long-term care facilities. We also added ``implementation'' into the 
requirement at Sec.  460.102(d)(1)(ii) because we have seen through 
audits and monitoring efforts that PACE organizations are interpreting 
``coordination'' narrowly, and they do not consider it to include all 
necessary components of care coordination, such as ensuring the 
implementation of care. As a result, we have seen problems with 
medication orders being implemented appropriately, wound care not being 
done in accordance with orders, and other necessary services not being 
provided to the participant. This proposal will further emphasize CMS' 
expectations of IDT coordination of care responsibilities and lead to 
better care for participants, especially participants residing in acute 
and long-term care facilities.
    This proposal is consistent with the current statutory and 
regulatory requirements for PACE organizations and the IDT. 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 (see Sec.  460.98(a)). PACE organizations are also 
responsible for furnishing comprehensive medical, health, and social 
services that integrate acute and long-term care. We have received 
requests to explain the difference between the PACE organization's 
responsibility to furnish care, and the IDT's responsibility to 
coordinate care. As we explained in the January 2021 final rule (86 FR 
6036), PACE organizations are responsible for furnishing comprehensive 
services to PACE participants. The IDT, which consists of a subset of 
PACE organization's 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. The proposed 
requirement at Sec.  460.102(d)(1)(ii) for the IDT coordinate and 
implement 24-hour care delivery that meets participant needs across all 
care settings aligns with this interpretation, as the IDT is not always 
responsible for directly furnishing or providing the care to 
participants, but it always maintains responsibility for coordinating 
care for participants.
    As previously noted, we are proposing to add 5 subparagraphs at 
Sec.  460.102(d)(1)(ii)(A) through (E) that further specify IDT 
coordination responsibilities across all care settings. We propose at 
Sec.  460.102(d)(1)(ii)(A) that the IDT is responsible for ordering, 
approving, or authorizing all necessary care in order to clarify CMS 
expectations regarding one aspect of the IDT care coordination 
responsibilities. PACE is a program designed around the IDT being 
responsible for authorizing and ordering all care that is needed for 
PACE participants. In fact, contractors, including medical specialty 
providers, must agree to furnish only those services authorized by the 
PACE IDT at Sec.  460.70(d)(5)(i). We believe the proposed 
responsibilities at Sec.  460.102(d)(1)(ii)(A) are important aspects of 
coordinating care that are inherent to the IDT's established and 
central role in care coordination.
    We propose at Sec.  460.102(d)(1)(ii)(B) to establish that the IDT 
is responsible for communicating all necessary care and relevant 
instructions for care. As discussed in connection with proposed Sec.  
460.102(d)(1)(ii)(A), the IDT is already responsible for authorizing 
all care the participant receives; however, in order for the 
participant to actually receive the care, the IDT must communicate the 
orders and relevant instructions to the appropriate individuals. For 
example, while a PCP may order a specialist consult, it is often 
scheduling or administrative staff that are responsible for actually 
arranging the appointment. As a part of coordinating care, the IDT must 
ensure that it communicates the necessary care and instructions to 
those individuals that need to know, for example, the individuals who 
will schedule, arrange, or provide the care and services. We 
contemplated adding further specificity in regulation about who those 
individuals may be, but we believe that it would encompass too many 
individuals for us to identify. For example, for a participant residing 
in a nursing facility, the IDT would need to ensure it communicated 
orders and instructions for care to the facility staff. For scheduling 
appointments, the IDT may need to communicate orders to administrative 
staff. We believe the IDT would be in the best position to identify the 
staff that need to know the information, and therefore we are leaving 
this proposed regulatory provision broad.
    We propose to specify at Sec.  460.102(d)(1)(ii)(C) that the IDT is 
responsible for ensuring care is implemented as it was ordered, 
approved, or authorized by the IDT. We have seen through oversight and 
monitoring efforts that while the IDT will order or authorize care, the 
team does not always follow through on ensuring that the care is 
provided in accordance with those orders. For example, a PCP may order 
wound care 3 times a week, but then the IDT will not follow through on 
ensuring that the wound care is actually done in accordance with those 
orders. As previously discussed, the 1999 PACE interim final rule (64 
FR 66279) established the IDT as instrumental in controlling the 
delivery, quality, and continuity of care. Part of controlling the 
delivery and quality of care is ensuring that the care that is ordered, 
approved or authorized is actually provided.
    We propose at Sec.  460.102(d)(1)(ii)(D) to establish that the IDT 
is responsible for monitoring and evaluating the participant's 
condition to ensure that the care provided is effective and meets the 
participant's needs. The IDT cannot appropriately coordinate 24-hour 
care delivery without also ensuring that it remains alert to the 
participant's condition by monitoring and evaluating the participant's 
condition. While the IDT is responsible for making sure that care is 
implemented in accordance with the approved or authorized orders, the 
IDT also remains responsible for ensuring the participant's needs are 
met through that care. For example, if the PCP orders wound care 2 
times a week but the wound continues to worsen, the PCP should consider 
whether a new order is necessary in order to meet the participant's 
needs.
    We propose to specify at Sec.  460.102(d)(1)(ii)(E) that the IDT is 
responsible for promptly modifying care when the IDT determines the 
participant's needs are not met in order to provide safe, appropriate, 
and effective care to the participant. The IDT's responsibilities for a 
participant do not end when care is authorized or ordered. As we stated 
in the 2006 PACE final rule (71 FR 71289), it is important for the IDT 
to monitor and respond to any changes in a participant's condition. It 
is important that the IDT respond promptly and modify care when it is 
determined that the participant's needs

[[Page 79653]]

are not currently being met. For example, if the PCP writes an order 
for blood pressure medication but then notes during a later assessment 
that the medication is not working, we would expect the PCP and the IDT 
to consider alternative medications or treatments that might better 
meet the participant's needs.
    We propose to redesignate current Sec.  460.102(d)(1)(ii) as Sec.  
460.102(d)(1)(iii) and add the title ``Documenting Recommended 
Services'' for improved readability. No further modifications are 
proposed for this provision.
    We propose to add Sec.  460.102(d)(1)(iv) to require the IDT to 
review, assess, and act on recommendations from emergency or urgent 
care providers following participant discharge, and employees and 
contractors, including medical specialists. As discussed earlier, the 
IDT is responsible for authorizing, approving and ordering all care, 
including care recommended from contracted providers. This means that a 
participant may not receive necessary care until the IDT considers and 
approves or authorizes those recommendations that were made by the 
provider or specialist. Through monitoring and oversight activities, we 
have identified instances where the IDT is not promptly reviewing 
recommendations from urgent and emergency care providers, as well as 
employees and contractors. Based on data collected during the 2021 
audits, approximately 75 percent of audited PACE organizations were 
cited based on a failure to review and act on recommendations from 
specialists in a manner necessary to meet the needs of the participant. 
Delayed review of recommendations and action on recommendations can 
delay the provision of necessary care and services, and can jeopardize 
participant health and safety. To address these concerns, we propose 
timeframes for the IDT to review and take action on recommendations 
from urgent and emergency care providers, as well as employees and 
contractors. As we stated in the January 2021 final rule (86 FR 6132), 
we do not believe we could implement a specific timeframe for the 
provision of services, given the vast array of services that PACE 
organizations provide and variation in individual participant needs. 
However, we believe requiring the IDT to promptly act on 
recommendations from urgent and emergency care providers, as well as 
employees and contractors, creates accountability for expeditious 
service delivery while offering flexibility for wide ranges of services 
and variation in urgency.
    The timeframes we propose at Sec.  460.102(d)(1)(iv)(A) through (C) 
would be maximum timeframes within which the IDT must review, assess 
and determine whether service recommendations from urgent and emergency 
care providers, as well as employees and contractors, are necessary to 
meet the participant's medical, physical, social, or emotional needs, 
and if so, promptly arrange and furnish the service in accordance with 
the timeframes at Sec.  460.98(c). Under Sec.  460.98(b)(4) (which we 
propose to redesignate as Sec.  460.98(c)(4)), PACE organizations must 
continue to provide services as expeditiously as the participant's 
health condition requires, taking into account the participant's 
medical, physical, social, and emotional needs. In order to meet the 
participant's needs, the IDT may need to review and act on 
recommendations sooner than the timeframes proposed in Sec.  
460.102(d)(1)(iv). Nothing in Sec.  460.102(d)(1)(iv) would require the 
IDT to approve all recommendations; however, we would expect that the 
IDT review, assess, and act on the recommendation. That action would 
either be to either make a determination to approve or provide the 
recommended service or make a determination to not approve or provide 
the recommended service. If the IDT makes a determination to approve or 
provide a service, it must arrange and schedule the service in 
accordance with Sec.  460.98(c). If the IDT makes a determination not 
to approve or provide a service, we would expect the IDT to document 
the reason(s) for not approving or providing the recommended care or 
services in accordance with current Sec.  460.102(d)(1)(ii), which, as 
previously noted, we propose to redesignate as Sec.  460.102(d)(1)(iii) 
and Sec.  460.210(b).
    We propose at Sec.  460.102(d)(1)(iv)(A) to establish that the 
appropriate member(s) of the IDT must review all recommendations from 
hospitals, emergency departments, and urgent care providers and 
determine if the recommended services are necessary to meet the 
participant's medical, physical, social, or emotional needs within 24 
hours from the time of the participant's discharge. We considered 
multiple factors when proposing a 24-hour timeframe. We believe the 24-
hour timeframe is necessary and reasonable due to the following 
considerations. First, this timeframe would be limited to only those 
recommendations made by hospitals, emergency departments and urgent 
care providers, and it would not apply to recommendations made by other 
providers or more routine appointments. Second, we considered that PACE 
is responsible for the needs of the participant 24 hours a day, every 
day of the year. When a participant is discharged from one of these 
settings there may be recommendations made or care needed, that cannot 
wait until the next business day. For example, a participant who is 
discharged from the hospital on a Saturday with a recommendation for 
antibiotics should not have to wait until Monday to have their 
prescription ordered or approved by the IDT. Third, we are proposing to 
not require that the full IDT be involved in assessing and acting on 
these recommendations, but rather the appropriate member(s) of the team 
as determined by the IDT. We do not anticipate that the full IDT would 
need to be involved in all decisions relating to recommendations made 
by hospitals or urgent care centers. It would likely be 1 or 2 IDT 
members that would ultimately be responsible for these recommendations 
and therefore a shorter timeframe is reasonable. For example, for the 
post discharge recommendation for antibiotics previously described, the 
IDT PCP may be the only discipline required to review and act on the 
medication request, since the PCP is responsible for ordering care and 
medications. We invite comment on alternative maximum timeframes for 
IDT review of all recommendations from hospitals, emergency 
departments, and urgent care providers and to make a determination on 
the recommendation's necessity; we are particularly interested in 
commenter's perspectives on timeframes of 12 hours, 48 hours, and 72 
hours from the time of the participant's discharge. We request that 
such comments address how the commenter's preferred/recommended 
timeframe would ensure participant health and safety.
    We propose to require at Sec.  460.102(d)(1)(iv)(B) that the 
appropriate member(s) of the IDT must review all recommendations from 
other employees and contractors and make a determination with respect 
to whether the recommended services are necessary to meet the 
participant's medical, physical, social, or emotional needs as 
expeditiously as the participant's health condition requires, but no 
later than 5 calendar days from the date the recommendation was made. 
We have seen through monitoring and audits where recommendations have 
not been considered or acted upon for significant periods of time, 
which has contributed to delays in the provision of necessary

[[Page 79654]]

care. While we do not believe that all recommendations made by all 
types of employees and contractors need to be responded to as quickly 
as recommendations from hospitals, urgent care providers, or emergency 
departments, we do believe the IDT must act promptly to consider the 
recommendations made, and, when the IDT deems the recommended care 
necessary, it must authorize the care. The proposed 5-day timeframe 
would represent the maximum amount of time a PACE organization would 
have to determine whether a recommended service is necessary, and we 
would expect the IDT to consider the participant's condition in 
determining whether it is necessary to make a determination sooner than 
5 days after the recommendation is made. Additionally, we propose that 
the timeframe would begin when the recommendation is made, not when the 
recommendation is received by the IDT. We have seen through monitoring 
instances of PACE organizations not making initial requests for consult 
notes from a participant's appointment with a specialist until months 
after the appointment has taken place, and only learning at that time 
that a recommendation was made during the appointment. It is important 
that the PACE organization promptly act on recommendations, and it is 
our expectation that they develop processes with their employees and 
contractors to ensure the IDT is receiving recommendations in a manner 
that allows the IDT to determine the necessity of the recommended 
services within the proposed timeframe. We invite comment on 
alternative maximum timeframes for IDT review of all recommendations 
from other employees and contractors and to make a determination on the 
recommendation's necessity. We are particularly interested in 
commenters' perspectives on whether we should adopt a 3 calendar day 
timeframe, a 7 calendar day timeframe, or a 10 calendar day timeframe. 
We request that commenters address how the alternative timeframes would 
ensure participant health and safety.
    We propose to establish at Sec.  460.102(d)(1)(iv)(C) that, if 
recommendations are authorized or approved by the IDT or a member of 
the IDT, the services must be promptly arranged and furnished under 
Sec.  460.98(c), as proposed. As discussed in section VI.G. of this 
proposed rule, we are proposing timeframes for the IDT to promptly 
arrange and schedule services that are authorized, ordered or approved 
by the IDT or a member of the IDT. If a recommendation is made by a 
contractor or an employee, and the IDT or a member of the IDT approves 
or orders that recommended service, we would expect the PACE 
organization to arrange and schedule the service in accordance with the 
proposed regulations at Sec.  460.98(c). We are proposing distinct 
timeframes depending on the facts and circumstances of the situation 
and the service at issue. For example, if a hospital, at the time of 
discharge, makes a recommendation for a medication, the appropriate 
members of the IDT would have 24 hours to act on the recommendation, 
and if approved and ordered by the PCP, another 24 hours to arrange for 
the medication to be dispensed under proposed Sec.  460.98(c)(1). In 
this scenario, because the recommendation is being made by a hospital, 
the timeframe to act on the recommendation is 24 hours under the 
proposal at Sec.  460.102(d)(iv)(A), and because the recommended 
service is a medication, the timeframe to arrange the service is 24 
hours from the date of the order under the proposal at Sec.  
460.98(c)(1). If a specialist recommends a medication, then the IDT 
would have 5 calendar days to make a determination with respect to the 
recommendation, and if it is approved and ordered, 24 hours to arrange 
for the medication to be dispensed. If a recommendation is made from a 
contractor such as a medical specialist for a service that is not a 
medication, the IDT would have 5 calendar days to consider and act on 
the recommendation, and then, if approved or authorized, the PACE 
organization would have 7 calendar days to arrange or schedule the 
approved or authorized service.
    The timeframe to schedule the service would begin the day the IDT 
or a member of the IDT approves or authorizes the recommendation. We 
emphasize again that these timeframes are maximum timeframes that the 
IDT and PACE organization should consider when reviewing 
recommendations. For some recommendations, such as an MRI to be done in 
3 months, these timeframes would be sufficient to ensure that the 
service is approved and arranged before the service is needed. However, 
there are other recommendations made where it would not be appropriate 
for the IDT to take a full 12 calendar days to assess and act on a 
recommendation, and then arrange and schedule it. For example, if a 
cardiologist indicated that the participant needed an urgent coronary 
artery bypass graft, we would expect that the IDT and PACE organization 
act upon that information in a more expeditious manner.
    We are not scoring this provision in the Regulatory Impact Analysis 
section because the IDT is already required to comprehensively assess 
and meet the individual needs of each participant, including ensuring 
the participant's access to all necessary covered items and services 24 
hours per day, every day of the year. We believe that by modifying this 
provision as proposed we would not be increasing burden on PACE 
organizations, as they already consider these items on a routine basis. 
We are also not scoring this provision in the Collection of Information 
section since all information impacts of this provision have already 
been accounted for under OMB control number 0938-0790 (CMS-R-244).

I. Plan of Care (Sec.  460.106)

    Sections 1894(a)(2)(B) and 1934(a)(2)(B) of the Act require 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. 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.
    In the 1999 PACE interim final rule (64 FR 66251), CMS developed 
requirements for participant plans of care based on the requirements in 
Part IV, section B of the original PACE Protocol. Those requirements 
were finalized in the 2006 PACE final rule (71 FR 71292) and they 
included: prompt development of a comprehensive plan of care by the IDT 
that specified the care needed to meet the participant's medical, 
physical, emotional, and social needs as identified in the initial 
comprehensive assessment; identification of measurable outcomes to be 
achieved; implementation, coordination, and monitoring of the

[[Page 79655]]

plan of care whether the services were furnished by PACE employees or 
contractors; reevaluation of the plan of care on at least a semiannual 
basis; development, review, and reevaluation of the plan of care in 
collaboration with the participant or caregiver, or both; and 
documentation of the plan of care, and any changes made to it, in the 
participant's medical record.
    In 2010, in response to questions from PACE organizations, CMS 
issued a subregulatory document titled, ``Care Planning Guidance for 
PACE Organizations.'' This care planning document provided detailed 
guidance for developing, implementing, monitoring, reevaluating, and 
revising plans of care. The care planning document also provided 
guidance on interdisciplinary team involvement in the plan of care and 
what content or care should be included in the participant's plan of 
care. While this document stressed that care plans should be 
comprehensive and include the participants medical, physical, social 
and emotional needs; it also noted that not all care received by the 
participant would need to be included in the care plan, and instead, 
could be tracked and documented through discipline specific progress 
notes. The guidance stated that, ``Each PACE organization must define 
what care is integrated into the participant's plan of care, and what 
discipline-specific care is appropriately documented and monitored by 
the respective discipline specialist in the progress notes.'' \221\
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    \221\ Centers for Medicare & Medicaid Services. (2022, April 
15). Care Planning Guidance for PACE Organizations. Retrieved from 
Silo Tips: https://silo.tips/download/care-planning-guidance-for-pace-organizations (pg 11).
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    Since that time, CMS has seen through oversight and monitoring 
efforts that participant care plans are often sparse and may not fully 
detail the care received by a participant. We have noted that 
organizations are relying heavily on providing and documenting care 
through discipline-specific progress notes, rather than through 
incorporation into a more comprehensive and formal plan of care.
    In the June 2019 final rule (84 FR 25675), CMS added additional 
requirements around the development of a comprehensive plan of care. As 
part of the modifications made during the June 2019 final rule, we 
added at Sec.  460.104(b) the requirement that within 30 days of the 
date of enrollment, the IDT must consolidate discipline-specific 
assessments into a single plan of care for each participant through 
team discussions and consensus of the entire IDT. The June 2019 final 
rule also added Sec.  460.104(b)(1), which provides that if, in 
developing the plan of care, the IDT determines that certain services 
are not necessary to the care of a participant, the reasoning behind 
this determination must be documented in the plan of care. CMS 
explained in the June 2019 final rule that if the IDT does not believe 
a PACE participant needs a certain service as it relates to the IDT 
care plan assessment findings and, therefore, does not authorize that 
service, the IDT must document the rationale for not including the 
service in the plan of care (84 FR 25643). CMS also noted that we would 
expect the plan of care to reflect that the participant was assessed 
for all services, even where a determination is made that certain 
services were unnecessary at the time (Id.).
    In addition to the modifications at Sec.  460.104(b), in the June 
2019 final rule, CMS also amended Sec.  460.106 in order to provide 
additional clarity with respect to the development and content of the 
plan of care process (84 FR 25646). Among other changes, CMS added at 
Sec.  460.106(b) three new requirements related to the interventions 
that must be included in a participant's plan of care. Specifically, 
CMS added requirements for PACE organizations to utilize the most 
appropriate interventions for each care need that advance the 
participant toward a measurable goal and outcome (Sec.  460.106(b)(3)); 
identify each intervention and how it will be implemented (Sec.  
460.106(b)(4)); and identify how each intervention will be evaluated to 
determine progress in reaching specified goals and desired outcomes 
(Sec.  460.106(b)(5)).
    Despite the addition of these requirements in the June 2019 final 
rule, we continue to find that PACE organizations are struggling with 
developing, implementing, monitoring, reevaluating, and revising plans 
of care. While the addition of Sec.  460.104(b)(1) has helped 
organizations create more robust initial care plans for participants, 
we have seen through our oversight and monitoring process that these 
care plans become more sparse over time, and care initially included in 
the plan of care will be omitted in subsequent revisions and handled 
through discipline-specific progress notes as the participant's 
enrollment continues. We acknowledge that documenting detailed 
information about participant care and services in discipline-specific 
progress notes is necessary and an accepted standard practice; however, 
this should not be done in lieu of a comprehensive plan of care that 
addresses the participant's needs. The purpose of a plan of care is to 
allow the different IDT disciplines to discuss a participant's needs 
and develop interventions and goals, as a team. The IDT approach to 
care management and service delivery is a statutory requirement, and is 
one of the requirements that is essential to the PACE program and 
cannot be waived (see section 1894(f)(2)(B)(iii) of the Act). As we 
explained in the 2006 PACE final rule (71 FR 71285), we believe a well-
functioning IDT is critical to the success of the PACE program as the 
team is instrumental in controlling the delivery, quality, and 
continuity of care. Members of the IDT should be knowledgeable about 
the overall needs of the participant, not just the needs that relate to 
their individual disciplines. In order to meet all of the health, 
psychosocial, and functional needs of the participant, team members 
must view the participant in a holistic manner and focus on a 
comprehensive care approach. By handling care through discipline-
specific progress notes, the team role in discussing and monitoring 
that care is removed, and individual team members provide care in a 
more isolated and individualized approach. The plan of care is a tool 
that allows the IDT to assess a participant holistically, and develop 
interventions and goals that may cross disciplines. We also believe 
that failing to develop comprehensive plans of care poses a risk to 
participants enrolled in PACE organizations by making it harder for the 
organization to track and monitor the provision of services. When 
information is documented throughout a medical record in discipline-
specific progress notes, instead of being consolidated in a single 
comprehensive plan of care, it prevents employees and contractors from 
quickly or easily locating necessary information and, as a result, may 
contribute to care not being provided as necessary or in a timely 
manner. Since the June 2019 final rule became effective, CMS has 
completed 40 PACE audits and we have identified a failure to provide 
services or delays in providing services in 37 of the 40 audits 
conducted. Although this non-compliance cannot be directly attributed 
to a failure to consolidate information into a comprehensive plan of 
care, our audit findings suggests that the coordination and delivery of 
necessary services is a challenge for PACE organizations.
    Finally, in addition to seeing concerns related to the content of 
care plans, we have also seen on audit that participant and caregiver 
involvement in the care planning process tends to be minimal and 
primarily occurs after the development and/or revisions to the plan of 
care have been finalized and

[[Page 79656]]

implemented by the IDT. In the 1999 PACE interim final rule (64 FR 
66252), CMS specifically stated that plans of care must be developed, 
reviewed, and reevaluated in collaboration with the participants or 
caregivers. The purpose of participant/caregiver involvement is to 
ensure that they approve of the care plan and that participant concerns 
are addressed. Furthermore, in the 2006 PACE final rule (71 FR 71293), 
CMS reiterated that it is our expectation that the IDT will include the 
participant in the plan of care development when possible and include 
the participant's representative when it is not appropriate to include 
the participant or at the instruction of the participant. We continue 
to believe that participant and caregiver involvement in the 
development, review, and reevaluation of the plan of care is necessary 
to ensure participants' needs are fully met.
    As a result of our experience overseeing PACE organizations, we 
believe it is prudent to implement additional requirements related to 
the minimum requirements for a participant's plan of care, including: 
further defining the timeframes for care plan development and 
reevaluation, defining the minimum content that should be reflected in 
a plan of care, emphasizing the ongoing responsibilities of the IDT to 
monitor and revise the plan of care to determine its effectiveness, and 
defining the involvement of the participant and/or their caregiver in 
the plan of care before it is finalized. In developing these proposed 
requirements, we attempted to adopt language and requirements that are 
consistent with the long-term care facility regulation at Sec.  
483.21(b), when possible. The regulation at Sec.  483.21(b) requires 
nursing facilities to develop comprehensive and person-centered care 
plans that meet residents' needs and identify the services necessary to 
meet those needs. Individuals who enroll in PACE must be deemed as 
nursing home eligible; therefore, individuals who enroll in PACE and 
individuals who receive services from nursing facilities have similar 
needs. Additionally, while PACE organizations are insurers, they are 
also direct care providers. Since nursing homes are also direct care 
providers, and serve a similar population, aligning care planning 
requirements across these programs is an important safeguard for 
participants, and will improve the PACE organization's ability to meet 
participants' needs and to deliver necessary services for this 
vulnerable population.
    First, we propose to modify the requirement in Sec.  460.106(a) to 
require that the members of the IDT specified in Sec.  460.102(b) must 
develop, evaluate, and if necessary, revise a person-centered plan of 
care for each participant. This is consistent with the requirement at 
Sec.  460.104(b) that states that within 30 days of the date of 
enrollment, the IDT must consolidate discipline-specific assessments 
into a single plan of care for each participant through team 
discussions and consensus of the entire IDT. Additionally, the IDT is 
required to reevaluate the plan of care on a semi-annual basis at the 
current Sec.  460.106(d); however, we are proposing to remove that 
requirement as our proposal at Sec.  460.106(a) would cover the role of 
the IDT in both the initial care plan development and also the 
subsequent reviews and reevaluations of the care plan. We are also 
proposing to add language into Sec.  460.106(a) that would require each 
plan of care to take into consideration the most current assessment 
findings and identify the services to be furnished to attain or 
maintain the participant's highest practicable level of well-being. As 
we will discuss in Section VI.J. of this proposed rule, since PACE is a 
direct care provider, serving nursing home eligible participants, we 
also considered nursing home regulations as we drafted this proposal. 
The nursing home regulations require that care plans must describe 
``the services that are to be furnished to attain or maintain the 
resident's highest practicable physical, mental, and psych-social well-
being'' (Sec.  483.21(b)(1)(i)). This language should also apply to 
PACE care plans, since they serve the same nursing home eligible 
population.
    Next, we propose to add a new section, Sec.  460.106(b), which 
would define the specific timeframes for developing, evaluating, and 
revising care plans. For initial care plans, we intend to maintain the 
requirement for the IDT to finalize the development of the initial plan 
of care within 30 calendar days of the participant's enrollment that is 
located at current Sec.  460.106(a), but we propose to move this 
requirement to new section Sec.  460.106(b)(1).
    The regulation at Sec.  460.106(d) currently requires the IDT to 
reevaluate the plan of care, including defined outcomes, and make 
changes as necessary on at least a semi-annual basis. The 
interpretation of the semi-annual timeframe has posed issues for PACE 
organizations. We therefore propose at Sec.  460.106(b)(2) to require 
that the IDT must complete a reevaluation of, and if necessary, 
revisions to each participant's plan of care at least once every 180 
calendar days. We believe that creating a strict timeframe of 180 days 
would be less ambiguous and easier for organizations to track.
    We propose at Sec.  460.106(b)(3)(i) that the IDT must complete a 
reevaluation, and if necessary, revisions of the plan of care within 14 
calendar days after the PACE organization determines, or should have 
determined, that there has been a change in the participant's health or 
psychosocial status or more expeditiously if the participant's 
condition requires. Currently, the members of the IDT specified in 
Sec.  460.104(d)(1) must conduct reassessments when a participant 
experiences a change in participant status. Additionally, the IDT 
members that conduct a reassessment must also reevaluate the 
participant's plan of care (see Sec.  460.104(e)(1)) and discuss any 
changes in the plan with the IDT (see Sec.  460.104(e)(2)). However, 
there is no timeframe for how quickly the IDT members must conduct 
those reassessments or reevaluate the plan of care to determine if 
changes are needed. We believe that a 14-calendar day timeframe is 
appropriate since it will ensure the IDT is promptly acting on changes 
to the participant's status. In considering an appropriate timeframe, 
we reviewed the nursing home requirements. The long-term care 
regulations at Sec.  483.20(b)(2)(ii) require that the resident receive 
a comprehensive assessment within 14 calendar days after the date the 
facility determines, or should have determined, that there has been a 
significant change in the resident's physical or mental condition. The 
long-term care facility must then use the results of the assessments to 
develop, review and revise the resident's comprehensive plan of care 
(see Sec.  483.20(d)). This is an appropriate standard to apply in PACE 
as well, since as we have previously discussed, participants in PACE 
are deemed nursing home eligible, and therefore their conditions are 
substantially similar to the conditions a nursing home resident 
experiences. As discussed later in this section of this proposed rule, 
we are also proposing to modify Sec.  460.104(e) to emphasize that all 
required assessments must be completed prior to the plan of care being 
revised. Therefore, this 14-calendar day timeframe would include both 
the required assessments under Sec.  460.104(d)(1) and the process of 
revising the plan of care under Sec.  460.106.
    We propose to specify at Sec.  460.106(b)(3)(i) that the 14-
calendar day timeframe starts when the PACE organization determines, or 
should have

[[Page 79657]]

determined, that a change in the participant's condition occurs. This 
requirement would align with long-term care regulations for when the 
timeframe begins following a participant's (or resident's) change in 
condition. If a participant experiences a change in status that 
triggers this reassessment and reevaluation of the care plan, the PACE 
organization should not be able to delay the timeframe by not 
recognizing the change in status for a period of time. We also propose 
to define at Sec.  460.106(b)(3)(i) what constitutes a change in 
status. While the PACE regulations require assessments when a change in 
participant status occurs, what constitutes a change in status has not 
been previously defined. Like other proposed changes in this proposed 
rule, we are proposing to adopt in PACE the requirement applicable to 
nursing homes at Sec.  483.20(b)(2)(ii), but we have tailored the 
language of the proposed regulation to be specific to PACE. For 
example, the proposed PACE regulation would refer to the 
``participant'' as opposed to the ``resident'', which is the term used 
in the long-term care regulation, it would use the phrase ``change in 
participant status'' where the long-term care regulation uses the 
phrase ``significant change''. Therefore, the requirement as proposed 
would state that for purposes of this section, a ``change in 
participant status'' means a major decline or improvement in the 
participant's status that will not normally resolve itself without 
further intervention by staff or by implementing standard disease-
related clinical interventions, that has an impact on more than one 
area of the participant's health status, and requires IDT review or 
revision of the care plan, or both. The proposed change would bring 
additional consistency between the PACE and nursing home requirements 
and ensure similarly situated beneficiaries are treated equally.
    In conjunction with the proposed requirement that a PACE 
organization must reevaluate and, if necessary, revise the plan of care 
within 14 calendar days after a change in the participant's condition 
occurs, we propose at Sec.  460.106(b)(3)(ii) that if a participant is 
hospitalized within 14 calendar days of the change in participant 
status, the IDT must complete a reevaluation of, and if necessary, 
revisions to the plan of care as expeditiously as the participant's 
condition requires but no later than 14 calendar days after the date of 
discharge from the hospital. We recognize that when a participant is 
hospitalized, it is difficult for the IDT to assess the participant, 
and revise a plan of care, during the course of that hospitalization. 
Given this complexity, we propose that the timeframe for reevaluating 
the plan of care starts when the participant is discharged from the 
hospital. Despite this proposed exception, we would remind PACE 
organizations that their responsibilities toward the participant do not 
end or stop when a participant is hospitalized, and the IDT should 
remain alert to pertinent information in all care settings under Sec.  
460.102(d)(2)(ii).
    We solicit comment on whether 14 calendar days is an appropriate 
timeframe to use. We also considered 21 or 30 calendar days, but were 
not persuaded to propose either, given the 14-day requirement in the 
nursing home regulations. However, are interested in commenters' 
feedback on whether 21 or 30 days would be more appropriate and, if so, 
why the timeframes for PACE and nursing homes should be different.
    We propose at Sec.  460.106(c) to make certain modifications 
related to the content of a plan of care. Currently, the content of a 
plan of care is specified at Sec.  460.106(b), which requires the care 
plan to include the care needed to meet the participant's medical, 
physical, emotional and social needs; identify measurable outcomes to 
be achieved; utilize the most appropriate interventions for each care 
need that advances the participant toward a measurable goal; identify 
each intervention and how it will be implemented; and identify how each 
intervention will be evaluated to determine progress. We have seen as 
part of our audit and oversight activities where treatments for 
participants' medical conditions are included in discipline-specific 
notes, but not in the comprehensive care plan. This has resulted in 
members of the IDT being unaware of what treatments or recommendations 
the participant has received from different members of the IDT or from 
outside contracted specialists. As a result, we have seen participants 
experience delays in receiving the recommended treatment or service, 
the treatment or service not being provided at all, and in some 
situations, duplicate orders for a service or treatment due to the IDT 
being unaware the service or treatment was previously provided. 
Therefore, in addition to proposing to move the content of plan of care 
requirements from Sec.  460.106(b) to Sec.  460.106(c), we propose to 
add language to the section to create minimum requirements for what 
each plan of care must include. When determining the minimum content a 
plan of care should include, we considered the care plans that nursing 
homes are required to create. Specifically, we considered the 
regulations at Sec.  483.21(b) which specify the requirements for a 
comprehensive plan of care. Additionally, Sec.  483.21(b) makes 
reference to Sec.  483.24 (Quality of Life), Sec.  483.25 (Quality of 
Care), and Sec.  483.40 (Behavior Health), so we considered those 
sections as well. Given the similarities between PACE participants and 
nursing home participants, our proposal aligns with the nursing home 
requirements to the extent we believe those requirements are 
applicable. Therefore, at Sec.  460.106(c), we propose modifying the 
language to state at a minimum, each plan of care must meet certain 
requirements, which would be set forth in the regulations at proposed 
Sec.  460.106(c)(1)(i) through (xiii). At Sec.  460.106(c)(1), we 
propose to add language that requires PACE organizations to identify 
all of the participant's current medical, physical, emotional, and 
social needs, including all needs associated with chronic diseases, 
behavioral disorders, and psychiatric disorders that require treatment 
or routine monitoring, and that at a minimum, the care plan must 
address specific factors we will discuss in the next paragraph. Care 
plans are currently required at Sec.  460.106(b)(1) to include the care 
needed to meet the participant's medical, physical, emotional and 
social needs, as identified in the initial comprehensive assessment. 
However, we are proposing to further specify that the plan of care 
should address all needs associated with chronic diseases, behavioral 
disorders, and psychiatric disorders that require treatment or routine 
monitoring. This is consistent with nursing home requirements since 
nursing homes must assess a resident's disease diagnoses and health 
conditions as part of the comprehensive assessment (see Sec.  
483.20(b)(1)(x)) and use those assessments in developing, reviewing and 
revising the plan of care (see Sec.  483.20(d)). We believe our 
proposal related to chronic behavioral and psychiatric disorders is 
consistent with long-term care requirements in Sec.  483.40, which 
require that each resident must receive and the facility must provide 
the necessary behavioral health care and services. As we mentioned 
earlier, the nursing home care plan requirements at Sec.  483.21(b) 
reference the behavior health requirements at Sec.  483.40. Therefore, 
we propose that chronic behavioral and psychiatric disorders that 
require treatment or routine monitoring also be included in PACE plans 
of care.

[[Page 79658]]

    While the nursing home assessment criteria require consideration 
and assessment of all disease diagnoses and health conditions, we are 
proposing in PACE to limit what diseases must be included in the plan 
of care to those that are chronic and require treatment or routine 
monitoring. For example, if a participant had Hepatitis C but was 
treated and cured, that disease may not need to be included in the plan 
of care. On the other hand, if a participant has coronary artery 
disease and requires ongoing monitoring by a cardiologist, we would 
expect that disease to be included in the plan of care. When 
considering how organizations would define ``chronic'' we believe that 
most organizations would consider the guidance issued by the CDC, which 
defines chronic diseases as conditions that last 1 year or more, and 
require ongoing medical attention or limit activities of daily living 
or both.\222\ We also considered whether it would be appropriate for 
the plan of care to address acute conditions, but decided that 
including acute conditions could make the care plan subject to more 
modifications than what is feasible for the IDT. For example, if the 
care plan needed to be updated for every infection, the care plan may 
be under a constant state of revision. However, we solicit comment on 
whether acute conditions should be included in the minimum content that 
a care plan must address.
---------------------------------------------------------------------------

    \222\ Centers for Disease Control and Prevention. (2022, May 6). 
About Chronic Diseases. Retrieved from: https://www.cdc.gov/chronicdisease/about/index.htm.
---------------------------------------------------------------------------

    We propose to specify at Sec.  460.106(c)(1)(i) that the PACE 
participant's plan of care must address the participant's vision needs. 
This is consistent with the long-term care provisions at Sec. Sec.  
483.20(b)(1)(v) and 483.25(a). Given the age of the PACE population, 
and the co-morbidities that may impact this population (such as 
diabetes), addressing a participant's vision needs is an important part 
of any plan of care. We similarly propose at Sec.  460.106(c)(1)(ii) 
that a PACE participant's plan of care must address the participant's 
hearing needs. This is consistent with the long-term care regulations 
at Sec.  483.25(a). We propose at Sec.  460.106(c)(1)(iii) that a 
participant's plan of care must address the participant's dentition. 
This would be consistent with the requirement at Sec.  
483.20(b)(1)(xi). We propose at Sec.  460.106(c)(1)(iv) that a plan of 
care must address the participant's skin integrity. This requirement 
would be consistent with the requirements at Sec. Sec.  
483.20(b)(1)(xii) and 483.25(b). We propose at Sec.  460.106(c)(1)(v) 
that the participant's plan of care must address the participant's 
mobility. This requirement would be consistent with the requirement at 
Sec.  483.25(c). We propose at Sec.  460.106(c)(1)(vi) that the 
participant's plan of care must address the participant's physical 
functioning (including activities of daily living). This would be 
consistent with the requirements at Sec. Sec.  483.20(b)(1)(viii) and 
483.24(b). We propose at Sec.  460.106(c)(1)(vii) that the plan of care 
must address the participant's pain management needs. This would be 
consistent with the requirement at Sec.  483.25(k).
    The next few proposed requirements deviate from the nursing home 
requirements and are tailored specifically to the PACE program. We 
propose to require at Sec.  460.106(c)(1)(viii) that the plan of care 
address the participant's nutrition, including access to meals that 
meet the participant's daily nutritional and special dietary needs. 
This proposed language is based on the long-term care regulations at 
Sec. Sec.  483.20(b)(1)(xi), 483.24(b)(4), and 483.25(g), but it is 
tailored to be more specific to PACE. In a nursing facility, the 
facility is responsible for providing three meals a day in the actual 
facility, and therefore the access to meals is not as much of an issue. 
However, in PACE, participants live in a variety of settings. While the 
PACE organization is responsible for ensuring that participants' 
nutritional needs are met per the regulations at Sec.  460.78, the 
exact manner in which the organization meets that requirement may be 
different for each participant. As we stated in the 2006 PACE final 
rule (71 FR 71281), the PACE organization is responsible for a 
participant's health and safety including his or her nutritional needs 
24 hours a day, 7 days a week. The IDT must assess the participant's 
needs as well as his or her access to adequate nutrition. The 
participant's nutritional requirements and dietary needs should be 
included in the plan of care, whether it is providing tube feedings, 
arranging for Meals on Wheels, sending meals home with the participant, 
or documenting that appropriate meals are provided by the family/
caregiver. For this reason, we are including in proposed Sec.  
460.106(c)(1)(viii) language that would specify that the plan of care 
address not only nutrition, but also how a participant accesses meals 
that meet their nutritional and special dietary needs.
    We propose at Sec.  460.106(c)(1)(ix) to establish the requirement 
that the plan of care address the participant's ability to live safely 
in the community, including the safety of their home environment. This 
proposal also deviates from the nursing home requirements, as the goal 
of PACE is to keep nursing home eligible individuals out of a facility 
and living in the community. In order to accomplish that goal, the IDT 
must assess the participant's environment and living situation for 
potential factors that may make it not safe for the participant. For 
example, if the PACE organization recognizes the participant does not 
have a means of contacting either the PACE organization or emergency 
services, the PACE organization should address that concern as part of 
the plan of care, and provide the participant with a method of 
contacting those individuals or entities. As we noted in the 2006 PACE 
final rule (71 FR 71275), PACE organizations are at risk for all health 
care services the participant receives and; therefore, we expect PACE 
organizations will be involved in assuring the health and safety of 
participants at all times, including when they are at home. We propose 
at Sec.  460.106(c)(1)(x) that the plan of care must address the 
participant's home care needs. This proposal would also deviate from 
nursing home guidance; however, we believe it to be important in the 
PACE model. The nursing home is responsible for 24-hour care similar to 
PACE, but inherently provides all care as part of the resident living 
at the facility. PACE often provides similar care, for example 
medication administration, through home care services. Therefore, we 
believe a participant's home care needs must be addressed through the 
plan of care. We propose to establish at Sec.  460.106(c)(1)(xi) that 
the participant's center attendance must be included in the plan of 
care. Again, while not a requirement in nursing homes, center 
attendance is an integral part of the PACE program, and we believe it 
is appropriate to include it in a participant's plan of care. We 
propose at Sec.  460.106(c)(1)(xii) to require that a participant's 
transportation needs be incorporated into the plan of care. 
Transportation is an essential part of the PACE benefit, as often it is 
the PACE transportation that ensures participants have access to their 
necessary medical appointments and specialist visits. In addition, we 
propose to require at Sec.  460.106(c)(1)(xiii) that a participant's 
communication needs (including any identified language barriers) be 
incorporated into the plan of care. For participants who are not 
English

[[Page 79659]]

speaking, or have some other difficulty communicating, addressing and 
resolving these needs preemptively can mean the difference between 
quality of care and participant's not receiving the care they need.
    We are soliciting comment on all items identified in the proposed 
Sec.  460.106(c)(1) and whether they should be required content in a 
plan of care for PACE participants. Along with any general comments 
that are submitted, we are specifically requesting comment on whether 
to include acute diseases and/or acute behavioral and psychiatric 
disorders in the plan of care. We contemplated adding acute diseases as 
part of the minimum criteria for the plan of care, but ultimately, we 
believe it might be hard to operationalize. When submitting comments on 
whether acute diseases should be included in the plan of care, we ask 
that commenters also indicate whether they believe the term ``acute 
diseases'' should be defined in the PACE regulations, and if so, how. 
We also solicit comment on whether there is other content that is 
required to be in a nursing home care plan that should also be included 
in a PACE plan of care. We are particularly interested in feedback that 
addresses whether we should include incontinence care and dialysis care 
as required content for PACE plans of care. (Both incontinence care and 
dialysis care are required in nursing home care plans, per the 
regulations at Sec.  483.25(e) and (l)).
    We propose at Sec.  460.106(c)(2) to require that the plan of care 
must identify each intervention (the care or service) needed to meet 
the participant's medical, physical, emotional, and social needs. In 
addition to identifying the needs of the participant as they relate to 
the proposed criteria in Sec.  460.106(c)(1), the PACE organization 
must also identify any service that will be provided in response to 
those needs. PACE organizations are currently required at Sec.  
460.106(b)(4) to identify each intervention, so this provision is 
consistent with the current requirement, but further emphasizes that 
it's any intervention needed to meet the participant's medical, 
physical, social or emotional needs. For example, if the participant 
has poor vision, the IDT may deem it necessary to provide glasses and 
routine trips to the optometrist or ophthalmologist. The IDT would need 
to identify these services in the plan of care. We propose to include 
at Sec.  460.106(c)(2) an exception to the interventions that need to 
be included in the plan of care; specifically, proposed Sec.  
460.106(c)(2) would provide that the plan of care does not need to 
identify the medications needed to meet a participant's needs if a 
comprehensive list of medications is already documented elsewhere in 
the medical record. As we define services at Sec.  460.6 to include 
medications, we strongly believe that medications are an important part 
of the PACE benefit, and may be the most applicable service for a 
particular diagnosis or condition. However, we also understand that 
medications may change frequently, especially when a participant is 
first beginning a medication routine, and are typically documented in 
the medical record in way that would allow the IDT to understand all 
current, pending and discontinued medications; therefore, we are not 
inclined to require medications to be included in the plan of care. 
However, while we are not proposing to require that all medications be 
identified in the plan of care, nothing would prohibit an organization 
from choosing to include medications in the care plan. We are 
soliciting comment on this proposal and whether the plan of care should 
include a comprehensive list of active medications.
    We propose to redesignate current Sec.  460.106(b)(3), which 
requires the care plan to utilize the most appropriate interventions 
for each care need that advances the participant toward a measurable 
goal and outcome, as Sec.  460.106(c)(3).
    We propose at Sec.  460.106(c)(4) to specify that the plan of care 
must identify how each service will be implemented, including a 
timeframe for implementation. The IDT is already required to identify 
how each intervention will be implemented in Sec.  460.106(b)(4), 
however we are proposing to modify the language to specify that as part 
of identifying how the intervention will be implemented, the PACE 
organization should specify a timeframe for that implementation. As 
part of the plan of care process, the IDT should determine the 
parameters of a service, specifically how it will be provided to the 
participant in order to meet their needs. For example, it is not enough 
for the IDT to decide that the participant needs physical therapy. They 
should also discuss how often the participant should receive physical 
therapy, when it should be provided, and by whom.
    We propose at Sec.  460.106(c)(5) to require that the plan of care 
must identify a measurable goal for each intervention. The current care 
plan regulations require that the plan identify measurable outcomes 
(Sec.  460.106(b)(2)), and utilize appropriate interventions that 
advance the participant toward a measurable goal (Sec.  460.106(b)(3)). 
Our proposal at Sec.  460.106(c)(5) is consistent with the intention of 
the current requirement; however, we believe the specificity of 
identifying measurable goals for each service are necessary. We believe 
that it is important when identifying a service to also identify the 
measurable goal for that service. Using the aforementioned example of 
physical therapy, we believe the IDT must determine what measurable 
goal the participant should achieve as a result of attending physical 
therapy. For example, the goal may be the participant's increased 
mobility demonstrated by the participant ambulating a specific distance 
either determined by an actual measurement (for example, 100 feet) or 
from one area of a room to another (for example. the participant will 
ambulate from the bed to the toilet without falling).
    We propose at Sec.  460.106(c)(6) to require that the care plan 
identify how the goal for each intervention will be evaluated to 
determine whether the intervention should be continued, discontinued, 
or modified. The IDT is currently required at Sec.  460.106(b)(5) to 
identify how each intervention will be evaluated to determine progress 
in reaching specified goals and desired outcomes. While our proposal is 
similar in intent, it would reduce ambiguity by specifying that the 
evaluation by the IDT should be focused on whether the goal was met for 
determining whether the intervention needs to be continued, 
discontinued or modified. For example, the IDT determines that the PACE 
participant should receive physical therapy 3 times a week. The goal 
may be that the participant is able to ambulate independently 100 feet. 
The IDT may determine the appropriate timeframe for that goal is 6 
weeks. At the time the PACE organization identifies the measurable 
goal, it must determine how it will evaluate the participant's success 
in meeting the goal. In this example, at the end of the 6-week 
timeframe, the PACE organization should have a mechanism to determine 
if the participant has met the goal of ambulating 100 feet. If the 
participant met the goal, the IDT may determine the intervention can be 
discontinued. If the participant has not met the goal, the IDT may 
determine whether the intervention needs to be modified or if it should 
be continued for another set period of time, at which point the IDT 
will need to determine a new measurable goal and how it will be 
evaluated.
    Finally, we propose at Sec.  460.106(c)(7) to require that the plan 
of care must identify the participant's preferences and goals of care. 
It is important for the PACE organization to document the

[[Page 79660]]

participant's goals and wishes for treatment and to consider them not 
only when developing and reevaluating the plan of care, but during 
implementation of the services that were added to the plan of care.
    Currently, Sec.  460.106(c) includes requirements for the 
implementation of the plan of care. We propose to move these 
requirements to Sec.  460.106(d) and make modifications to the existing 
requirements. Currently, Sec.  460.106(c)(1) requires the team to 
implement, coordinate, and monitor the plan of care regardless of 
whether the services are furnished by PACE employees or contractors. We 
propose to move this language to Sec.  460.106(d)(1) and to modify it 
to read that the IDT must continuously implement, coordinate, and 
monitor the plan of care, regardless of whether the services are 
furnished by PACE employees or contractors, across all care settings. 
Through our audit and oversight activities, we have seen where PACE 
organizations met the minimum requirement of reassessing participants 
semiannually and updating the plan of care accordingly, but then took 
no further action with respect to the plan of care until the next 
semiannual assessment period. We want to reemphasize that the intent of 
the plan of care is to create a comprehensive, living document that is 
updated per the participant's current status at any given point; we are 
proposing to add the word ``continuously'' to emphasize that the team 
must continue to be responsible for implementing, coordinating and 
monitoring the plan of care. We are proposing to include language 
specifying that this implementation, coordination and monitoring of the 
plan of care must be done across all care settings, to reiterate the 
responsibilities of the IDT in ensuring that care is appropriately 
coordinated and furnished, regardless of where a participant resides. 
For example, if a participant is living in a nursing home, that does 
not absolve the IDT of its responsibility to ensure that the care is 
implemented appropriately and that the participant's needs are met.
    Currently, Sec.  460.106(c)(2) requires the IDT to continuously 
monitor the participant's health and psychosocial status, as well as 
the effectiveness of the plan of care, through the provision of 
services, informal observation, input from participants or caregivers, 
and communications among members of the IDT. We propose to move the 
current requirements at Sec.  460.106(c)(2) to Sec.  460.106(d)(2) and 
to modify Sec.  460.106(d)(2) to specify that the IDT must continuously 
evaluate and monitor the participant's medical, physical, emotional, 
and social needs, as well as the effectiveness of the plan of care, 
through the provision of services, informal observation, input from 
participants or caregivers, and communications among members of the IDT 
and other employees or contractors. The proposed modification to change 
the language from ``participant's health and psychosocial status'' to 
``participant's medical, physical, emotional, and social needs'' is 
intended to align more closely with the regulation on required services 
at Sec.  460.92(b).
    We propose to add Sec.  460.106(d)(3) to state that all services 
must be arranged and provided in accordance with Sec.  460.98(c). The 
provision of care planned services is an important part of implementing 
the plan of care. As we discussed in section VI.G. of this rule, we 
have proposed additional criteria concerning the arranging and 
provision of services that are determined necessary by the IDT. When a 
service is care planned, the IDT has determined that the service is 
necessary for the participant, and we would expect it to be arranged 
and provided in accordance with the rules governing other approved or 
necessary services.
    Currently, Sec.  460.106(e) requires that the team must develop, 
review, and reevaluate the plan of care in collaboration with the 
participant or caregiver, or both, to ensure that there is agreement 
with the plan of care and that the participant's concerns are 
addressed. We have seen as part of our audit and oversight activities 
where participants and/or caregivers are unaware of the contents of 
their plan of care or what services they should be receiving. We have 
also seen that the involvement of the participant and/or caregiver in 
the plan of care is often limited, and often reflects no direct 
involvement or input in that decision-making process. Instead, we often 
see that the plan of care is finalized by the team and then provided or 
reviewed with the participant after the fact as a means of 
``collaboration.'' Therefore, we propose to split the existing language 
into two new paragraphs Sec.  460.106(e)(1) and (e)(2). We propose at 
Sec.  460.106(e)(1) that the IDT must develop, evaluate, and revise 
each plan of care in collaboration with the participant or caregiver, 
or both. We are proposing to amend the language to refer to ``each'' 
plan of care in order to emphasize that this collaboration must be 
performed for every new plan of care, including the initial, semi-
annual, and a revised plan of care as a result of a change in status. 
We also propose at Sec.  460.106(e)(2) that the IDT must review and 
discuss each plan of care with the participant and/or caregiver before 
the plan of care is completed to ensure that there is agreement with 
the plan of care and the participant's concerns are addressed. We want 
to ensure the participant and/or caregiver has an opportunity to voice 
concerns and ensure that any concerns are addressed in the proposed 
plan of care; therefore, our proposal addresses the expectation that 
the IDT discuss the plan of care with the participant prior to it being 
finalized. We believe a discussion about the plan of care, with the 
participant and/or caregiver, is the best way for the IDT to explain 
the care they believe is necessary, and receive input from the 
participant and/or caregiver about their wishes and concerns related to 
their care.
    Currently, Sec.  460.106(f) requires that the team must document 
the plan of care, and any changes made to it, in the participant's 
medical record. As part of our audit and oversight activities, we have 
seen organizations have insufficient documentation related to 
participant plans of care. We often see minimum documentation related 
to whether a participant has met the goals set at the last assessment 
and any changes in the participant's status, but we do not see 
documentation of the conversations with the participant in the plan of 
care, including whether the participant disagreed with any part of the 
plan of care and whether those concerns were addressed. Therefore, we 
propose to modify the language in Sec.  460.106(f) to state that the 
team must establish and implement a process to document and maintain 
records related to all requirements for the plan of care in the 
participant's medical record, and ensure that the most recent care plan 
is available to all employees and contractors within the organization 
as needed. This proposal is consistent with the current requirement, 
but ensures that the PACE organization understands that it must 
document all care planning requirements. Therefore, we would expect to 
see documentation that the appropriate members of the IDT were involved 
in care planning in accordance with Sec.  460.106(a), the IDT met the 
timeframes for finalizing care plans in Sec.  460.106(b), that the care 
plans included all required content in Sec.  460.106(c), that the IDT 
implemented and monitored the plan of care in accordance with Sec.  
460.106(d), and that the participant and caregiver were appropriately 
involved in the care planning process in accordance with Sec.  
460.106(e).
    We also propose certain modifications to Sec.  460.104 to align 
with our proposed amendment to Sec.  460.106. Currently,

[[Page 79661]]

Sec.  460.104(e) requires that the team member who conducts a 
reassessment must reevaluate the participant's plan of care, discuss 
any changes in the plan with the IDT, obtain approval of the revised 
plan from the IDT and the participant (or designated representative), 
and furnish any services included in the revised plan of care as a 
result of a reassessment to the participant as expeditiously as the 
participant's health condition requires. We propose to remove most of 
the language currently in section Sec.  460.104(e), and add the 
requirement that when the IDT conducts semiannual or unscheduled 
reassessments, the IDT must reevaluate and, if necessary, revise the 
plan of care in accordance with Sec.  460.106(c) following the 
completion of all required assessments. We believe this will eliminate 
any unnecessary duplication and ensure there is no confusion as it 
relates to care plans.
    As both the development of and updates to the care plan are a 
typical responsibility for the IDT, any burden associated with this 
would be incurred by persons in their normal course of business. 
Therefore, the burden associated with the development of and updates to 
the care plan are exempt from the PRA in accordance with 5 CFR 
1320.3(b)(2) because the time, effort, and financial resources 
necessary to comply with these requirements would be incurred by 
persons in the normal course of their activities and is a usual and 
customary business practice.

J. Specific Rights to Which a Participant Is Entitled (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 
considerate, respectful care and the right not to be discriminated 
against (Sec.  460.112(a)); the right to receive accurate, easily 
understood information and to receive assistance in making informed 
health care decisions (Sec.  460.112(b)); the right to access emergency 
services without prior authorization (Sec.  460.112(d)); and the right 
to participate fully in decisions related to his or her treatment 
(Sec.  460.112(e)).
    In this proposed rule, CMS is proposing to amend Sec.  460.112 to 
incorporate the following participant rights: the right to appropriate 
and timely treatment for health conditions including the right to 
receive all care and services needed to improve or maintain the 
participant's health condition and to attain the highest practicable 
physical, emotional and social well-being; the right to have the PACE 
organization explain all treatment options; the right to be fully 
informed, in writing, before the PACE organization implements 
palliative care, comfort care, or end-of-life care services; the right 
to fully understand the PACE organization's palliative care, comfort 
care, and end-of-life care services; and the right to request services 
from the PACE organization, its employees, or contractors through the 
process described in Sec.  460.121.
    Sections 1894(b)(1)(B) and 1934(b)(1)(B) of the Act establish that 
PACE organizations shall provide enrollees access to necessary covered 
items and services 24 hours per day, every day of the year. CMS 
codified these required services at Sec.  460.92, which provides that 
the PACE benefit package for all participants, regardless of the source 
of payment, must include all Medicare covered services, all Medicaid 
covered services as specified in the State's approved Medicaid plan, 
and other services determined necessary by the IDT to improve and 
maintain the participant's overall health status. At Sec.  460.98(a), 
CMS established the requirement for PACE organizations to provide care 
that meets the needs of each participant across all care settings, 24 
hours a day, every day of the year. However, through our audit and 
oversight activities, we have identified some PACE organizations that 
do not provide care meant to improve or maintain the participant's 
condition, and instead provide a palliative-like benefit, where the 
services provided to participants are geared more toward ensuring the 
participant's comfort even when that is not in line with the 
participant's wishes or needs. We have also seen organizations, in care 
plans and notes from discussions with participants, use terms such as 
palliative care and comfort care without clearly defining those terms 
for the participants and/or their designated representatives, leaving 
participants and families confused as to what level of care they are 
receiving. Based on what we have seen through audits, we believe that 
not all participants understand that they are entitled to all care and 
services deemed necessary to improve or maintain their health status, 
and are not limited to services related to palliative, comfort or end-
of-life care. As we stated in the January 2021 final rule (86 FR 6041), 
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. Therefore, it 
is reasonable that a PACE participant may transition from receiving 
treatment meant to cure or maintain health conditions at the time of 
enrollment, to receiving end-of-life care by the time they approach 
their death. However, it is essential that PACE participants understand 
their right to receive all treatments in the PACE benefit package that 
are necessary and appropriate at the time of enrollment and on an 
ongoing basis, and that they clearly understand their rights as they 
transition from receiving treatment focused on curing a condition or 
improving or maintaining their health status, to treatment meant solely 
to provide comfort.
    For the foregoing reasons, we are proposing certain modifications 
to Sec.  460.112. First, we propose to redesignate current paragraphs 
(a) through (c) as paragraphs (b) through (d) to allow for the addition 
of proposed new paragraph (a). Proposed new paragraph (a)(1) would 
state that participants have a right to appropriate and timely 
treatment for their health conditions, which includes the right to 
receive all care and services needed to improve or maintain the 
participant's health condition and attain the highest practicable 
physical, emotional, and social well-being. We are proposing to add 
this language in new paragraph (a)(1) of Sec.  460.112 because the 
right to treatment is a separate and distinct right that should be 
assigned its own paragraph in the participant rights section. By 
creating a new paragraph (a) and titling it the right to treatment, we 
aim to emphasize the participant's right to receive care and services, 
which many of the other participant rights relate to or build upon. In 
drafting proposed new Sec.  460.112(a)(1), we considered the language 
in Sec.  460.92 related to services meant to improve or maintain the 
participant's health condition. Additionally, since a PACE organization 
is a direct care provider that serves nursing home eligible 
participants, we also considered nursing home regulations as we drafted 
this proposal. The nursing home regulations require that care plans 
must describe ``the services that are to be furnished to attain or 
maintain the resident's highest practicable physical, mental, and 
psychosocial well-being'' (Sec.  483.21(b)(1)(i)). We adapted this 
language to align with existing PACE regulations. We believe this 
modification will ensure that PACE participants are made aware of their

[[Page 79662]]

right to receive any care and services that are necessary to improve 
their condition to the highest practicable level, or maintain their 
condition to the highest practicable level, depending on the 
participant's health condition.
    In addition, we propose to add to Sec.  460.112 a new paragraph 
(a)(2), which would state that participants have the right to 
appropriate and timely treatment for their health conditions, including 
the right to access emergency health care services when and where the 
need arises without prior authorization by the PACE interdisciplinary 
team. The right to access emergency care services currently appears at 
Sec.  460.112(d); however, we believe that it relates to the right to 
treatment, and therefore, we propose to move the text of current Sec.  
460.112(d) to new Sec.  460.112(a)(2). It is appropriate that both of 
the proposed provisions concerning the right to treatment (that is, 
proposed paragraph (a)(1) regarding standard treatments and proposed 
paragraph (a)(2) regarding emergency treatments) appear in the same 
paragraph of Sec.  460.112.
    In the 1999 PACE interim final rule, CMS codified at Sec.  
460.112(a) (which we propose to redesignate as Sec.  460.112(b)) that 
all participants have the right to considerate respectful care, and 
each participant has the right not to be discriminated against in the 
delivery of required PACE services based on race, ethnicity, national 
origin, religion, sex, age, mental or physical disability, or source of 
payment (64 FR 66253). CMS also codified at Sec.  460.112(e) the right 
of participants to participate fully in all treatment decisions. As 
part of that right, participants have the right to have all treatment 
options explained in a culturally competent manner and to make health 
care decisions, including the right to refuse treatment, and be 
informed of the consequences of the decisions (Sec.  460.112(e)(1)). 
This right has two specific parts; the right to have all treatment 
options explained in a culturally competent manner, and the right to 
make health care decisions. We believe the first right, the right to 
have all treatment options explained in a culturally competent manner, 
relates more to the rights under redesignated Sec.  460.112(b) 
(``Respect and nondiscrimination''). Therefore, we propose to add a new 
paragraph at Sec.  460.112(b)(8) which states that participants have 
the right to have all information regarding PACE services and treatment 
options explained in a culturally competent manner. Culturally 
competent care respects diversity in the patient population and 
cultural factors that can affect health and health care, and can 
contribute to the elimination of racial and ethnic health disparities. 
By moving the provision establishing the right to have treatment 
options explained in a culturally competent manner from Sec.  
460.112(e)(1) to new Sec.  460.112(b)(8), as proposed, we would 
emphasize that receiving materials about all PACE services, not just 
treatment options, in a culturally competent manner is an inherent 
right.
    In the 1999 PACE interim final rule (64 FR 66254), CMS codified the 
participant's rights to receive accurate and easily understood 
information at current Sec.  460.112(b) (which we propose to 
redesignate as Sec.  460.112(c)). In the 2006 PACE final rule, CMS 
further stated that this information was necessary for participants to 
``comprehensively assess differences in their health care options'' (71 
FR 71295). CMS also codified at Sec.  460.112(e) that ``a participant 
who is unable to participate fully in treatment decisions has the right 
to designate a representative'' (64 FR 66290). For the participant's 
designated representative to be able to act on behalf of the 
participant in the event the participant is unable to make informed 
decisions, the designated representative should receive the same 
accurate, easily understood information the participant receives. 
Therefore, we are proposing to add language to the newly designated 
Sec.  460.112(c) that would provide that a participant has the right to 
have all information in this section shared with their designated 
representative. As previously mentioned, participants may be enrolled 
with a PACE organization until their death, and therefore the PACE 
benefit adapts as the participant's needs change. Because PACE is 
designed to meet a participant's needs, regardless of what those needs 
are, PACE organizations are permitted to provide participants similar 
benefits to hospice or end-of-life care while allowing participants to 
remain in PACE, assuming that is in line with the participant's wishes 
for treatment. However, we have seen as part of our audit and oversight 
activities that certain types of care offered by PACE organizations are 
not well-defined. For instance, through audits we have seen 
organizations use terms such as palliative care, comfort care, and end-
of-life care, with little or no information on what those terms mean or 
how they are defined or implemented across PACE organizations. We have 
also seen that the lack of a clear, comprehensive definition of 
palliative care, comfort care, or end-of-life care has caused confusion 
to participants and/or their caregivers related to what care they are 
and are not getting when this type of care is provided. While CMS does 
not seek to define these terms, we believe it is important for PACE 
organizations to define the terms within their respective programs, and 
provide clear information to participants and their designated 
representatives on what the terms mean. Participants and their 
representatives have the right to understand how their choices to 
pursue these different types of treatment options will impact their 
ability to continue pursuing care and services meant to improve or 
maintain their health conditions. Therefore, we are proposing to add 
language to newly designated Sec.  460.112(c)(5) that would provide 
that participants have the right to be fully informed, in writing, of 
several factors before the PACE organization implements palliative 
care, comfort care, or end-of-life care. We propose that the written 
notification to participants must explain four different aspects of the 
treatment options, which we outline in proposed Sec.  460.112(c)(5)(i) 
through (iv).
    First, we propose at Sec.  460.112(c)(5)(i) that the written 
notification must include a description of the palliative care, comfort 
care, and end-of-life care services (as applicable) and how they differ 
from the care the participant is currently receiving to meet their 
individual needs. The explanation of the different types of care, and 
more importantly, how they differ from the care being currently 
received is important in ensuring that participants are fully informed 
of their options for treatment and are therefore able to make informed 
decisions on the care they wish to receive. A participant should have 
the right to fully understand the care they are agreeing to receive 
prior to that care being initiated.
    Proposed Sec.  460.112(c)(5)(ii) would require PACE organizations 
to explain, in writing, to participants or their designated 
representative whether palliative care, comfort care, or end-of-life 
care services (as applicable) will be provided in addition to or in 
lieu of the care the participant is currently receiving. We have seen 
through audit that some PACE participants receive palliative care and/
or comfort care in addition to other services a participant may be 
receiving, including services meant to improve or maintain their health 
condition. We have also seen PACE participants receive palliative care 
and/or comfort care instead of providing services meant to improve or 
maintain the participant's health condition. In other words, for some 
participants, when they agree to receive palliative care or comfort 
care, they are also agreeing to no longer receive care

[[Page 79663]]

meant to improve or maintain their health condition and are receiving, 
in essence, end-of-life care. While this may be appropriate in some 
instances, given a participant's condition, it is important that 
participants fully understand what they are agreeing to when they enter 
into palliative or comfort care status. We believe that part of the 
appeal of PACE to participants is the person-centered nature of the 
benefit, which allows for the IDT to provide any and all services that 
are tailored around the participant's needs. This is true for end of 
life services too. One participant may want, and the IDT may approve, 
comfort measures in addition to treatment meant to maintain the 
participant's health condition. Another participant may be at the end 
of their life, and may only want treatment meant to reduce or control 
pain. CMS believes that the PACE organization is allowed to pursue 
either scenario, but that the participant must be able to understand 
the options and what care they will or will not receive in order to 
make an informed decision.
    Proposed Sec.  460.112(c)(5)(iii) would require PACE organizations 
to identify all services that would be impacted if the participant and/
or their designated representative elects to initiate palliative care, 
comfort care, or end-of-life care. For example, one or more of the 
following types of services could be impacted and the PACE organization 
should include the impacted services in the detailed description: 
physician services (including specialist services), hospital services, 
long-term care services, nursing services, social services, dietary 
services, transportation, home care, therapy (including physical, 
occupational, and speech), behavioral health, diagnostic testing 
(including imaging and laboratory services), medications, preventative 
healthcare services, and PACE center attendance. Under this proposal, 
PACE organizations would be required to provide a detailed explanation 
of how specific services would be impacted by the addition of or 
transition to palliative care, comfort care, or end-of-life care. If 
the participant would be receiving palliative care or comfort care in 
addition to all the other services they are currently receiving, then 
the PACE organization may not have to provide a detailed analysis, and 
could simply include language that the designation of palliative care 
or comfort care will not impact any existing services. However, if 
moving a participant to palliative care, comfort care, or end-of-life 
care would impact their services (for example a participant would no 
longer be sent to specialists, or they would no longer be sent to the 
hospital), then a PACE organization would be required to identify the 
services that would be impacted, and explain how those services would 
be impacted.
    Proposed Sec.  460.112(c)(5)(iv) would state that the participant 
has the right to revoke or withdraw their consent to receive 
palliative, comfort, or end-of-life care at any time and for any reason 
either verbally or in writing. We also propose to require PACE 
organizations to explain this right to participants both orally and in 
writing. A participant has the right to fully participate in treatment 
decisions, as established at current Sec.  460.112(e). Part of that 
right is participating in the decision-making process of what care to 
receive, and a participant must not only understand what the proposed 
care or treatment decisions mean, but also that they can change their 
mind with regards to treatment decisions previously made. We have seen 
through audits and oversight activities that participants or their 
designated representatives may decide to pursue palliative care or 
comfort care, without fully understanding what those terms mean. We 
have also seen situations where participants or their designated 
representatives want to stop palliative care or comfort care when they 
realize they will no longer receive other services and do not know they 
have the right to revisit prior treatment decisions. Participants 
should be clearly informed, in writing, that they have the ability to 
change their mind on these important treatment decisions.
    In the 1999 PACE interim final rule (64 FR 66255), CMS established 
at Sec.  460.112(e) the right for each participant to fully participate 
in all decisions related to his or her care. Paragraph (e)(1) specifies 
that this includes the right ``[t]o have all treatment options 
explained in a culturally competent manner and to make health care 
decisions, including the right to refuse treatment, and be informed of 
the consequences of the decisions.'' In this proposed rule, we are 
proposing to modify the language in Sec.  460.112(e)(1) by removing the 
language regarding the participant's right to have all treatment 
options explained in a culturally competent manner. As we explained in 
the discussion around our proposed amendments to Sec.  460.112(b), the 
right to have treatment options explained in a culturally competent 
manner is better suited for inclusion in that paragraph, which, as 
amended, sets forth participant rights related to respect and non-
discrimination. We also propose to restructure and modify Sec.  
460.112(e)(1) by separating the requirements into three subparts at 
Sec.  460.112(e)(1)(i), (ii) and (iii). We propose at Sec.  
460.112(e)(1)(i) to establish that participants' right to make health 
care decisions includes the right to have all treatment options fully 
explained to them. Inherent in the right to participate in health care 
decisions is the right to understand all available options for 
treatment. A participant cannot make an informed health care decision 
without fully understanding the options available. Proposed Sec.  
460.112(e)(1)(ii) would provide that participants have the right to 
refuse any and all care and services. As we explained in the 2006 PACE 
final rule (71 FR 71298), the right to refuse treatment is a type of 
health care decision, and participants have the right to make those 
decisions. We propose at Sec.  460.112(e)(1)(iii) to specify that 
participants have the right to be informed of the consequences their 
decisions may have on their health and/or psychosocial status. The 
language at current Sec.  460.112(e)(1) refers to the participant's 
right to ``be informed of the consequences of the decisions,'' but we 
propose to add additional specificity around that right and the 
obligation it creates for PACE organizations by modifying the 
regulatory language to refer to the participant's right to ``be 
informed of the consequences their decisions may have on their health 
and/or psychosocial status.'' We believe this proposed revision would 
emphasize that the participant should be made aware of how their 
decision to refuse care may impact their health and/or psychosocial 
status. For example, if a physician was recommending the participant 
have a diagnostic cardiac catherization, and the participant refused, 
the participant has the right to be informed that, by not having the 
diagnostic testing done, they might be at increased risk for a cardiac 
event, including a heart attack.
    We propose to further amend Sec.  460.112(e) by redesignating 
current paragraphs (e)(2) through (e)(6) as (e)(3) through (e)(7), and 
by adding a new paragraph (e)(2), which would state that participants 
have a right to fully understand the PACE organization's palliative 
care, comfort care, and end-of-life care services. Proposed paragraph 
(e)(2) would further require that PACE organizations take several 
steps, outlined at proposed Sec.  460.112(e)(2)(i) through (iii), in 
order to ensure that participants understand this right. As we 
mentioned in our discussion of Sec.  460.112(a), we have seen as part 
of our

[[Page 79664]]

audit and oversight activities that participants and/or their 
representatives are not always fully aware of what treatments they will 
or will not receive if they opt to pursue palliative care, comfort 
care, or end-of-life care services. While palliative care, comfort 
care, and ultimately, end-of-life care are necessary components of the 
PACE benefit, PACE organizations must ensure that participants fully 
understand these terms and treatment options, prior to them being 
initiated.
    At Sec.  460.112(e)(2)(i), we propose to establish that the PACE 
organization must fully explain the applicable treatment options to the 
participant prior to initiating palliative care, comfort care, or end-
of-life care services. This proposal would require the PACE 
organization to explain to the participant what these terms mean, and 
how choosing one of those options would impact the participant's 
health. We are also proposing at Sec.  460.112(e)(2)(ii) to require 
that the PACE organization provide the participant with written 
information about their treatment options in accordance with Sec.  
460.112(c)(5). In the discussion around Sec.  460.112(c)(5), we 
highlighted that we believe providing written information on these 
terms is important for the participant, and that the information must 
include details regarding the treatment and how the participant's 
current services may be impacted. We are proposing to add paragraphs 
(e)(2)(i) and (e)(2)(ii) as separate provisions because the 
organization should be responsible both for providing the written 
notification outlined in Sec.  460.112(c)(5), and actually explaining 
the treatment options in a way that is understandable to the 
participant. A participant may be overwhelmed by receiving only written 
notification; therefore, both provisions are necessary to ensure the 
participant has a full understanding of their options. Finally, we are 
proposing at Sec.  460.112(e)(2)(iii) that the PACE organization obtain 
written consent from the participant or their designated representative 
to change a treatment plan to include palliative care, comfort care, or 
end of life care. Because some organizations stop treatments to improve 
or maintain a participant's condition when a participant enters 
palliative care or comfort care, it is especially important that 
participants or their designated representatives are in agreement with 
these treatment options, and consent to receiving this care. We believe 
ensuring that this consent is in writing is the most appropriate 
safeguard, not only for participants, but also for PACE organizations 
to ensure that they have adequate documentation to support providing 
these benefits. We propose to redesignate current paragraphs (e)(2) 
through (e)(6) of Sec.  460.112 as (e)(3) through (e)(7) to allow for 
the addition of a new paragraph (e)(2) as discussed in this section. We 
want to emphasize that this proposed requirement would not take the 
place of any advanced directives a participant may have, and would not 
eliminate the requirement in current Sec.  460.112(e)(2) (which would 
be redesignated as (e)(3) under our proposal) that requires a PACE 
organization to explain advance directives and to establish them, if 
the participant so desires. That directive is distinct from the 
notification proposed at new Sec.  460.112(e)(2), which should explain 
the services under the PACE benefit that may be provided or not 
provided to the participant as a part of their care decisions.
    In the 1999 PACE interim final rule (64 FR 66256, 66290), CMS 
codified at Sec.  460.112(g) the participant's right to ``a fair and 
efficient process for resolving differences with the PACE organization, 
including a rigorous system for internal review by the organization and 
an independent system of external review.'' In the January 2021 final 
rule (86 FR 5864), CMS added Sec.  460.121 to clearly define service 
determination requests and specify the requirements for how those 
requests would be processed. As we explained in that rule, the service 
determination request process serves an important participant 
protection, as it allows a participant to advocate for services (86 FR 
6008). We also explained that the service determination request process 
is the first step of the appeals process (86 FR 6008). At Sec.  
460.112(g)(1), the participant is provided the right to be encouraged 
and assisted to voice complaints to PACE staff and outside 
representatives; and Sec.  460.112(g)(2) provides participants the 
right to appeal any treatment decision of the PACE organization, its 
employees, or contractors through the process described in Sec.  
460.122. Because the participant rights in section Sec.  460.112(g) 
discusses both the right to voice grievances and the right to appeal, 
it should also reference the right to request a service determination 
request, which is the first step in the appeals process. Therefore, we 
propose to add a new Sec.  460.112(g)(2) to provide that a participant 
has the right to request services from the PACE organization, its 
employees, or contractors through the process described in Sec.  
460.121. We propose to redesignate current paragraph (g)(2) as (g)(3) 
to allow for the addition of a new paragraph (g)(2) as discussed in 
this section. We believe the burden associated with this provision is 
related to developing written templates regarding the PACE 
organization's palliative, comfort, and end-of-life care services and 
tailoring those templates to the participants. We discuss the burden in 
the collection of information section.

K. Grievance Process (Sec.  460.120)

    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 have codified requirements around the processing of 
grievances at Sec.  460.120. The grievance process serves as an 
important participant protection as it allows for participants and 
their family members to express complaints related to the quality of 
care a participant receives, or the delivery of services. Currently, 
Sec.  460.120 defines a grievance as a complaint, either oral or 
written, expressing dissatisfaction with service delivery or the 
quality of care furnished. A PACE organization must have a formal 
written process to evaluate and resolve medical and nonmedical 
grievances by participants, family members, or representatives (Sec.  
460.120(a)). At a minimum, the PACE organization's grievance process 
must include written procedures for the following: (1) how a 
participant files a grievance; (2) documentation of a participant's 
grievance; (3) response to, and resolution of, grievances in a timely 
manner; and (4) maintenance of confidentiality of a participant's 
grievance (Sec.  460.120(c)).
    A PACE organization must discuss with and provide to the 
participant in writing the specific steps, including timeframes for 
response, that will be taken to resolve the participant's grievance. 
The PACE organization must also maintain, aggregate, and analyze 
grievance data for use in its internal quality improvement operations 
(Sec.  460.120(f)).
    Since the grievance regulations were codified in 1999, CMS has 
received feedback from PACE organizations requesting clarification and 
guidance on the grievance process. Additionally, we have discovered 
through audits that the current grievance process, which allows PACE 
organizations latitude to define their own grievance resolution 
timeframes and develop their own procedures for processing grievances, 
has created confusion and inconsistency in how grievances are handled 
from organization to organization. We are

[[Page 79665]]

proposing certain modifications to the grievance requirements at Sec.  
460.120 to strengthen participant protections and provide more detailed 
processing requirements for grievances from PACE participants and their 
family members. We also propose certain adjustments that would align 
the requirements with the service determination process in Sec.  
460.121 for consistency.
    Currently, the grievance requirements at Sec.  460.120(a) require a 
PACE organization to have a formal written process to evaluate and 
resolve medical and nonmedical grievances by participants, their family 
members, or representatives. We propose to modify paragraph (a) of 
Sec.  460.120 to align more closely with paragraph (a) of Sec.  
460.121, which establishes the requirement to have certain written 
procedures in place for identifying and processing service 
determination requests. First, we propose to amend Sec.  460.120(a) by 
removing the current paragraph header, which reads ``Process to resolve 
grievances,'', adding in its place a new paragraph header, which would 
read, ``Written procedures.'' Specifically, we propose to modify the 
requirement to state that each PACE organization must have formal 
written procedures to promptly identify, document, investigate and 
resolve all medical and nonmedical grievances in accordance with the 
requirements in this part. It is important to ensure that PACE 
organizations develop internal processes and procedures to properly 
implement the grievance process. In addition, we propose to further 
amend Sec.  460.120(a) by removing the list of individuals who can file 
a grievance, as we are proposing to create a new paragraph that 
outlines who may file a grievance at Sec.  460.120(d).
    We propose to add to Sec.  460.120 a new paragraph (b), which would 
define a grievance in PACE as a complaint, either oral or written, 
expressing dissatisfaction with service delivery or the quality of care 
furnished, regardless of whether remedial action is requested; and 
further that a grievance may be between a participant and the PACE 
organization or any other entity or individual through which the PACE 
organization provides services to the participant. Currently, the term 
grievance is defined in the introductory paragraph of Sec.  460.120 as 
a complaint, either written or oral, expressing dissatisfaction with 
service delivery or the quality of care furnished. We have heard from 
PACE organizations over the years that they would prefer that the term 
grievance be better defined in the regulations, and we have received 
requests from PACE organizations for the grievance definition to be 
narrowed to exclude complaints that may not rise to the level of a 
grievance. Based on this feedback, we considered how we might refine 
the definition of grievance for purposes of PACE. In doing so, we 
reviewed how grievances are defined in other managed care programs and 
care settings, specifically in MA and in nursing homes.
    The MA regulations define a grievance as any complaint or dispute, 
other than one that constitutes as organization determination, 
expressing dissatisfaction with any aspect of an MA organization's or 
provider's operations, activities, or behavior, regardless of whether 
remedial action is requested (Sec.  422.561). While the long-term care 
regulations do not define ``grievance'', Sec.  483.10(j)(1) provides 
that a resident has the right to voice grievances to the facility or 
other agency or entity that hears grievances without discrimination or 
reprisal and without fear of discrimination or reprisal. Section 
483.10(j)(1) further specifies that such grievances include those with 
respect to care and treatment which has been furnished as well as that 
which has not been furnished, the behavior of staff and of other 
residents; and other concerns regarding their long-term care facility 
stay. When considering these other approaches to defining what 
constitutes a grievance, we concluded that the definition used in PACE 
is already tailored more narrowly than the MA or nursing home 
requirements. That being the case, we do not believe it would be 
appropriate to narrow the definition even more, and potentially limit a 
PACE participant's ability to complain about their care and have their 
complaints resolved through a formal process.
    However, we recognize that there are aspects of the MA regulations' 
definition of grievance that would be helpful to include in the PACE 
definition at Sec.  460.120, because it would further refine the 
grievance definition and offer clarity sought by PACE organizations in 
previous feedback. For example, in developing our proposal, we noted 
that the MA regulations specify that a grievance is any complaint that 
meets the definition at Sec.  422.561 regardless of whether remedial 
action is requested. We have seen on audit where PACE organizations 
will not recognize or process complaints that fit within the definition 
of a grievance, because remedial action was not requested. However, we 
want to stress that a grievance must be identified and processed if it 
satisfies the definition, regardless of whether remedial action is 
requested. This is an important participant safeguard because 
grievances are required under the current Sec.  460.120(f) to be 
maintained, aggregated and analyzed as part of the PACE organization's 
quality improvement program. Regardless of whether remedial action is 
requested, it is important for organizations to analyze all complaints 
received in order to ensure they are making necessary improvements in 
their quality program. For these reasons, we propose to include in our 
definition of a grievance that a request for remedial action is not 
required.
    In further consideration of MA grievance regulations, and 
specifically MA grievance procedures at Sec.  422.564, we propose that 
the definition of a grievance would provide that a grievance may be 
between a participant and the PACE organization, but it may also be 
between any other entity or individual through which the PACE 
organization provides services to the participant. This proposed change 
to the PACE grievance definition is based on the MA grievance 
definition, which provides at the current Sec.  422.564(a) that each MA 
organization must provide meaningful procedures for timely hearing and 
resolving grievances between enrollees and the organization or any 
other entity or individual through which the organization provides 
health care services under any MA plan it offers. PACE provides a wide 
array of services through different home care agencies, medical 
specialists, and facilities such as nursing homes. It is important that 
a participant or their family have the ability to voice complaints 
related to any care they receive, even if that care is provided through 
a contracted entity or individual.
    We are proposing the grievance definition at Sec.  460.120(b) be: 
``For purposes of this part, a grievance is a complaint, either oral or 
written, expressing dissatisfaction with service delivery or the 
quality of care furnished, regardless of whether remedial action is 
requested. Grievances may be between participants and the PACE 
organization or any other entity or individual through which the PACE 
organization provides services to the participant.'' However, we would 
like to solicit comment on whether we should modify the PACE grievance 
definition to more closely resemble the definition of grievances in MA 
at Sec.  422.561. Specifically, we solicit comment on whether we should 
consider use of the following definition for PACE grievances: A 
grievance means any complaint or dispute expressing dissatisfaction 
with any aspect of the PACE organization's or it's contractors'

[[Page 79666]]

operations, activities, or behavior, regardless of whether remedial 
action is requested.
    Currently, Sec.  460.120(b) requires that upon enrollment, and at 
least annually thereafter, the PACE organization must give a 
participant written information on the grievance process. We are 
proposing to redesignate Sec.  460.120(b) as Sec.  460.120(c), change 
the title, and amend the regulation text. Specifically, we propose to 
change the title from notification to participants to grievance process 
notification to participants, to differentiate from notifications 
related to grievance resolutions, and that the grievance process 
notification be written in understandable language. We propose to add 
new paragraphs (c)(1), (c)(2), and (c)(3) to Sec.  460.120, which would 
set forth requirements for the grievance process notification. We 
solicit comment on whether the other individuals should receive the 
grievance process notification, in addition to the participant, upon 
the participant's enrollment and annually thereafter. Specifically, we 
are soliciting comment on whether the other individuals specified in 
Sec.  460.120(d) should receive the grievance process notification, or 
at a minimum, whether the participant's designated representative 
should receive the notification in addition to the participant.
    First, we propose at Sec.  460.120(c)(1) that the grievance process 
notification must include information on the right of the participant 
or other individual specified in Sec.  460.120(d) to voice grievances 
without discrimination or reprisal, and without fear of discrimination 
or reprisal. In developing this proposal, we again considered the long-
term care regulation at Sec.  483.10(j)(1), and we believe that the 
language in the long-term care regulation that provides that a resident 
has the right to voice grievances without reprisal or discrimination 
and without the fear of reprisal or discrimination would also be 
relevant in PACE. PACE participants have the right to voice complaints 
to PACE staff without reprisal by the PACE staff under current Sec.  
460.112(g)(1), but we believe this right should be specifically called 
out in the PACE regulations, as written in the long-term care 
regulations, in the notification that goes to participants about the 
grievance process. By including it in the notification under proposed 
Sec.  460.120(c), we would ensure that participants would be aware of 
this right to complain, and that they are assured in that notification 
that they and the other individuals specified in Sec.  460.120(d) 
should not fear making complaints. When we have conducted interviews of 
PACE participants and their family members as part of our audit 
process, we have heard that some participants are afraid to voice 
grievances for fear that the PACE organization will take some punitive 
action against them. For example, some participants have expressed 
fears that the PACE organization will eliminate their center 
attendance, or discontinue other necessary services, if the participant 
complains about the care they receive. We believe it is important for 
the grievance process notification to participants to emphasize that a 
participant or other individual specified in Sec.  460.120(d) has the 
right to voice grievances without the fear of reprisal or 
discrimination.
    We propose at Sec.  460.120(c)(2) that the grievance process 
notification must inform pariticipants that a Medicare participant as 
defined in Sec.  460.6 or other individual specified in Sec.  
460.120(d) acting on behalf of a Medicare participant has the right to 
file a written complaint with the quality improvement organization 
(QIO) with regard to Medicare covered services, consistent with section 
1154(a)(14) of the Act. Section 1154(a)(14) provides that the QIO 
``shall conduct an appropriate review of all written complaints about 
the quality of services (for which payment may otherwise be made under 
title XVIII) not meeting professionally recognized standards of health 
care, if the complaint is filed with the organization by an individual 
entitled to benefits for such services under such title (or a person 
acting on the individual's behalf).'' Title XVIII of the Act is the 
Medicare statute, so this provision is specific to Medicare 
beneficiaries and Medicare-covered benefits. Since most PACE 
participants are Medicare beneficiaries, they are also eligible to 
submit quality of care grievances to a QIO. This right has not been 
formally provided to PACE participants before, and we are proposing to 
require it now in order to ensure that Medicare beneficiaries enrolled 
in PACE understand this additional right.
    We propose at Sec.  460.120(c)(3) to require that the grievance 
process notification include the grievance definition at Sec.  
460.120(b) and provide information on all grievance processing 
requirements in paragraphs (d) through (k) of Sec.  460.120. In order 
for the grievance process to serve as a fair and efficient avenue for 
participants to express their dissatisfaction with service delivery or 
the quality of care furnished, and to resolve their differences with 
the PACE organization or any other entity or individual through which 
the PACE organization provides services to the participant, 
participants must understand how to submit a grievance to the 
organization, and how that grievance will be processed once submitted.
    Currently, at Sec.  460.120(c), PACE organizations are required to 
develop written procedures that, at a minimum, must address how a 
participant files a grievance, documentation of the participant's 
grievance, response to and resolution of a grievance in a timely 
manner, and maintenance of confidentiality of a participant's 
grievance. These requirements allow PACE organizations to develop their 
own procedures for resolving grievances, including creating their own 
timeframes for doing so. Given the frail and vulnerable population in 
PACE, we believe that additional structure around how grievances should 
be processed is necessary. Therefore, we are proposing to remove the 
language that is currently at Sec.  460.120(c) and create specific 
processing requirements in its place.
    We propose to move the language regarding who can submit a 
grievance from current Sec.  460.120(a) to a new paragraph at Sec.  
460.120(d), as we believe the details regarding who is eligible to file 
a grievance will be more easily understood if they are placed in a new 
paragraph and separated from the remainder of Sec.  460.120(a), which, 
under our proposed amendments, would require PACE organizations to have 
a formal written process to promptly identify, document, investigate, 
and resolve all grievances. Current Sec.  460.120(a) provides that 
grievances can be submitted by participants, family members or their 
representatives. We propose to amend the list of individuals who can 
submit a grievance to include the participant's caregiver. We believe 
the proposed addition would be in alignment with the service 
determination process requirements in Sec.  460.121, which allow a 
participant's caregiver to request services (Sec.  460.121(c)(3)), and 
with the plan of care requirements at Sec.  460.106, which allow the 
caregiver to be involved in the development and reevaluation of the 
care plan (Sec.  460.106(e)).
    As we stated in the January 2021 final rule (86 FR 6018), given the 
fact that caregivers may provide some care to the participants, it is 
important that caregivers are able to advocate for services on the 
participant's behalf. Similarly, if caregivers are providing some care 
to the participant, they should be able to make complaints related to 
any aspect of the care that the participant receives from the PACE 
organization. Since the grievance

[[Page 79667]]

regulation already allows for family members and representatives to 
submit a grievance, we believe the change to add the term caregivers 
will not create a substantial change or burden for PACE organizations, 
since we believe that most caregivers will fall into one of the 
categories of family member or representative. As we explained in the 
January 2021 final (86 FR 6018), we have not historically considered 
``caregivers'' to include employees or contractors of the organization. 
We know some organizations may use the term ``caregiver'' to describe 
an aide at a nursing home, but CMS would not generally consider these 
individuals to fall within this category. We also explained in that 
rule (86 FR 6018) that employees and contractors of the PACE 
organizations enter into a contractual relationship with the PACE 
organization and generally have a predominately financial incentive to 
provide care; and we have not considered these individuals to be 
``caregivers'' under the regulations. While these paid individuals may 
have pertinent information related to the participant's care, their 
feedback is captured under the requirements for the IDT to remain alert 
to pertinent information under current Sec.  460.102(d)(2)(ii). We do 
not believe that these paid individuals would generally be entitled to 
file a grievance under Sec.  460.120. We solicit comment on our 
proposal to amend the list of individuals who can submit a grievance to 
include a participant's caregiver.
    In order to provide more clarity regarding CMS' expectations for 
recognizing and processing complaints as grievances, we believe it is 
appropriate that we add additional structure to the regulations 
concerning how a grievance may be submitted, similar to how the service 
determination regulations are structured. We propose to add these rules 
around the submission of grievances in new paragraph Sec.  460.120(e).
    Proposed Sec.  460.120(e)(1) would provide that any individual 
permitted to file a grievance with a PACE organization under Sec.  
460.120(d) may do so either orally or in writing. Currently, the 
introductory text of Sec.  460.120 allows for a grievance to be filed 
orally or in writing. The right to file a grievance orally or in 
writing is an important participant safeguard, especially in an aging 
population, and it should continue to appear in our regulations. 
However, we believe it is more appropriate that we codify this right in 
a separate provision (as opposed to folding it into the definition of 
the term grievance, as in current Sec.  460.120) in new proposed 
paragraph (e), along with the other proposed requirements for the 
submission of grievances. Proposed Sec.  460.120(e)(2) would establish 
that the PACE organization may not require a written grievance to be 
submitted on a specific form. While we understand that some 
organizations may use forms to help them process and investigate the 
grievance, we do not believe that a PACE participant should be 
restricted in how they can submit the complaint. We have seen 
participants detail their complaints to PACE organizations in letters 
and email correspondence. Receipt of these written complaints should be 
considered grievances and accepted in their original form. If a PACE 
organization decides to create a grievance form on its own and 
summarize the original grievance, that would continue to be permitted 
under our proposal, as long as the PACE organization maintains the 
written communication in its original form as required by Sec.  
460.200(d)(2).
    Proposed Sec.  460.120(e)(3) would provide that a grievance may be 
made to any employee or contractor of the PACE organization that 
provides care to a participant in the participant's residence, the PACE 
center, or while transporting participants. This language is similar to 
the method for filing a service determination request at Sec.  
460.121(d)(2). As we indicated in the January 2021 final rule (86 FR 
6019), these are the settings where participants have the most frequent 
contact with employees or contractors of the PACE organization, and 
therefore are logical settings for service determination requests to 
occur. We believe the same logic can be applied to grievances, and as a 
result, we limited our proposal to employees and contractors working in 
these settings.
    We propose at new Sec.  460.120(f) to establish the requirement 
that the PACE organization must conduct a thorough investigation of all 
distinct issues within the grievance when the cause of the issue is not 
already known. Investigating why the situation occurred is an important 
part of ensuring that appropriate action will be taken in response to a 
grievance. However, we also recognize there may be some situations 
where the cause for the complaint or a specific issue is already known 
and therefore an investigation is not needed. For example, if the PACE 
bus has a flat tire, and as a result is late to pick up a participant 
for their center attendance, the participant may complain to the PACE 
organization about the late pick-up. While this would constitute a 
grievance and would need to be identified and processed, an 
investigation would not be necessary because the PACE organization was 
already aware of the cause of the complaint (that is, the flat tire). 
If there are multiple issues within a grievance that require 
investigation, proposed Sec.  460.120(f) would require the PACE 
organization to conduct a thorough investigation into each distinct 
issue when the cause of an issue is not known. We have seen on audit 
that some complaints may contain different issues within the one 
grievance. For example, a participant may call to complain that their 
home care aide is routinely late and does not clean the kitchen as is 
care planned for that participant. These are 2 different issues and 
both may need to be investigated in order to appropriately resolve the 
grievance. The PACE organization as a result of its investigation may 
determine that while the aide was late due to poor time management 
skills, the kitchen was not being cleaned because the home care company 
did not have the most recent care plan for the participant. The results 
of the investigation would directly impact how the PACE organization 
would resolve these concerns.
    We propose at new Sec.  460.120(g) to establish resolution and 
notification timeframes that would apply to grievances. Specifically, 
we propose at Sec.  460.120(g)(1) that the PACE organization must take 
action to resolve the grievance based on the results of its 
investigation as expeditiously as the case requires, but no later than 
30 calendar days after the date the PACE organization receives the oral 
or written grievance. Again, we considered both the MA grievance 
regulations and also the long-term care regulations. While the long-
term care regulations do not define a timeframe for resolving 
grievances, the MA regulation at Sec.  422.564(e)(1) requires that an 
MA organization must notify an enrollee who submits a grievance of the 
organization's decision as expeditiously as the case requires, based on 
the enrollee's health status, but no later than 30 days after the date 
the organization receives the oral or written grievance. We believe 
this is a fair timeframe, and based on our oversight efforts, we 
believe that a majority of organizations currently utilize a similar 
timeframe for resolving grievances. In our proposal for the PACE 
grievance regulation, we propose to adopt a modified version of the 
requirement in the MA regulations, which would specify that the 30-day 
timeframe is the maximum amount of time the PACE organization has to 
resolve the

[[Page 79668]]

grievance, as opposed to the maximum amount of time to notify the 
participant. Proposed Sec.  460.120(g) would maintain the language 
regarding ensuring that this timeframe is a maximum length of time, and 
that organizations may need to resolve grievances more quickly if the 
participant's case requires. We propose at Sec.  460.120(g)(2) that the 
PACE organization must notify the individual who submitted the 
grievance of the grievance resolution as expeditiously as the case 
requires, but no later than 3 calendar days after the date the PACE 
organization resolves the grievance in accordance with Sec.  
460.120(g)(1). We contemplated combining both the notification and 
resolution of a grievance into a single timeframe, but ultimately 
decided against that. We believe that the act of resolving a grievance, 
and the act of notifying the submitter about the resolution, are two 
separate actions. Additionally, as we will discuss in this section of 
this proposed rule in relation to proposed new Sec.  460.120(i), we 
believe this exception strengthens our rationale for having distinct 
resolution and notification timeframes since we would expect a timely 
resolution of the grievance even if the individual who submitted the 
grievance requested not to be notified of that resolution.
    Proposed Sec.  460.120(h) would establish requirements for the 
processing of expedited grievances. Specifically, we propose to require 
that the PACE organization must resolve and notify the individual who 
submitted the grievance of the grievance resolution as expeditiously as 
the case requires, but no later than 24 hours after the time the PACE 
organization receives the oral or written grievance if the nature of 
the grievance could have an imminent and significant impact on the 
health or safety of the participant. Because PACE organizations are 
direct care providers, it is important that they have a system for 
recognizing and processing complaints quickly when those complaints 
could have both an imminent and significant impact on the health or 
safety of the participant. We have not chosen to define the words 
``imminent'' and ``significant'', because we believe PACE determine how 
they will define those terms as a part of their development of their 
grievance procedures. PACE organizations should already have some 
system in place to recognize similar situations as organization's are 
currently required as a part of their quality improvement program at 
Sec.  460.136(a)(5) to immediately correct any identified problem that 
directly or potentially threatens the health and safety of a PACE 
participant. It would be important for PACE organizations to have a 
procedures for quickly responding to those complaints that may have an 
imminent and significant impact on the participant's health or safety. 
For example, if a participant complains that a home care aide abused 
him or her, and the aide is due back in the home later that day, the 
PACE organization should be prepared to investigate and resolve that 
concern immediately.
    We propose at new Sec.  460.120(i) to create grievance resolution 
notification requirements for how the PACE organization must inform the 
individual who submitted the grievance of the resolution of that 
grievance. We propose at Sec.  460.120(i)(1) that the PACE organization 
may inform the individual either orally or in writing, based on the 
individual's preference for notification, except for grievances 
identified in Sec.  460.120(i)(3). We contemplated following the MA 
rule around notification in Sec.  422.564(e)(3), which allows for oral 
grievances to be responded to orally or in writing, but requires 
written grievances to be responded to in writing. However, we 
understand that because PACE organizations are not only an insurer, but 
also a provider, they often have calls or other remote communications 
with participants, and likely talk with them more often than an MA 
organization would talk with one of their enrollees. We also understand 
that some PACE participants would prefer oral notification, even if 
they their grievance was submitted in writing. Likewise, some PACE 
participants may call with a grievance, but may want a formal written 
notice explaining the resolution. Therefore, we believe that PACE 
organizations should tailor the notification of the grievance 
resolution to what a PACE participant prefers.
    We propose to establish at Sec.  460.120(i)(2) that oral or written 
notification of grievance resolutions must include a minimum of three 
requirements. First, we propose at Sec.  460.120(i)(2)(i) that the 
notification must include a summary statement of the participant's 
grievance including all distinct issues. This is especially important 
when a grievance cannot be resolved immediately and requires additional 
investigation. When notifying a participant or other individual who 
submitted the complaint, it would be important to restate the distinct 
issues of the grievance so they understand what the organization was 
investigating and resolving. Second, we propose at Sec.  
460.120(i)(2)(ii) that for each distinct issue that requires an 
investigation, the notification must include the steps taken to 
investigate the issue and a summary of the pertinent findings or 
conclusions regarding the concerns for each issue. As we stated 
earlier, we do not believe that every grievance, or every issue within 
a grievance, will require an investigation, and some issues may require 
minimal investigation; however, we believe that to the extent it is 
applicable it would be important for the individual who submitted the 
grievance to understand what the organization did during their 
investigation. Third, we propose at Sec.  460.120(i)(2)(iii) that for a 
grievance that requires corrective action, the grievance resolution 
notification must include corrective action(s) taken or to be taken by 
the PACE organization as a result of the grievance, and when the 
participant may expect corrective action(s) to occur. In the example we 
used earlier, we noted that during the investigation into the home care 
aide not cleaning the kitchen, the PACE organization discovered that 
the home care agency did not have the most current care plan for that 
participant. The correction that would likely result from that 
investigation would be to provide the updated care plan to the home 
care agency and ensure they have received and understand it. This 
action should be communicated to the participant in order for them to 
understand how their grievance has been handled and resolved.
    Proposed Sec.  460.120(i)(3) would set forth requirements related 
to how PACE organizations must provide notification when the complaint 
relates to a Medicare quality of care issue. Specifically, we propose 
that for Medicare participants, any grievance related to quality of 
care, regardless of how the grievance is filed, must be responded to in 
writing. This is consistent with the MA requirement in Sec.  
422.564(e)(3)(iii). As previously discussed, Medicare beneficiaries, 
and by extension, Medicare participants enrolled in PACE, have the 
right to submit quality of care grievances and complaints to a QIO 
under section 1154(a)(14) of the Act. We propose at Sec.  460.120(i)(3) 
that, when a grievance relates to a Medicare quality of care issue, the 
PACE organization must provide a written grievance resolution 
notification that describes the right of a Medicare participant or 
other individual specified in Sec.  460.120(d) acting on behalf of a 
Medicare participant to file a written complaint with the QIO with 
regard to Medicare covered services. The only exception to this 
requirement to provide a written resolution notice

[[Page 79669]]

would be when the submitter specifically requests not to receive 
notification as specified in proposed Sec.  460.120(i)(4), which is 
discussed in more detail in this section of this proposed rule. We also 
propose to specify that for any complaint submitted to a QIO, the PACE 
organization must cooperate with the QIO in resolving the complaint. 
This language is consistent with the language used in the MA program, 
and therefore we are proposing it be added to the PACE regulations as 
well. Because the QIO's statutory function related to review of quality 
of care concerns and responses to beneficiary complaints is only 
applicable to Medicare services and only available to Medicare 
beneficiaries, and because PACE organizations may have some 
participants who are not Medicare beneficiaries and may cover non-
Medicare services, we expect PACE organizations to work with 
participants to help them understand whether their grievance relates to 
a Medicare quality of care issue.
    We propose to establish at new Sec.  460.120(i)(4) that the PACE 
organization may withhold notification of the grievance resolution if 
the individual who submitted the grievance specifically requests not to 
receive notification of the grievance resolution, and the PACE 
organization has documented this request in writing. We have heard 
through our auditing experience that some participants may wish to 
remain anonymous and some may want to submit a complaint, but they may 
not wish to receive any notification of the resolution. In order to 
balance the need for an organization to track and process grievances, 
with respect for the preferences of participants who wish to not 
receive communications related to the resolution of a grievance after 
submitting the initial complaint, we propose to specify in new Sec.  
460.120(i)(4) that PACE participants must have an option to request not 
to receive any further communication or notification of the grievance 
resolution following their initial complaint submission. In order for a 
PACE organization to withhold notification of the grievance resolution 
for participants who request to exercise this option, the PACE 
organization would be required to document the participant's request in 
writing. We propose to include in new Sec.  460.120(i)(4) language that 
provides that the PACE organization would still be responsible for all 
other parts of this section.
    Section 460.120(d) specifies that the PACE organization must 
continue to furnish all required services to the participant during the 
grievance process. We propose to redesignate current Sec.  460.120(d) 
as Sec.  460.120(j) to account for our other proposals.
    Currently, Sec.  460.120(e) requires a PACE organization to discuss 
with and provide to the participant in writing the specific steps, 
including the timeframes for response, that will be taken to resolve 
the participant's grievance. We believe our proposals at Sec.  
460.120(c) and Sec.  460.120(i) would ensure that PACE participants 
receive sufficient notification regarding both the general grievance 
process and how a specific grievance was resolved. Therefore, we 
propose to remove current Sec.  460.120(e).
    We propose to add a new paragraph Sec.  460.120(k) that would 
redesignate and modify the requirement that is currently included at 
Sec.  460.120(c)(4). Specifically, we are proposing that the PACE 
organization must develop and implement procedures to ensure that they 
maintain the confidentiality of a grievance, including protecting the 
identity of any individuals involved in the grievance from other 
employees and contractors when appropriate. As we stated when 
discussing the proposed notification requirements at Sec.  
460.120(i)(4), we understand that some grievances may be sensitive and 
some participants or other submitters may wish for their complaint to 
be kept confidential. For example, if a participant has a complaint 
related to their physical therapist, that participant may not want the 
physical therapist to be aware of the complaint. We expect that 
organizations consider these situations, and have a method for 
participants that may want certain information to be kept confidential. 
There may be instances where a person submitting the complaint may want 
their identity to be protected, or where the complaint involves a 
sensitive matter where the identity of all individuals may need to be 
protected, and we would expect the PACE organization to have a process 
for ensuring that there is a way to maintain the confidentiality of the 
identity of any individual involved in the grievance from other 
employees or contractors when it is appropriate. However, we would 
reiterate that accepting and processing a confidential grievance would 
not negate the PACE organization's responsibilities to investigating 
and resolving the grievance. It also would not negate the 
responsibilities to document, aggregate and analyze the grievance, as 
required under current Sec.  460.120(f). Also, as we discussed earlier, 
we have heard from multiple PACE participants that sometimes 
participants or their family members are afraid to complain to the PACE 
organization for fear of reprisal. While we require a PACE organization 
to ensure that confidentiality of a grievance is maintained, we also 
want to remind PACE organizations that participants have the right to 
submit grievances without fear of reprisal. We have heard through 
oversight and monitoring activities that participants are afraid that 
they will lose necessary services, or not be approved for services, if 
they complain regarding the care received by an organization. PACE 
organizations should ensure that all participants understand that they 
are free to complain without any fear of reprisal, regardless of what 
their grievance is about.
    We propose to add a new paragraph at Sec.  460.120(l) that aligns 
with the record keeping requirements for service determination 
requests, which are set forth at Sec.  460.121(m). Specifically, 
proposed Sec.  460.120(l) would require that a PACE organization must 
establish and implement a process to document, track, and maintain 
records related to all processing requirements for grievances received 
both orally and in writing. These records, except for information 
deemed confidential as a part of Sec.  460.120(k), must be available to 
the IDT to ensure that all members remain alert to pertinent 
participant information. We expect that PACE organizations have 
appropriate mechanisms in place for documenting all complaints, 
including ensuring that oral complaints are documented appropriately, 
and that written complaints are maintained as required in Sec.  
460.200(d)(2). We believe that proposed Sec.  460.120(k), similar to 
the Sec.  460.121(m) service determination request, would ensure that 
all relevant parts of the grievance process are documented, including 
details of the investigation, the findings, any corrective action that 
was taken, and the notification (oral and/or written) that was provided 
to the participant of the resolution.
    Finally, current Sec.  460.120(f) requires PACE organizations to 
maintain, aggregate, and analyze information on grievance proceedings. 
This information must be used in the PACE organization's quality 
improvement program. We are proposing to redesignate this as paragraph 
(m) to account for our other proposals. We are also proposing to remove 
the word ``maintain'' that appears in the current regulation text, 
since the requirement to maintain records has been added to the 
proposed paragraph (l). Redesignated Sec.  460.120(m), as revised under 
our proposal, would state that the PACE

[[Page 79670]]

organization must aggregate and analyze the information collected under 
paragraph (l) of this section for purposes of its internal quality 
improvement program. We note that this requirement applies to all 
grievances; oral or written, including anonymous grievances. We have 
seen through audit that some organizations do not include all 
grievances as a part of their internal quality improvement analysis. It 
is important that PACE organizations consider all complaints that 
constitute a grievance in order for them to make adequate improvements 
to their program.
    We estimate a one-time burden for PACE organizations to update 
their grievance materials to meet these proposed requirements. We do 
not believe there will be a change in annual burden as a PACE 
organization is already required to provide notification to 
participants on their grievance resolution, and may opt to do so orally 
or in writing. Therefore, we believe that the ongoing burden will not 
change with this proposal. We discuss and account for the one-time 
burden for PACE organizations to update their grievance materials to 
meet the proposed new requirements in the Collection of Information 
Requirements section. We will submit these changes 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.
    We solicit comments on this proposal.

L. Service Determination Request (Sec.  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 participant, including procedures for grievances and 
appeals. Along with the regulations at Sec.  460.120 related to 
grievances, and Sec.  460.122 related to appeals, CMS created a process 
for service determination requests, the first stage of an appeal, at 
Sec.  460.121.
    A service determination request is defined at Sec.  460.121(b)(1) 
as a request to initiate a service, to modify an existing service, 
including to increase, reduce, eliminate, or otherwise change a 
service, or to continue coverage of a service that the PACE 
organization is recommending be discontinued or reduced. Once a service 
determination request is received by the full IDT, the IDT must make a 
decision on the request and provide notification of its decision as 
expeditiously as the participant's condition requires, but no later 
than 3 calendar days after the date the IDT receives the request, 
except that the IDT may extend the timeframe for review and 
notification by up to 5 calendar days if the extension requirements as 
specified in Sec.  460.121(i)(1) are met. When CMS proposed \223\ to 
require service determination request extension notifications in Sec.  
460.121(i)(2), we based the requirement on the MA organization 
determination requirements in Sec.  422.568, which require written 
notification when an extension is taken. Comments submitted by PACE 
organizations and industry advocacy groups regarding our proposal to 
require written notification of extensions recommended we allow either 
oral or written notification when the IDT extends the timeframe for a 
service determination request, rather than requiring written 
notification only. At the time, we did not finalize the change to allow 
oral or written notification for extension requests, and we explained 
that we believed written notification of the extension was important in 
order to ensure the participant received a full explanation. 
Additionally, we explained that providing written notification of the 
extension would allow the participant to share the information with 
family members or caregivers, if desired (86 FR 6022).
---------------------------------------------------------------------------

    \223\ CMS included this proposal in the February 2020 proposed 
rule (85 FR 9002).
---------------------------------------------------------------------------

    Since that rule was finalized, PACE organizations have had an 
opportunity to implement the provision and assess whether written 
notification is practical for all extensions. Additionally, since the 
rule was finalized, PACE organizations have been operating under a 
worldwide pandemic, which has required organizations to increase their 
ability to engage participants in new ways through the use of remote 
technology, and utilizing different means of communicating orally has 
become more prevalent and has proven an effective way to communicate 
important information quickly. For these reasons, we are now proposing 
to revise the requirement in Sec.  460.121(i)(2) to allow the IDT to 
provide notification either orally or in writing to the participant or 
their designated representative when the IDT extends the timeframe for 
a service determination request, as permitted under Sec.  
460.121(i)(1). Allowing the IDT to provide either oral or written 
notice of service determination request extensions would increase 
operational flexibility for PACE organizations without compromising 
participant safeguards. In order to ensure participants are fully 
informed of the reason(s) for an extension, we expect oral notice of 
the service determination request extensions to meet the same 
requirements as written notice, including the expectations that notices 
will explain the reason(s) for the delay and be issued as expeditiously 
as the participant's condition requires, but no later than 24 hours 
after the IDT decides to extend the timeframe. We also expect that PACE 
organizations would document the content of oral notifications of 
service determination request extensions in accordance with Sec.  
460.121(m). An IDT may choose to provide the extension notification 
both orally and in writing if it believes that is necessary to ensure 
the participant's understanding.
    We estimate ongoing burden reduction due to the expected decrease 
in written notifications of service determination request extensions in 
favor of oral notification. We discuss and account for the burden 
reduction resulting from the expected decrease in written notification 
of service determination request extensions in the Collection of 
Information Requirements section. We will submit these changes 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.
    We solicit comment on this new alternative.

M. Participant Notification Requirement for PACE Organizations With 
Performance Issues or Compliance Deficiencies (Sec.  460.198)

    Sections 1894(f)(3) and 1934(f)(3) of the Act provides CMS the 
discretion to apply such requirements of Part C of title XVIII and 
sections 1903(m) and 1932 of the Act relating to protection of 
beneficiaries and program integrity as would apply to Medicare 
Advantage (MA) organizations under Part C and to Medicaid managed care 
organizations under prepaid capitation agreements under section 1903(m) 
of the Act. Some examples of where CMS has previously exercised this 
discretion include the development and implementation of requirements 
related to PACE compliance and oversight, PACE enforcement actions 
(CMPs, sanctions, and termination), and PACE participant rights and 
protections.
    Under Sec. Sec.  422.111(g) and 423.128(f), CMS may require an MA 
organization or Part D plan sponsor to disclose to its enrollees or 
potential enrollees, the MA organization or Part D sponsor's 
performance and contract compliance deficiencies in a manner specified 
by CMS. The purpose of these beneficiary protections is to provide 
beneficiaries with the information they need to assess

[[Page 79671]]

the quality of care they are receiving and to make sponsoring 
organizations accountable for their performance deficiencies, which 
should improve compliance with the rules and requirements of the 
Medicare program. Further, in the final rule titled ``Medicare Program; 
Policy and Technical Changes to the Medicare Advantage and the Medicare 
Prescription Drug Benefit Programs'' (75 FR 19677), which appeared in 
the April 15, 2010 issue of the Federal Register, CMS explained that 
``our intent is to invoke this disclosure authority when we become 
aware that a sponsoring organization has serious compliance or 
performance deficiencies such as those that may lead to an intermediate 
sanction or require immediate correction and where we believe 
beneficiaries should be specifically notified. One example of a 
situation where enrollees should be notified of performance or 
compliance deficiencies would be when a sponsoring organization fails 
to provide beneficiaries with the proper premium notices to collect 
premium amounts in arrears. Another example would be if a sponsoring 
organization failed to provide access to services and we instructed the 
sponsor to contact enrollees regarding this issue and assist them with 
obtaining needed services or medications. In each of these situations 
we would require a sponsoring organization to disclose the deficiency 
to its enrollees and take affirmative steps to alleviate any problems 
for enrollees, such as providing enrollees with options to fix the 
issue'' (75 FR 19734-19735).
    In contrast to the Part C and D regulations at Parts 422 and 423, 
respectively, the PACE regulations at Part 460 do not include a 
requirement for PACE organizations to notify current and potential PACE 
participants of the organization's performance and contract compliance 
deficiencies. In addition, we note that although regulations at Part 
423 generally apply to PACE organizations, Sec.  423.128 was waived for 
PACE organizations in 2005 (see January Part D 2005 final rule (70 FR 
4430, 4432-4433)). However, we believe the disclosure of this 
information would serve as an important protection for PACE 
participants, as it would help to ensure current and potential PACE 
participants and their caregivers have adequate information to make 
informed decisions about whether to enroll in or to continue their 
enrollment with a PACE organization. PACE participants that are 
enrolled in the organization and their caregivers should have notice of 
the PACE organization's performance and compliance deficiencies in 
order to assess whether they have experienced similar issues that must 
be addressed by the PACE organization. In addition, for participants 
that are looking to enroll in a PACE organization, it is important they 
understand any potential issues that they may experience if they 
proceed with their enrollment. Finally, it is important to ensure there 
is public transparency regarding a PACE organization that has, or has 
had, performance and contract compliance deficiencies.
    Therefore, effective beginning in CY 2024, we propose to amend the 
regulations at Part 460 by adding Sec.  460.198, which would require 
PACE organizations to disclose to current PACE participants and 
potential PACE participants information specific to PACE organization 
performance and contract compliance deficiencies, in a manner specified 
by CMS. As in the MA and Part D programs, we anticipate that we would 
invoke the disclosure requirement when we become aware that a PACE 
organization has serious compliance or performance deficiencies such as 
those that may lead to intermediate sanctions or requires immediate 
correction, and where we believe PACE participants and potential PACE 
participants should be specifically notified.
    Consistent with Sec.  423.128(d), CMS waives any provision of the 
Part D regulations to the extent that CMS determines that the provision 
is duplicative of, or conflicts with, a provision otherwise applicable 
to PACE organizations under sections 1894 or 1934 of the Act, or as 
necessary to promote coordination between Part D and PACE. Because 
sections 1894 and 1934 of the Act do not include a requirement for PACE 
organizations to notify current and potential PACE participants of the 
organization's performance and contract compliance deficiencies, the 
regulation at Sec.  423.128(f) does not duplicate, conflict with, or 
impede coordination between Part D and PACE. In addition, we note that, 
at the time CMS announced the waiver of Sec.  423.128 in the January 
Part D 2005 final rule (see 70 FR 4432-4433), the disclosure 
requirement in paragraph (f) did not appear in Sec.  423.128.\224\ 
Therefore, we believe the 2005 waiver of the rest of Sec.  423.128 does 
not apply to Sec.  423.128(f), and the disclosure of information 
regarding performance and contract deficiencies concerning a PACE 
organization in its capacity as a Part D sponsor would serve as an 
important protection for PACE participants, as it would help to ensure 
current and potential PACE participants and their caregivers have 
adequate information to make informed decisions about whether to enroll 
in or to continue their enrollment with a PACE organization. This 
proposed rule does not impact the waiver of the remainder of Sec.  
423.128 for PACE organizations, as applicable.
---------------------------------------------------------------------------

    \224\ The April 2010 final rule (75 FR 19677) amended Sec.  
423.128 to include paragraph (f).
---------------------------------------------------------------------------

N. PACE Maintenance of Records (Sec. Sec.  460.200 and 460.210)

    Under sections 1894(b) and 1934(b) of the Act, PACE organizations 
are required to provide all items and services covered under Medicare 
and Medicaid, and all additional items and services specified in 
regulations and determined necessary by the interdisciplinary team to 
improve and maintain the participant's overall health status. 
Currently, PACE organizations are required to safeguard data and 
records in accordance with Sec.  460.200(d). PACE organizations must 
also maintain a single comprehensive medical record for each 
participant in accordance with accepted professional standards (Sec.  
460.210(a)(1)).
    In the February 2020 proposed rule (85 FR 9002), CMS proposed to 
add a new requirement at Sec.  460.200(d)(2) for PACE organizations to 
maintain in the medical record 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 in 
accordance with Sec.  460.210(b)(6). We explained in the proposed rule 
that we had found through our monitoring of PACE organizations that 
they 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 (85 FR 9134). We stated 
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 (85 FR 9140). Therefore, 
we also proposed a new requirement at Sec.  460.210(b)(6) for PACE 
organizations to maintain in a participant's medical record original 
documentation 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 (i) communications from the participant,

[[Page 79672]]

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 State-based Adult Protective 
Services.
    In the January 2021 final rule, CMS summarized and responded to the 
comments received on these proposed record maintenance requirements (86 
FR 6039 through 6040). We noted that some commenters recommended we 
allow PACE organizations to maintain original communications outside of 
the medical record systems, as they believed 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 (86 FR 6040). Based on 
these comments, we contemplated allowing original documentation of 
communications to be summarized in the medical record, so long as PACE 
organizations maintained the original documentation of the 
communication in a separate system. Ultimately, we chose not to modify 
our proposal with the contemplated change of permitting PACE 
organizations to summarize written communications relating to the care, 
health, or safety of a participant in the medical record. We did, 
however, modify our original proposal to allow PACE organizations to 
maintain in a participant's medical record original documentation, or 
an electronic copy, of any written communication the PACE organization 
receives relating to the care, health or safety of a participant. In 
finalizing this provision, we explained that we were not establishing 
specific requirements governing where affected communications must be 
stored within a participant's medical record. We also explained that 
PACE organizations may operationalize these requirements in accordance 
with the capabilities of their medical record systems (86 FR 6040).
    Participants, their family members, and representatives have a 
longstanding right to file a grievance expressing dissatisfaction with 
the delivery of PACE services or the quality of care furnished as part 
of the PACE benefit package (see Sec. Sec.  460.112(g)(1) and 460.120). 
A PACE organization must have a formal written process to evaluate and 
resolve medical and non-medical grievances by PACE participants (Sec.  
460.120(a)). A PACE organization's grievance process must include a 
written procedure for maintaining the confidentiality of a 
participant's grievance (Sec.  460.120(c)(4)).
    PACE participants routinely file grievances with a PACE 
organization under the assumption that the details of their grievance 
will be kept confidential. This is especially important to PACE 
participants when a grievance involves a particular staff member of the 
PACE organization (for example, a home care aide, a driver, or a 
specific member of the interdisciplinary team). PACE organizations have 
typically maintained confidentiality of this information by only 
allowing access to the information, that is, the details of the 
complaint, to a limited number of PACE organization staff and/or by 
storing this information outside of the medical record in a secure 
location (for example, a separate electronic application or paper-based 
system).
    Since we finalized the January 2021 final rule, PACE organizations 
have had an opportunity to implement this provision, and we have 
continued to receive questions related to maintaining original 
communications in the medical record. These questions and comments 
indicate that as PACE organizations have begun to operationalize this 
requirement, they have been challenged with maintaining the 
confidentiality of grievances and managing the volume of these 
communications in the medical record. Other inquires include whether it 
would be permissible for PACE organizations to scan communications and 
store them electronically in the medical record.
    In addition to the concerns around maintaining the confidentiality 
of grievances, PACE organizations have also pointed out that there are 
instances when written communications sent to the PACE organization by 
the individuals and entities listed at Sec.  460.210(b)(6)(i) and (ii) 
may contain sensitive information about a PACE participant, their 
caregivers, and/or family members, and that these communications are 
often accompanied by a request to keep the information private. For 
example, information shared with a PACE organization may pertain to a 
caregiver's health, and may have implications for the participant's 
care, and the caregiver may only want the details of this information 
shared among employees and contractors who need to know the information 
rather than all individuals with access to the participant's medical 
record. There are also instances when the communications include 
contents or language that may be inappropriate for inclusion in the 
medical record, such as vulgar comments directed towards individual 
PACE staff. PACE organization staff have indicated that maintaining 
written communications related to participant grievances in the medical 
record allows access to the information by all PACE organization staff, 
thereby jeopardizing the confidentiality of such communications, and 
have therefore requested clarification from CMS on how to adhere to 
comply with the requirement in Sec.  460.210(b)(6) when the original 
communication is part of a participant grievance and contains sensitive 
or confidential information.
    Sections 1894(f)(3) and 1934(f)(3) of the Act provide authority for 
the establishment of certain additional beneficiary and program 
protections applicable to MA and Medicaid managed care programs under 
prepaid capitation agreements under section 1903(m) of the Act. 
Sections 1894(b)(2) and 1934(b)(2) of the Act require that the PACE 
program agreement have written safeguards of the rights of enrolled 
participants, including a bill of rights and procedures for grievances 
and appeals, in accordance with regulations and with other Federal and 
State laws designed for the protection of beneficiaries. This authority 
allows CMS to implement regulations to ensure that PACE participants' 
rights are protected, including the right to file a grievance 
anonymously.
    To uphold participant rights and help PACE organizations to 
safeguard anonymity to the extent possible during the grievance process 
and in other circumstances that involve sensitive information, CMS now 
proposes, using the authority at sections 1894(f)(3) and 1934(f)(3) of 
the Act, to amend the PACE regulations at Sec. Sec.  460.200(d)(2) and 
460.210(b)(6) to allow for more administrative flexibility in how PACE 
organizations maintain written communications relating to the care, 
health, or safety of a participant.
    Specifically, we propose to amend Sec.  460.200(d)(2) to require 
that a PACE organization must maintain all written communications 
received in any format (for example, emails, faxes, letters, etc.) from 
participants or other parties in their original form when the 
communications relate to a participant's care, health, or safety, 
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 care, health or safety; and (ii) communications from 
an advocacy or governmental agency, such as Adult Protective Services. 
This proposal would move and revise language currently located in

[[Page 79673]]

Sec.  460.210(b)(6) that requires 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. By moving this 
language to Sec.  460.200(d)(2), with the proposed modifications, we 
would retain the requirement for PACE organizations to maintain these 
important communications in their original form, while removing the 
requirement that these communications be stored in the participant's 
medical record. At Sec.  460.210(b)(6), we propose to replace the 
current language with a new requirement that states that original 
documentation or an unaltered electronic copy, of any written 
communication as described in Sec.  460.200(d)(2), must be maintained 
in the participant's medical record unless the following requirements 
are met: (i) the medical record contains a thorough and accurate 
summary of the communication including all relevant aspects of the 
communication, (ii) original documentation of the communication is 
maintained outside of the medical record and is accessible by employees 
and contractors of the PACE organization when necessary, and in 
accordance with Sec.  460.200(e), and (iii) original documentation of 
the communication is available to CMS and the SAA upon request. This 
proposal would continue to require PACE organizations to ensure that 
these important communications relating to the care, health, or safety 
of a participant are included in the medical record, but it would allow 
PACE organizations operational flexibility on how these communications 
are included. PACE organizations would be permitted, under this 
proposal, to summarize the information in the medical record, as long 
as the summary is accurate and thorough, and the original documentation 
of the communication is maintained outside the medical record and is 
accessible by the PACE organization's employees and contractors as 
needed, and available to CMS and the SAA upon request. We believe this 
proposal would balance CMS' interest in ensuring these communications 
are safeguarded with PACE organizations' interest in ensuring the 
medical record is usable and that confidential information may be 
protected to the extent possible. A PACE organization would be able to 
include a summary of the information but could choose to exclude names 
or other potentially sensitive information, provided the requirements 
under proposed Sec.  460.210(b)(6)(i) through (iii) have been met.

O. PACE Participant Health Outcomes Data (Sec.  460.202)

    Sections 1894(e)(3)(A) and 1934(e)(3)(A) of the Act require PACE 
organizations to collect, maintain, and report data necessary to 
monitor the operation, cost, and effectiveness of the PACE program to 
CMS and the State administering agency (SAA).
    Following publication of the 1999 PACE interim final rule, CMS 
established a set of participant health outcomes data that PACE 
organizations were required to report to CMS. In subsequent years, we 
have modified the participant health outcomes data on a routine basis 
to ensure that we are collecting data that is relevant and useful to 
our efforts to monitor and oversee the PACE program. According to 5 CFR 
1320.15, at least once every 3 years, in order to comply with the 
Paperwork Reduction Act of 1995 (Public Law 104-13) (PRA), CMS is 
required to publish the proposed data collection and solicit public 
comment. The data collection requirements related to participant health 
outcomes data can be found in the information collection request 
currently approved under OMB control number 0938-1264 (CMS-10525). 
Section 460.202 currently requires participant health outcomes data 
reported to CMS and the SAA to be specified in the PACE program 
agreement; however, CMS does not routinely update program agreements 
based on changes to the required participant health outcomes data. As a 
result, the quality data collection specified in the program agreement 
is often out of date and no longer applicable within a few years.
    Since the participant health outcomes data that PACE organizations 
must report to CMS and the SAA are specified and routinely updated 
through the PRA process which requires CMS to publish and solicit 
comments on these data, we propose to amend paragraph (b) of Sec.  
460.202 by striking the final sentence, which states, ``The items 
collected are specified in the PACE program agreement.'' This change 
would eliminate confusion regarding where the data collection 
requirements may be found. The PACE program agreement would still 
include a statement of the data collected, as required by Sec.  
460.32(a)(11), but it would not include the level of specificity 
regarding the data collection that is included in the CMS PRA 
information collection request approved under OMB control number 0938-
1264. We believe that by modifying Sec.  460.202 as proposed we would 
not be increasing the burden on PACE organizations as they are 
currently required to furnish information to CMS and the SAA through 
the aforementioned information collection request.

VII. 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. We are soliciting public comment on each of these issues 
for the following sections of this document that contain information 
collection requirements. Comments, if received, will be responded to 
within the subsequent final rule.

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 2021 wages. In this regard, Table 7 presents the mean 
hourly wage, the cost of fringe benefits and overhead (calculated at 
100 percent of salary), and the adjusted hourly wage.
BILLING CODE 4120-01-P

[[Page 79674]]

[GRAPHIC] [TIFF OMITTED] TP27DE22.016

BILLING CODE 4120-01-C
    As indicated, except for enrollees (All Occupations), 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. However, the 
mean wage for enrollees (under All Occupations) applies to a group of 
respondents that varies widely from working and nonworking individuals 
and by respondent age, location, years of employment, educational 
attainment, and other factors. We are not adjusting this figure

[[Page 79675]]

for fringe benefits and overhead since this group includes many 
individuals who are not working.

B. Proposed Information Collection Requirements (ICRs)

    The following ICRs are listed in the order of appearance within the 
preamble (see sections II. through VI.) of this proposed rule.
1. ICRs Regarding Applying D-SNP Look-Alike Requirements To Plan 
Benefit Package Segments (Sec.  422.514)
    We propose adding a new paragraph at Sec.  422.514(g) to clarify 
that the D-SNP look-alike contracting limitations at Sec.  422.514(d) 
through (f) apply to segments of the MA plan. This new paragraph will 
address instances we have seen since adopting Sec.  422.514(d) through 
(f) where a specific segment of an MA plan looks like a D-SNP look-
alike and would be subject to the contracting prohibitions in Sec.  
422.514(d) if the segment were treated as an MA plan. We believe that 
by applying the D-SNP look-alike contracting limitations only at the MA 
plan level without applying it to segments of plans, our existing 
regulation has an unintended and unforeseen loophole through which D-
SNP look-alikes could persist, contrary to the stated objectives in our 
prior rulemaking.
    Based on January 2022 Monthly Membership Report data, we estimate 
that the proposed change would result in three MA plan segments being 
identified as D-SNP look-alikes, and these D-SNP look-alikes would 
likely transition the approximately 3,000 current enrollees into 
another MA-PD plan offered by the same MA organization (or by another 
MA organization with the same parent organization as the MA 
organization) using the transition process described in Sec.  
422.514(e). Based on our analysis of proposed D-SNP look-alike 
transitions for contract year 2023, two D-SNP look-alikes in contract 
year 2022 are proposing to transition a combined total of approximately 
7,000 D-SNP look-alike enrollees into two new non-SNP MA plan segments, 
which could create two new D-SNP look-alikes for contract year 2023.
    In the June 2020 final rule (85 FR 33877 through 33880), we 
estimated each D-SNP look-alike would take a one-time effort of 2 hours 
for a business operations specialist to submit all enrollment changes 
to CMS necessary to complete the transition process. We also stated 
that, after the prohibition on D-SNP look-alikes was implemented, at 
most five plans per year would be identified as D-SNP look-alikes under 
Sec.  422.514(d) due to meeting the enrollment threshold for dually 
eligible individuals or operating in a State that will begin 
contracting with D-SNPs or other integrated plans. These estimates were 
submitted to OMB for approval under control numbers 0938-0753 (CMS-R-
267). In association with our June 2020 final rule, the requirement and 
burden estimates (5 respondents, 5 total responses, and 10 total hours) 
were approved by OMB under control number 0938-0753 (CMS-R-267).
    Our proposed clarification at Sec.  422.514(g) does not change the 
transition process nor our burden estimates. Additionally, the proposed 
addition of non-SNP MA plan segments to the contracting limitations at 
Sec.  422.514 does not change our estimates that at most five plans 
(including PBP segments) per year would be identified as D-SNP look-
alikes; therefore, the estimated number of respondents and burden 
estimates in control numbers 0938-0753 (CMS-R-267) would not change.
2. ICRs Regarding Transitional Coverage and Retroactive Medicare Part D 
Coverage for Certain Low-Income Beneficiaries Through the LI NET 
Program (Sec.  423.2500 Through Sec.  423.2536)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-TBD (CMS-10831). At this time, the control 
number has yet to be determined, but will be assigned by OMB upon their 
clearance of this proposed rule's collection of information request. 
OMB will set out an expiration date upon their approval of the final 
rule's collection of information request.
    As described in section II.D.2 of this proposed rule, we expect 
that some beneficiaries will enroll in LI NET using methods that may 
entail providing information. Some beneficiaries, called ``immediate 
need beneficiaries'' may enroll in LI NET at the point-of-sale (POS) at 
a pharmacy because they are likely eligible for the Part D low-income 
subsidy (LIS), have immediate need for their prescription, and do not 
have Part D coverage. Some beneficiaries submit receipts for 
reimbursement for claims paid out of pocket; if they are eligible for 
LI NET they will be retroactively enrolled into the LI NET program by 
the LI NET sponsor. Another way for beneficiaries to potentially 
enrollment into LI NET is by complete an LI NET application form.
    To estimate the total burden, we consider the burden for enrollees, 
pharmacists, and Part D sponsors separately. Each consideration entails 
counting the number of documents arising from point of sale 
enrollments, direct reimbursement forms, and LI NET application forms.
    For Beneficiaries: To estimate the information collection burden 
for beneficiaries, we have estimated the number of beneficiaries 
submitting information to LI NET and time related to handling the 
information. We have not included burden estimates for individuals who 
would not be providing documentation, such as those CMS automatically 
enrolls into LI NET, individuals whose eligibility for LI NET is 
confirmed independently by the LI NET sponsor, or for those who opt not 
to provide evidence.
    When enrolling in LI NET at POS, possible forms of evidence for LIS 
eligibility include but are not limited to, a Medicaid card, an LIS 
award letter, or a declaration to the pharmacist of LIS applicant 
status. We estimate that it would take an individual approximately 15 
minutes (0.25 hr) to gather supporting documentation. There are 36,722 
individuals enrolled in the LI NET demonstration at POS in 2021 who 
will apply at the point of sale. Based on our experience with the LI 
NET demonstration, we estimate approximately 250 beneficiaries would 
submit receipts for reimbursement for claims paid out of pocket. These 
beneficiaries may complete a direct reimbursement request form 
available online, and return by mail, email, or fax, together with 
their receipt, to the LI NET sponsor. In the LI NET demonstration, 
approximately ten beneficiaries per year complete the LI NET 
application form, which is available online, and return it to the LI 
NET sponsor by mail, email, or fax. Thus, in total we expect 36,982 
beneficiaries (36,722 at point of sale plus 250 through direct 
reimbursement plus 10 applying via the LI NET application form) to 
spend 15 minutes (0.25 hr) resulting in an aggregate burden of 9,246 
hours (36,982 enrollees * 0.25 hr) at an aggregate cost of $258,980 
(9,246 hr. * $28.01/hr).
    For the Private Sector (Pharmacists): We estimate that it will take 
2 minutes (0.0333 hr) for a pharmacy to fax the documentation to the LI 
NET sponsor. However, pharmacists will not process the forms of 
enrollees who use direct reimbursement or the LI NET application form. 
Thus, pharmacists will only process the 36,722 enrollees at point of 
sale. Thus, the aggregate burden for pharmacists is 1,223 hours (36,722 
enrollees * 0.0333 hr) at an aggregate cost of $147,812 (1,223 hr * 
$120.86).
    For Part D Sponsors: The Part D sponsors will process the documents

[[Page 79676]]

received from all 36,982 enrollees. Part D sponsors are estimated to 
spend about 2 minutes (0.0333 hr.) to fax information and to CMS and 
process information. Thus, the aggregate burden for Part D sponsors is 
1,232 hours (36,982 enrollees * 0.0333 hr) at an aggregate cost of 
$93,878 (1,232 hr * $76.20/hr).
3. ICRs Regarding Adding New Behavioral Health Specialty Types Subject 
to Network Adequacy Evaluation (Sec.  422.116)
    In order to ensure that MA enrollees have access to provider 
networks sufficient to provide covered services, including behavioral 
health service providers, we are proposing to add new specialty types 
that will be subject to network adequacy evaluation under Sec.  
422.116. We are proposing to add Clinical Psychology, Clinical Social 
Work and Prescribers of Medication for Opioid Use Disorder under Sec.  
422.116(b)(1).
    To determine the potential burden regarding this proposal, we 
considered cost estimates for CMS making programming updates to the 
HPMS system, which is utilized to conduct automated reviews; additional 
burden, including updating policies and procedures, for CMS contractor; 
and additional burden, including updating policies and procedures, for 
MA organizations.
    We have determined that there is a $0 cost for programming HPMS 
with regard to this proposal. Adding new specialty types to the 
automated review conducted by HPMS would be covered under funding 
currently in place for updating the system.
    The CMS contractor does not indicate any additional costs to carry 
out the work required by this proposal, therefore there is no impact.
    We have determined that there is a $0 cost for MA organizations in 
regards to reporting new specialty types to CMS for their network 
adequacy reviews as this proposal requires. However, we have determined 
that there is a minimal one-time cost for MA organizations to update 
their policies and procedures associated with this proposal.
    First, regarding reporting the proposed new specialty types to CMS, 
MA organizations are already conducting ongoing work related to network 
adequacy reviews that happen during the initial or service area 
application, or every three years for the triennial review. Further, 
organizations should already have these specialty provider types within 
network, as these are services covered by Medicare Part A and B and 
which are furnished by these specialty types, so there is no burden 
related to contracting with new provider types. This proposal would 
only require that the proposed specialty types be added to the Health 
Services Delivery (HSD) tables during any network adequacy evaluation 
requested by CMS. The time to conduct tasks related to adding 
additional specialty types on the HSD tables is negligible.
    We understand that MA organizations will need to update their 
policies and procedures related to submission of HSD tables to ensure 
that the new required behavioral health specialty types are included. 
We estimate that a business operations specialist working at an hourly 
wage of $76.20/hr will take five minutes (0.0833 hr) for a one-time 
update of policies and procedures related to this task, at a cost of 
$6.35 (0.0833 hr * $76.20/hr). The aggregate burden is 62 hours (742 MA 
contracts * 0.0833) at a cost $4,724 (62 hours * 76.20/hr).
    These changes will be submitted to OMB for approval under control 
number OMB 0938-1346. Subject to renewal, the control number is 
currently set to expire on November 30, 2024. It was last approved on 
January 13, 2022 and remains active.
4. ICRs Regarding Enrollee Notification Requirements for Medicare 
Advantage (MA) Provider Contract Terminations (Sec. Sec.  422.111 and 
422.2267)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0753 (CMS-R-267).
    As described in section III.D. of this proposed rule, we are 
proposing to revise: (1) Sec.  422.111(e) by establishing specific 
enrollee notification requirements for no-cause and for-cause provider 
contract terminations and adding specific and more stringent enrollee 
notification requirements when primary care and behavioral health 
provider contract terminations occur; and (2) Sec.  422.2267(e)(12) to 
specify the requirements for the content of the notification to 
enrollees about a provider contract termination.
    This proposal to amend Sec. Sec.  422.111(e) and 422.2267(e)(12) 
would impact MA organizations in terms of the burden required to 
identify those enrollees who must be notified of provider contract 
terminations per CMS requirements, to develop and send the required 
written notices, to develop the scripts for the required telephonic 
notices, and to make the required enrollee telephone calls and any 
necessary follow-up calls. However, CMS does not currently collect data 
regarding the widely variable number of provider contract terminations 
an MA organization undergoes in a given contract year, nor the number 
of enrollees affected by each termination. Therefore, we do not have 
information to estimate the extent of MA provider contract 
terminations, how many enrollees are affected and need to be notified 
per Sec.  422.111(e), or how the MA program would be impacted as we see 
the effects of the proposed regulation.
    The actual direct burden of this provision arises from MA 
organization staff hours spent, resources purchased, and enrollee 
notifications provided. MA organizations may also differ in how their 
spending for the proposed requirements evolves over time as they test 
strategies and redevelop their approaches to complying with the 
regulation.
    Despite our inability to quantify certain burden for this proposal, 
we are able to estimate the one-time burden on MA organizations to 
update their existing written provider termination notice in compliance 
with the new required notice content that we are proposing at Sec.  
422.2267(e)(12)(ii). We expect MA organizations to engage in some 
routine software development to update their notice template and 
related systems to incorporate the new proposed requirements, which we 
are proposing will be delineated in a provider termination model 
document developed by CMS staff (thus not incurring COI burden). This 
proposed model will be posted for public review and comment in 
conjunction with the proposed rule's CMS-R-267 PRA package. We estimate 
that one or two software developers working at a wage of $92.92/hr will 
spend a total of 8 hours updating an MA organization's existing 
provider termination notice template and related systems based on CMS's 
model. With approximately 697 MA organizations impacted by this 
proposed change, this results in a total of 5,576 hours (697 MA 
organizations * 8 hours), at an aggregate cost across all MA 
organizations of $518,122 (5,576 hours * $92.92/hr). We are unable to 
estimate the burden for the proposed telephonic notice requirement at 
proposed Sec. Sec.  422.111(e)(1)(i) and 422.2267(e)(12)(iii) because 
the number of primary care and behavioral health provider contract 
terminations an MA organization undergoes in a given contract year is 
unknown, as are the number of affected enrollees per termination.
5. ICRs Regarding Clarifications of Coverage Criteria for Basic 
Benefits and Use of Prior Authorization (Sec.  422.101)
    The requirements and burden related to Clarifications of Coverage 
Criteria for

[[Page 79677]]

Basic Benefits and Use of Prior Authorization will be submitted to OMB 
for approval under control number (0938-0753) (CMS-R-267). As explained 
in section III.E. of this rule, we propose that MA plans must comply 
with national coverage determinations (NCD), local coverage 
determinations (LCD), and general coverage and benefit conditions 
included in Traditional Medicare statutes and regulations when making 
medical necessity determinations. This rule proposes that MA plans must 
follow Traditional Medicare coverage criteria as specified in NCDs, 
LCD, or Medicare laws (that is, in Medicare statutes and regulations).
    This rule further proposes that in the absence of coverage criteria 
in an applicable Medicare statute or regulation, NCD or LCD, an MA plan 
may create internal coverage criteria that are based on current 
evidence in widely used treatment guidelines or clinical literature and 
that this evidence must be made publicly available.
    This rule also proposes a new requirement that in creating these 
internal policies, MA organizations must provide a publicly accessible 
summary of evidence that was considered during the development of the 
internal coverage criteria used to make medical necessity 
determinations, a list of the sources of such evidence, and include an 
explanation of the rationale that supports the adoption of the coverage 
criteria used to make a medical necessity determination. We expect that 
each plan annually will have new policies that they create.
    We believe that the public posting of the summary of evidence used 
to develop a plan's internal coverage criteria would require minimal 
time. We estimate that over the course of a year 2 business days or 16 
hours would be an adequate estimate of time needed for a business 
operations specialist to make all postings. Thus the per contract 
burden is 16 hours at a cost of $1,219 (16 * $76.20) and the aggregate 
burden over 697 contracts is 11,152 hours (697 contracts * 16 hours/
contract) at a cost of $849,782 (11,152 hr * $76.20/hr)
    We invite stakeholder comment on all aspects of this proposal. More 
specifically, we ask (1) is our assumption that plans are already 
complying with the requirement of creating new guidance correct? (2) is 
our assumption of 16 hours annually sufficient? (3) Are there any other 
aspects of this proposal or its estimates upon which stakeholders have 
comments?
6. ICRs Regarding Utilization Management Committee (Sec.  422.137)
    This rule proposes protections to help ensure that beneficiaries 
maintain access to medically necessary Part A and B services and drugs, 
while permitting MA plans to use utilization management tools, such as 
prior authorization. This proposed rule requires that MA plans 
establish and use a committee (similar to a P&T committee) that reviews 
PA policies annually to ensure the policies are consistent with current 
traditional Medicare coverage and guidelines in Medicare statutes and 
regulations, NCDs, and LCDs. This proposed rule requires the committee 
to review all medical services that require PA and other utilization 
management policies, at least on an annual basis and to document their 
findings. Additionally, the committee would be responsible for revising 
and updating the MA plan's utilization management policies as needed.
    Specifically, we propose at 422.137 (c)(1) through (4) that the UM 
committee must clearly articulate and document processes to determine 
that the committee membership requirements under the proposed 422.137 
(c)(1) through (4) of this section have been met, including the 
determination by an objective party of whether disclosed financial 
interests are conflicts of interest and the management of any recusals 
due to such conflicts. We estimate it would take 1 hour at $76.20/hr 
for an UM Committee business specialist to perform certain tasks and 
review and retain documentation and information on an annual basis. 
Additionally, we propose at Sec.  422.137(d)(4) and (5) that the 
committee must document in writing the reason for its decisions 
regarding the development of UM policies and make this documentation 
available to CMS upon request. We estimate that it will take 2 hours at 
$ 76.20/hr for a UM Committee business specialist to capture and retain 
this required documentation on an annual basis. We invite stakeholder 
comment on these assumptions.
    The aggregate burden for each of the 697 MA plans would be 2,091 
hours (697 plans * 3 hours) at a cost of $159,334.2 (2,091 hours * 
76.20/hr).
7. ICRs Regarding Review of Medical Necessity Decisions by a Physician 
or Other Health Care Professional With Expertise in the Field of 
Medicine Appropriate to the Requested Service (Sec. Sec.  422.566 and 
422.629)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0753 (CMS-R-267).
    In section III.N. of this proposed rule, we have proposed to 
strengthen the current requirement at Sec. Sec.  422.566(d) and 
422.629(k)(3) for who must review an organization determination or an 
integrated organization determination when the MA organization or AIP 
expects to issue a partially or fully adverse medical necessity 
decision.
    Under the existing requirements, if a plan expects to issue a 
partially or fully adverse medical necessity (or any substantively 
equivalent term used to describe the concept of medical necessity) 
decision based on the initial review of the request, the organization 
determination must be reviewed by a physician or other appropriate 
health care professional with sufficient medical and other expertise, 
including knowledge of Medicare coverage criteria, before the MA 
organization issues the organization determination decision. We are 
proposing that additionally, the reviewing physician or health care 
professional must have expertise in the field appropriate to the 
requested service. As discussed in the preamble, this proposal will 
also apply to coverage denials from section 1876 cost plans and 
healthcare prepayment plans because Sec. Sec.  417.600 and 417.840 
require those plans to comply with the requirements in the MA 
regulations regarding organization determinations.
    We next discuss the implications of this proposal for staffing and 
for appeals. We do not believe this proposal will impose additional 
staffing burden on plans. In light of existing review requirements 
applicable to organization determinations and integrated organization 
determinations, coupled with the requirements at Sec.  422.152 for MA 
plans (including AIPs) to engage in ongoing quality improvement 
(including in processing requests for initial or continued 
authorization of services) and the contract requirement provisions at 
Sec.  422.504, we believe plans already have the requisite expertise in 
staffing to satisfy the proposed requirement. Therefore, the proposed 
requirement that the physician or other appropriate health care 
professional have expertise in the field appropriate to the requested 
service may at most result in plans reallocating staff resources in 
certain

[[Page 79678]]

cases to ensure that someone with appropriate expertise is reviewing 
the request; however, we don't believe that this proposal will require 
additional staffing for MA organizations and AIPs.
    If this proposal is finalized, MA organizations and AIPs would 
maintain the flexibility to utilize a physician or other health care 
professional, so long as they have expertise in the field of medicine 
that is appropriate for the services at issue. Under this proposed 
approach, an appropriate physician or other health care professional 
with expertise appropriate to the requested service would be reviewing 
the coverage request at a lower level of review.
    However, this proposed provision would enhance medical review 
activities and plan operations related to organization determinations 
resulting in reduced burden. We note that the existing medical 
necessity review function is not identified as a separate line item in 
the aforementioned PRA package (CMS-R-267). However, this function is 
inherent in, and bundled into, the overall processing of organization 
determinations and appeals that is accounted for in this package. 
Because a separate and discrete burden estimate has not previously been 
submitted to OMB for the medical necessity review function, we are 
requesting OMB's review and approval under the aforementioned control 
number. The following table summarizes relevant plan reported data we 
have on organization determinations and our estimates related to this 
proposal to require medical review by physicians or other health care 
professionals with expertise in the field of medicine appropriate to 
the requested service. As explained more fully below, if this proposal 
is finalized we expect savings due to fewer denied organization 
determinations getting into the appeals process as a result of enhanced 
medical necessity review by appropriate experts.
[GRAPHIC] [TIFF OMITTED] TP27DE22.017

    According to 2020 MA plan reported data, 1,786,733 (5.7 percent of 
all 31,346,194 Medicare pre-service organization determination 
decisions) are unfavorable coverage decisions (the decision is fully or 
partially unfavorable to the enrollee). Of this universe of unfavorable 
pre-service organization determinations, 160,806 cases (9 percent * 
1,786,733) are appealed and subject to reconsideration by the plan. Of 
the cases reviewed on appeal, 130,253 cases (81 percent * 160,806 
cases) of the reconsiderations resulted in a plan overturning its 
unfavorable organization determination.
    Thus, the total burden is 32,563 hr (130,253 cases * 0.25 hr/case) 
at a cost of $2,481,317 (32,563 hr * $76.20/hr for a business 
operations specialist).
    Assumptions about the proposal: There is a high percentage of cases 
overturned on appeal by the plan. We believe that strengthening the 
regulations at Sec. Sec.  422.566(d) and 422.629(k)(3) to require the 
physician or other health care professional who reviews the initial 
coverage decision to have expertise in the field of medicine that is 
appropriate for the requested service or item ensure the appropriate 
level of protection for enrollees. For example, if plans are able to 
approve more coverage requests that involve medical necessity decisions 
at the organization determination level of review, this is likely to 
reduce costs associated with the administrative appeal process because 
fewer denials will occur at the initial level of review and, in turn, 
fewer cases are likely to get into the appeals process.
    While we don't know with certainty what the reduction in existing 
denied organization determinations will be if this proposal is 
finalized, we believe it is reasonable to estimate that one-half (50 
percent) of the existing volume of denials will result in a favorable 
decision given the enhanced standard of review. In other words, having 
a physician or other health care professional with expertise in the 
field of medicine appropriate to the requested service will result in a 
favorable organization determination decision, thereby reducing the 
number of cases potentially subject to appeal. In the absence of 
further information, we believe this a reasonable assumption. We 
solicit stakeholder input on the reasonableness of this assumption and 
whether their experience suggests some other savings.
    Proposed Burden: Therefore, if this proposal is implemented, we 
estimate that 2.85 percent (one-half of the current rate of 5.7 
percent), or 893,367 (0.0285 * 31,346,194 pre-service organization 
determinations) of the organization determinations will be unfavorable. 
At the previously stated appeal rate of 9 percent of unfavorable pre-
service organization determinations being appealed to the plan, the 
number of cases will be 80,403 (0.09 * 893,367) reconsiderations (plan 
level appeals). Assuming the overturn rate of 81 percent remains, we 
expect overturns of 65,126 cases (0.81 * 80,403 cases).

[[Page 79679]]

    We estimate that a physician spends 30 minutes reviewing a case for 
medical necessity. Under our proposal the same 30 minutes will be used 
for review; however, the review will occur at the organization 
determination level of review rather than at the appeal level of 
review. Thus, we expect no savings from physician review.
    However, savings will occur as a result of a reduction is issuing 
appeal notices if the plan is able to approve more requests at a lower 
level of review (resulting in fewer appeals). We estimate that a 
business operations specialist spends 15 minutes generating and sending 
the notice of the appeal decision, or 16,282 hours (80,403 cases x 
0.25hr/case) at a cost of $1,240,688 (16,282 hr * $76.20/hr).
    Savings: To estimate savings associated with this proposed 
rulemaking, we note that the proposed rule estimates 50 percent of the 
burden of the current practice and hence the savings is also 50 
percent. That is, the numbers in the column with proposed burden are 
numerically equal to the savings: 16,282 hours and $1,240,688 ($76.20/
hr x 16,282).
    We recognize that there are circumstances in which the plan is 
unable to make a fully favorable organization determination based on 
the information they have available to them before the end of the 
applicable adjudication timeframe. However, we believe that there 
remains a proportion of cases that contain the necessary information 
needed to approve coverage that may have a higher likelihood of 
approval if the individual reviewing the case has specific expertise 
related to the item or service being requested.
8. ICRs Regarding Strengthening Updating Translation Requirements 
Standards for Required Materials and Content: Require FIDE SNPs and 
HIDE SNPs and Applicable Integrated Plans to Translate Materials Into 
the Medicare Translation Standard Plus Additional Medicaid Languages 
(Sec. Sec.  422.2267 and 423.2267)
    We are proposing to require that FIDE SNPs, HIDE SNPs, and AIPs 
translate materials into any languages required by the Medicare 
translation standard plus any additional languages required by the 
Medicaid translation standard as specified through their Medicaid 
capitated contracts.
    This rule proposes to slightly modify existing policy, so the 
impact to FIDE SNPs, HIDE SNPs, and AIPs depends upon whether, and to 
what extent, these plans are already translating materials in ways that 
would meet our proposed requirements. We note that translation 
requirements vary by State. Therefore, we expect no impact in States 
where the applicable Medicaid and Medicaid translation requirements 
result in the same outcome. We expect marginal impacts where State 
requirements result in translation into languages not required by the 
current MA rules at Sec. Sec.  422.2267(a)(2) and 423.2267(a)(2). 
However, even in these States, FIDE SNPs, HIDE SNPs, and AIPs (in 
combination with their affiliated Medicaid managed care plans) have 
translators on staff or access them via contractors because of existing 
Medicare and Medicaid translation requirements.
    Consistent with our April 15, 2011 final rule (76 FR 21536), (CMS-
4144-F, RIN 0938-AQ00), we continue to claim that the Medicare 
translation requirement is exempt from the requirements of the PRA 
since the time, effort, and financial resources necessary to comply 
with the proposed translation requirements is a usual and customary 
business practice (see 5 CFR 1320.3(b)(2). For a full accounting of the 
translation burden, please see section IX.D.3.b. of this proposed rule.
9. ICRs Regarding Medicare Advantage (MA) and Part D Marketing (Subpart 
V of Parts 422 and 423)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-1051 (CMS-10260).
    We are proposing several changes to the marketing policies in 
subpart V of parts 422 and 423. Each of these proposed changes would 
require updates to policies and procedures on the part of a business 
operations specialist, entailing the addition of a phrase or sentence 
and, as such, not requiring much time. We will estimate the time 
required for each proposed regulatory change in this section of this 
rule. For those instances where we believe the burden to plans is 
greater than a change to policies and procedures, we will elaborate on 
what we expect that burden to be.
    For our proposed reinstatement of the prohibition on MAOs and Part 
D sponsors marketing outside of their service areas (unless 
unavoidable), we estimate \1/2\ hour to implement the change to 
policies and procedures (.5 hour x $76.20/hour = $38.10).
    For our proposed reinstatement of the prohibition on sales 
presentations following educational events, we estimate \1/4\ hour to 
implement the change to policies and procedures (.25 hour x $76.20/hour 
= $19.05).
    For our reinstatement of the prohibition on distribution and 
collection of Scope of Appointment and Business Reply Cards by agents 
at educational events, we estimate \1/4\ hour to implement the change 
to policies and procedures (0.25 hour x $76.20/hour = $19.05).
    For our reinstatement of the prohibition on conducting a sales/
marketing or enrollment meeting with a beneficiary before 48 hours 
after the beneficiary's initial consent to the meeting (via scope of 
appointment), we estimate \1/4\ hour to implement the change to 
policies and procedures (0.25 hours x $76.20/hour = $19.05).
    For the clarification of the requirement of a plan to notify CMS of 
any agent that fails to adhere to CMS requirements, we estimate \1/2\ 
hour to implement the change to policies and procedures 0(.5 hours x 
$76.20/hour = $38.10). We estimate that this policy change does have 
burden, however we have no way of estimating the number of agents and 
frequency of which they will violate CMS requirements. Therefore, we 
cannot estimate it. We do, however, solicit industry and more general 
input on the burden associated with this proposed requirement.
    For the requirement that agents/brokers inform beneficiaries that 
the beneficiaries can obtain complete Medicare information from 1-800-
MEDICARE, SHIPs, or Medicare.gov, we estimate \1/2\ hour to implement 
the change to policies and procedures (0.5 hours x $76.20/hour = 
$38.10).
    For the requirement that agents/brokers ask a standardized list of 
questions prior to enrolling the beneficiary in a plan, we estimate \1/
2\ hour to implement the change to policies and procedures (0.5 hours x 
$76.20/hour = $38.10). CMS has already developed the questions as part 
of the Pre-Enrollment Check List. CMS does not require agents/brokers 
to develop the questions themselves. As the questions were already 
developed, and the development was by CMS staff, development of the 
questions does not incur COI burden.
    For the requirement that agents/brokers inform beneficiaries of all 
the plans the agent/broker actually sells, we estimate \1/4\ hour to 
implement the change to policies and procedures (0.25 hours x $76.20/
hour = $19.05).
    For the changes that clarify the prohibition of the use of the term 
``Medicare'' or CMS's logos in a way that is misleading or confusing or 
which misrepresents the plan, we estimate \1/4\ hour to implement the 
change to policies and procedures (0.25 hours x $76.20/hour = $19.05).
    Thus, the total one-time burden per contract for these marketing 
provisions is 3.25 hours (0.5 + 0.25 + 0.25 + 0.25

[[Page 79680]]

+ 0.5 + 0.5 + 0.5 + 0.25 + 0.25 for the time required to update 
policies and procedures on the prohibitions of marketing outside the 
service area, of sales following educational events, of distribution of 
business cards, as well as the required 48-hour wait time for agents, 
reporting to CMS delinquent agents, disclosing 800-Medicare, using a 
standardized list of questions, for agents to notify beneficiaries of 
all plans they represent, and to avoid misleading use of the Medicare 
log respectively) at $76.20/hour for a total of $247.65. The aggregate 
burden across 697 contracts is 2265 hr (3.25 * 697) at a cost of 
$172,593 ($76.20/hr * 2265 hr).
10. ICRs Regarding Changes to an Approved Formulary (Sec. Sec.  423.4, 
423.100, 423.104, 423.120, and 423.128)
    The following proposed changes will be posted for public review 
under control number 0938-0964 (CMS-10141) using the standard non-rule 
PRA process which includes the publication of 60- and 30-day Federal 
Register notices. The 60-day notice will publish soon after the 
publication of the final rule (CMS-4201-F).
    In the proposed provision, ``Changes to an Approved Formulary'' 
(see section III.Q. of this proposed rule) we propose to codify 
guidance in place since early in the Part D program. The burden 
associated with the negative change request process and notice of 
negative formulary changes to CMS, affected enrollees, current and 
prospective enrollees, and other specified entities (as listed in Sec.  
423.120(b)(5)(i)) was not accurately captured under the aforementioned 
OMB control number, which simply included a lump sum of 40 hours per 
Part D sponsor for a business operations specialist to complete notice 
requirements to CMS and other entities and did not include notice to 
affected enrollees. Similarly, the aforementioned control number does 
not include burden associated with updating the Part D formulary on the 
Part D sponsor website as required per Sec.  423.128(d)(2)(ii)-(iii). 
We are now quantifying burden associated with negative formulary 
changes in a more granular fashion, which includes notice to affected 
enrollees and online notice by updating the formulary posted on the 
Part D sponsor website, which we believe to reflect the operational 
processes which Part D sponsors have been following. As such, we do not 
believe this reflects added burden for Part D sponsors but rather 
quantifies the burden that Part D sponsors have been assuming over the 
course of the Part D program. As noted in section III.Q.1. of this 
proposed rule, we believe Part D sponsors have been following published 
guidance since CMS has operational oversight of negative change 
requests and corresponding formulary updates and we are not aware of 
significant complaints that beneficiaries are being subjected to 
negative formulary changes without proper notice.
    Immediate formulary changes require advance general notice that 
such changes may occur at any time. Advance general notice to CMS of 
immediate substitutions is currently incorporated into annual bid 
submission workflow as a simple checkbox, which we do not believe has 
added substantial burden to the overall bid submission process. 
Language constituting advance general notice of immediate formulary 
changes (that is, immediate substitutions, positive formulary changes, 
and market withdrawals) for other specified entities and current and 
prospective enrollees, is already incorporated into model formulary and 
evidence of coverage documents and we do not believe our proposed 
changes would add a substantial burden to preparing the documents 
outside of the routine annual updates. The burden attributed to the 
dissemination of Part D plan information is approved under the 
aforementioned control number at 80 hours annually for each Part D 
contract's business operations specialist to prepare required plan 
materials consistent with Sec.  423.128(a), which includes annual 
updates to the formulary and evidence of coverage documents, among 
other information. Since language has already been incorporated into 
the model documents used by Part D sponsors to update their materials 
and since CMS-10141 has been posted for comment multiple times since 
the requirements related to advance general notice were codified at 
Sec.  423.120(b)(5)(iv)(C) (which we are proposing to move to Sec.  
423.120(f)(2)), we continue to assume the accuracy of this estimate.
    Part D sponsors notify CMS of their intent to make a negative 
formulary change by submitting a negative change request (NCR) via the 
Health Plan Management System (HPMS) NCR module. Part D sponsors 
provide CMS notice of changes which do not require NCRs by submitting 
updated formulary files during monthly windows, which is a standard 
formulary management operation. Part D sponsors submit formularies 
which can be used across multiple contracts and plans. In 2021, CMS 
approved 551 formularies which were used across 946 contracts and 6,679 
plans offered by 206 parent organizations. Since there are some 
efficiencies with respect to formulary management and NCR submissions 
(for example, NCRs submitted for one formulary can be applied to others 
in a streamlined manner), we estimate burden at the parent organization 
level. However, not all Part D sponsors submit NCRs. In 2021, 136 
parent organizations submitted 3,642 NCRs for 321 formularies. We 
believe that generally a pharmacist is responsible for managing NCR 
submissions and that each NCR takes approximately 5 minutes (0.0833 hr) 
to submit through the HPMS module, based on CMS internal user testing. 
In total, for 136 parent organizations, the burden to submit NCRs is 
estimated to be 303 hours (3,642 NCRs x 0.0833 hr per NCR) at a cost of 
$36,621 ($120.86/hr x 303 hr).
    Part D sponsors include immediate formulary changes, approved 
negative changes, and any enhancements (for example, addition of newly 
approved drugs, moving a drug to a lower cost-sharing tier, removing or 
making less restrictive utilization management requirements) to their 
formularies consistent with formulary requirements. Generally, every 
formulary is updated during these monthly formulary update windows and 
CMS reviews all changes to ensure they are consistent with regulatory 
requirements. Since every parent organization generally updates their 
formulary regardless of whether any negative changes are made, we 
estimate burden for all 206 parent organizations representing 551 
formularies in 2021. There are 11 formulary update windows per year 
(monthly from January to November). We believe a pharmacist is 
generally responsible for managing formulary submissions. In this case, 
6,061 formulary submissions (551 formularies x 11 submission windows). 
We estimate that each formulary file update requires 2 hours to 
prepare, for a total of 12,122 hours (6,061 submissions x 2 hr per 
submission) at a cost of $1,465,065 (12,122 hr x $120.86/hr).
    In addition to notifying CMS in the manner described, Part D 
sponsors are required to notify other specified entities of formulary 
changes. As defined in Sec.  423.100, ``other specified entities'' are 
State Pharmaceutical Assistance Programs (as defined in Sec.  423.454), 
entities providing other prescription drug coverage (as described in 
Sec.  423.464(f)(1)), authorized prescribers, network pharmacies, and 
pharmacists. Online postings that are otherwise consistent with 
requirements for notice to other specified entities may constitute 
sufficient notice of negative formulary changes, although sponsors may 
use mechanisms other than the

[[Page 79681]]

online postings to notify other specified entities of midyear formulary 
changes as well. Requirements for Part D sponsors' internet website 
include the current formulary for the Part D plan, updated at least 
monthly consistent with Sec.  423.128(d)(2)(ii), and advance notice of 
negative formulary changes for current and prospective enrollees, 
consistent with Sec.  423.128(d)(2)(iii) as we propose to revise it. To 
estimate burden associated with providing notice of formulary changes 
to other specified entities, we calculate the time and cost associated 
with updating the formulary and providing notice of drugs affected by 
negative formulary changes (such as a summary table which lists such 
changes) on the Part D sponsor's website. For 551 formularies in 2021, 
monthly updates would be posted at least 12 times annually for a total 
of 6,612 postings (551 formularies x 12 updates/year) by all 206 parent 
organizations. We estimate that it would take 1 hour to update the 
website consistent with the requirements at Sec.  423.128(d)(2)(ii) and 
(iii) and that a computer programmer would be responsible for such 
postings for a total annual burden of 6,612 hours (6,612 updates x 1 
hr/update) at a cost of $614,387 ($92.92/hr x 6,612 hr).
    Enrollees affected by negative formulary changes are currently 
required to receive direct written notice as described at Sec.  
423.120(b)(5)(i)(A) and (b)(5)(ii). We propose to move this requirement 
to Sec.  423.120(f) and (f)(4), respectively. CMS provides a model 
``Notice of Formulary Change'' which sponsors may use to meet 
regulatory requirements. Affected enrollees include those who are 
subject to immediate substitutions and maintenance formulary changes. 
The notice requirement is the same, with the exception that enrollees 
subject to immediate substitutions receive notice retrospectively while 
enrollees subject to maintenance formulary changes receive notice in 
advance of the change. Under the proposed rule codifying current 
operational guidance, there would be no affected enrollees subject to 
non-maintenance changes since these types of changes would be permitted 
only when enrollees taking the drug subject to the non-maintenance 
change are exempt from the change (that is, ``grandfathered'') for the 
remainder of the contract year. CMS does not collect data on the number 
of enrollees affected by negative formulary changes. In order to 
estimate the number of affected enrollees, we used 2021 data on the 
total number of Part D enrollees (across the entire program) taking 
each drug subject to the negative formulary change during the contract 
year. We then calculated the estimated number of affected enrollees by 
prorating the number of enrollees taking the drug across the entire 
program based on the relative proportion of the Part D plan's 
enrollment to the total Medicare Part D enrollment.
    The following example illustrates this process. As of December 
2021, there were 49,289,670 Part D enrollees. As stated previously, 
multiple contracts and plans may share the same formulary. A negative 
formulary change submitted for Drug A on a particular formulary 
impacted a total of 6 individual plans utilizing this formulary. The 
total number of Part D enrollees taking Drug A in 2021 was 25,717. The 
total number of enrollees in the 6 plans implementing the negative 
formulary change was 40,045, representing 0.0812 percent of the total 
Part D enrollment (40,045/49,289,670). We then assume that of the 
25,717 Part D enrollees taking Drug A during 2021, that 0.0812 percent 
or 21 enrollees (25,717 x 0.000812) were affected by the negative 
formulary change. This logic was applied across all immediate 
substitutions and maintenance formulary changes submitted during 2021. 
We do not estimate enrollees affected by market withdrawals since these 
occur infrequently and unpredictably (historically occurring every few 
years) and the number of enrollees affected could vary substantially 
depending on the drug implicated.
    In total, there were 164 parent organizations that implemented 
immediate substitutions or maintenance formulary changes for 379 
formularies used for 576 contracts and 3,735 plans affecting a total of 
65,535 enrollees. We do not attribute substantial burden associated 
with incorporating the model notice into Part D sponsors' internal 
systems for mailing, since this would have been a one-time initial 
upload with minor updates annually. We therefore calculate non-labor 
costs associated with sending notice of formulary change to affected 
enrollees. Enrollees may opt in to receiving communication materials 
electronically rather than via hard-copy mailings; however, consistent 
with informal communication from stakeholders for other required 
documents, we assume all affected enrollees prefer hard-copy mailings. 
Costs for hard-copy mailings include paper, toner, and postage.
     Cost of paper: We assume $3.50 for a ream of 500 sheets. 
The cost for one page is $0.007 ($3.50/500 sheets).
     Cost of toner: We assume a cost of $70 for 10,000 pages. 
The toner cost per page is $0.007 ($70/10,000 pages).
     Cost of postage: The cost of first-class metered mail is 
$0.57 per letter up to 1 ounce. We are using metered mail because these 
notifications contain confidential beneficiary information and 
therefore a bulk mailing cannot be used.
    ++ A sheet of paper weights 0.16 ounces (5 pounds/500 sheets x 16 
ounces/pound). We estimate each mailing to consist of 2 pages or 0.32 
ounces, so no additional postage for mailings in excess of 1 ounce is 
anticipated.
    Thus, the aggregate cost per mailing is $0.598 ([$0.007 for paper x 
2 pages] + [$0.007 for toner x 2 pages] + $0.57 for postage). We 
estimate the total annual mailing cost at $39,190 ($0.598 per notice x 
65,535 affected enrollees).
    The summary of burden, labor and non-labor costs, associated with 
this provision is summarized in Table 9.
BILLING CODE 4120-01-P

[[Page 79682]]

[GRAPHIC] [TIFF OMITTED] TP27DE22.018


[[Page 79683]]


BILLING CODE 4120-01-C
11. ICRs Regarding Part D Medication Therapy Management (MTM) Program 
Eligibility Criteria (Sec.  423.153(d))
    The following proposed changes will be submitted to OMB for review 
under control number 0938-1154 (CMS-10396).
    Based on analyses conducted on MTM plan-reported and validated 
beneficiary-level data from 2020, CMS proposes the following 
combination of changes to the MTM program targeting criteria:
     Requiring plan sponsors to target all core chronic 
diseases, and continuing to allow them to add other chronic diseases;
     Codifying the current 9 core chronic diseases in 
regulation and adding HIV/AIDS, for a total of 10 core chronic 
diseases;
     Lowering the maximum number of covered Part D drugs, a 
sponsor may require from 8 to 5 drugs and requiring sponsors to include 
all Part D maintenance drugs in their targeting criteria; and
     Revising the annual cost threshold ($4,935 in 2023) 
methodology to be based on the average annual cost of 5 generic drugs 
($1,004 in 2020);
    Taken together, we estimate that these proposed changes would 
increase the number (and percentage) of Part D beneficiaries eligible 
for MTM services by 6,485,066 from 4,508,762 (9 percent of all Part D 
beneficiaries) to 10,993,828 (22.93 percent of all Part D 
beneficiaries). While we considered multiple alternative proposals, we 
ultimately proposed this combination of changes as a way to close 
significant gaps in MTM eligibility while balancing program size and 
burden on Part D sponsors.
    Under Sec.  423.153(d), all MTM enrollees must be offered a 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. Under Sec.  423.153(d)(1), plans are required to provide all 
enrollees targeted for MTM services with information about safe 
disposal of prescription medications that are controlled substances. 
Plans may mail this information as part of the CMR summary, a TMR, or 
other MTM correspondence or service. In this section we are estimating 
the additional burden that would be placed on plan sponsors to conduct 
CMRs (labor cost) and mail the written CMR summaries (non-labor cost) 
to the additional beneficiaries that would be targeted for MTM programs 
based on our proposed revisions. We also estimate the cost of sending 
safe disposal information to the beneficiaries who would be newly 
targeted under these revised criteria, but do not receive a CMR.
    To obtain aggregate burden we separately estimate: (1) the burden 
for pharmacists to complete the CMR; (2) the mailing costs of the CMRs; 
and (3) the cost of mailing of safe disposal instructions to those 
targeted beneficiaries who did not accept the offer of a CMR.
     The burden for pharmacists to complete the CMR: Based on 
internal data, we found 63.6 percent of MTM program enrollees accepted 
the offer of a CMR in 2020. To estimate the cost of conducting the 
additional CMRs, we multiply the expected number of additional MTM 
program enrollees (6,485,066) by 0.636 to obtain the number of 
additional CMRs we estimate will actually be conducted (4,124,502). We 
estimate a pharmacist would take 40 minutes (0.6667 hr) at $120.86/hr 
to complete a CMR. Thus, the total burden is 2,749,805 hours (0.6667 
hr/CMR * 4,124,502 enrollees who accept the CMR offer) at a cost of 
$332,341,432 (2,749,805 hr * $120.86/hr).
     Mailing Costs of CMRs. To estimate the cost of sending the 
CMR summaries, we assume that the average length of a CMR is 7 pages 
(including 1 page for information regarding safe disposal). Therefore, 
the first class postage costs $0.81 per metered mailing. Paper costs 
are $0.007 per sheet ($3.50 per ream/500 sheets per ream) and toner 
costs $70.00 per cartridge and lasts for 10,000 sheets (at $0.007 per 
sheet = $70.00/10,000 sheets). Thus, the total cost per CMR mailing is 
$0.908 ($0.81 postage + [7 sheets/CMR * $0.014]. Therefore, the annual 
cost of mailing CMRs to the additional 4,124,502 beneficiaries expected 
to accept the CMR offer is $3,745,048 (4,124,502 enrollees x $0.908/
mailing).
     Mailing costs for safe disposal information: Out of the 
6,485,066 additional beneficiaries expected to be targeted for MTM 
based on the revised criteria, we expect that 36.4 percent or 2,360,564 
(6,485,066 * 0.364) will decline a CMR. These enrollees will still need 
to receive information regarding the safe disposal of prescription 
drugs that are controlled substances. For purposes of calculating the 
burden, we are assuming that any safe disposal information that is not 
included in a CMR is either (1) being mailed in a TMR, which may be as 
short as one page and may contain private health information; or (2) is 
mailed as a stand-alone document which does not contain any private 
health information. For purposes of impact, (1) if one additional page 
is included in the TMR, then there is no additional postage; and (2) 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 with regard to what 
percentage of safe disposal information will be mailed as part of a TMR 
or other MTM correspondence or service, we are assuming that all safe 
disposal information not sent with a CMR will be one page that is 
mailed separately using bulk postage in order to project the maximum 
cost of such mailing. The cost to mail one page of safe disposal 
information is $0.015 per enrollee if the letter does not contain 
private health information and thus bulk mailing is used (1 page 
$0.007/sheet) + (1 page x $0.007 toner) + ($0.20/200 items for bulk 
postage). Therefore, we estimate that the cost of mailing safe disposal 
information to those beneficiaries targeted for MTM who do not receive 
it in a CMR summary is $35,408 ($0.015 x 2,360,564).
    Therefore, the total burden associated with the proposed revisions 
to the MTM targeting criteria is 2,749,805 hours and $336,121,888 
($332,341,432 for a pharmacist to produce the CMRs for beneficiaries 
newly targeted for MTM under the proposed revised criteria + $3,745,048 
to mail the CMR written summary in the CMS standardized format with 
safe disposal information + $35,408 for mailing information regarding 
safe disposal to beneficiaries newly targeted for MTM who do not 
receive a CMR).
12. ICRs Regarding Medicare Parts A, B, C, and D Overpayment Provisions 
of the Affordable Care Act (Sec. Sec.  401.305(a)(2), 422.326(c), and 
423.360(c))
    The proposed amendments to Sec. Sec.  401.305(a)(2), 422.326(c), 
and 423.360(c) would change the standard for an ``identified 
overpayment'' for Medicare Parts A, B, C, and D and adopt by reference, 
the knowledge standard set forth in the False Claims Act at 31 U.S.C. 
3729(b)(1). The proposed amendments for Medicare Parts A and B are 
associated with OMB control number 0938-1323 (CMS-10405); however, we 
are not making any revisions to the currently approved requirements and 
burden under this

[[Page 79684]]

control number. The proposed amendments for Medicare Parts C and D are 
associated with OMB control number 0938-1152 (CMS-10340) and OMB 
control number 0938-0878 (CMS-10062); however, we are not making any 
revisions to the currently approved requirements and burden under 
either of these control numbers. Although we cannot predict if there 
will be any change in the number of overpayments identified or reported 
under the proposed amendments to the rule, we solicit comment on this 
assumption.
13. ICRs Regarding Required Notices for Involuntary Disenrollment for 
Loss of Special Needs Status (Sec.  422.74)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0753 (CMS-R-267).
    MA organizations that offer special needs plans are currently 
effectuating involuntary disenrollments for loss of special needs 
status as part of existing disenrollment processes, including the 
member notifications outlined in our proposal; therefore, no additional 
burden is anticipated from this proposal. However, because a burden 
estimate for these member notifications has not previously been 
submitted to OMB, due to inadvertent oversight, we are seeking OMB 
approval under the aforementioned OMB control number.
    We are proposing to codify current policy on MA plan notices prior 
to a member disenrollment for loss of special needs status. MA 
organizations would be required to provide the member a minimum of 30 
days advance notice of disenrollment regardless of the date of the loss 
of special needs status. Additionally, the organization would be 
required to provide the member a final notice of involuntary 
disenrollment, sent within 3 business days following the disenrollment 
effective date, and before the disenrollment transaction is submitted 
to CMS.
    Where an individual is involuntarily disenrolled from an MA plan 
for any reason other than death, loss of entitlement to Part A or Part 
B, the MA organization must give the individual a written notice of the 
disenrollment with an explanation of why the MA organization is 
planning to disenroll the individual, pursuant to Sec.  422.74(c). The 
notice requirement in Sec.  422.74(c) is currently approved by OMB 
under the aforementioned control number.
    To estimate the number of notices required due to involuntary 
disenrollments for loss of special needs status, we determined the 
average number of annual disenrollments due to loss of special needs 
status. Between 2017 and 2021, there were an average of 55,127 
involuntary disenrollments per year due to loss of special needs 
status.
    We estimate that it would take each MA organization 1 minute (0.017 
hr) to assemble and disseminate the advance notice, 5 minutes (0.083 
hr) to submit the required transaction to CMS for each disenrollment, 
and 0.017 hr to assemble and disseminate the final notice for each 
disenrollment. Therefore, the total annual time for each MA 
organization is 0.1170 hours (0.017 hr + 0.083 hr + 0.017 hr).
    We estimate the aggregate annual burden for all MA organizations to 
process these disenrollments to be 6,450 hours (55,127 disenrollments * 
0.117 hr) at a cost of $491,490 (6,450 hr * $76.20/hr).
14. ICRs Regarding Involuntary Disenrollment for Individuals Enrolled 
in an MA Medical Savings Account (MSA) Plan (Sec.  422.74(b)(2))
    The requirement proposed at Sec.  422.74(b)(2)(vii) to establish a 
process for involuntary disenrollment for an individual who loses 
eligibility mid-year to be enrolled in an MA MSA plan, and more 
specifically, the requirement for the MA organization to give the 
individual a written notice of the disenrollment at Sec.  422.74(c) 
with an explanation of why the MA organization is planning to disenroll 
the individual, will be submitted to OMB for review under control 
number 0938-0753 (CMS-R-267).
    The annual burden associated with this requirement consists of the 
time and cost to notify the individual and CMS. Based on the active 
burden in CMS-R-267, we estimate that each disenrollment will require 1 
minute (0.017 hr) for the MA MSA plan to notify CMS and 5 minutes 
(0.083 hr) for the MA MSA plan to notify the individual. Thus, the 
total burden per disenrollment is estimated at 6 minutes (0.1 hr) (1 
minute to assemble and disseminate the notice to CMS and 5 minutes to 
assemble and disseminate the notice to the individual) at a cost of 
$7.62 (0.1 hr x $76.20/hr for a business operations specialist to 
perform the work).
    To obtain aggregate burden we used data from 2019 and 2021 in which 
there were an average of 4 MSA contracts. We used an average since the 
data had no visible trend but hovered around a central value. There was 
an average of 8,624 enrollees during 2019-2021 and the average 
disenrollment was 124. Thus, we estimate an aggregate burden of 12 
hours (124 disenrollments * 0.1 hr. per disenrollment) at a cost of 
$914 (12 hr * $76.20/hr).
15. ICRs Regarding Required Notice for Reinstatements Based on 
Beneficiary Cancellation of New Enrollment (Sec. Sec.  422.60 and 
423.32)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-1378 (CMS-10718).
    CMS's subregulatory guidance currently provides that MA and PDP 
plans send notification of enrollment reinstatement based on the 
cancellation of enrollment in a new plan. Our proposal would not add to 
existing reinstatement processes; therefore, no additional burden is 
anticipated from this proposal. However, because a burden estimate for 
these enrollment reinstatement notifications has not previously been 
submitted to OMB, we aim to correct that oversight by requesting OMB's 
review and approval under the aforementioned control number.
    We are proposing to codify CMS's current policy that plans notify 
an individual when the individual's enrollment is reinstated due to the 
individual's cancellation of enrollment in a different plan. The MA or 
PDP plan from which the individual was disenrolled would be required to 
send the notification of the enrollment reinstatement within 10 days of 
receipt of Daily Transaction Reply Report (DTRR) confirmation of the 
individual's reinstatement. The reinstatement notice would include 
confirmation of the individual's enrollment in the previous plan with 
no break in coverage, plan-specific information as needed, and plan 
contact information.
    To estimate the number of reinstatement notices required due to an 
individual's cancellation of enrollment in a new plan, we determined 
the number of annual reinstatements based on the cancellations of 
enrollment in a new plan. In 2021, there were 5,686,989 disenrollments 
from MA and MA-PD plans due to enrollments in another plan and 
4,292,426 disenrollments from PDP plans due to enrollments in another 
plan. Further, between 2017 and 2021, there was an average of 193,183 
cancelled enrollments per year in a new MA plan (including MA-PD 
plans). Between 2017 and 2021, there was an average of 32,723 cancelled 
enrollments per year in a new PDP plan. Each cancelled enrollment in a 
new plan results in a reinstatement notice sent to the beneficiary. 
Thus, we estimate 225,906 (193,183 + 32,723) reinstatements annually.
    We estimate that it would take 1 minute (0.017 hr) at $76.20/hr for 
a MA or PDP plan's business operations

[[Page 79685]]

specialist to assemble and disseminate the notice for each 
reinstatement. In aggregate, we estimate an annual burden of 3,840 
hours (225,906 reinstatements * 0.017 hr) at a cost of $292,608 (3,840 
hr * $76.20/hr).
16. ICRs Regarding Medicare Final Settlement Process and Final 
Settlement Appeals Process for Organizations and Sponsors That Are 
Consolidating, Non-Renewing, or Otherwise Terminating a Contract 
(Sec. Sec.  422.500, 422.528, 422.529, 423.501, 423.521, and 423.522)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-1054 (CMS-10261).
    In this rule, proposed Sec. Sec.  422.528, 422.529, 423.521, and 
423.522 would increase burden by requiring that MA organizations and 
Part D sponsors who disagree with the CMS calculated final settlement 
amount appeal the final settlement amount, if any, for each contract 
that consolidates, non-renews, or terminates. There is also additional 
burden requiring that MA organizations and Part D sponsors respond 
directly to CMS. The response consists of those MA organizations and 
Part D sponsors requesting an appeal of the final settlement amount and 
filing a written request for reconsideration with CMS that includes the 
specific calculations with which the MA organization or Part D sponsor 
disagrees and any relevant evidence to support a belief that the CMS 
final settlement amount may have been calculated incorrectly.
    In amended paragraphs Sec. Sec.  422.500 and 423.501 of this 
proposed rule, we proposed to define final settlement amount and 
outline the proposed final settlement process which consists of: (1) 
CMS calculating the final settlement amount of any payment to be 
disbursed to, or collected from, an MA organization or Part D sponsor 
whose contract with CMS has been consolidated into another contract, 
non-renewed, or terminated; (2) CMS communicating to the MA 
organization or Part D sponsor the final settlement amount and any 
relevant information MA organizations and Part D sponsors need to 
validate the final settlement amount; and (3) final actions needed to 
be taken by CMS, MA organizations, and Part D sponsors to make payments 
to or receive final payments from CMS. The final settlement amount is 
calculated by summing final retroactive payment adjustments that 
accumulated after a contract ceased operation and all final applicable 
reconciliations including MLR remittances (described in Sec. Sec.  
422.2470 and 423.2470), Coverage Gap Discount Program (described in 
Sec.  423.2320), Part D annual reconciliation (described in Sec.  
423.343), and final risk adjustment reconciliation (described in Sec.  
422.310).
    Under the current policy, CMS would send a notice, referred to as 
the notice of final settlement, to MA organizations and Part D sponsors 
with contracts that are consolidating, non-renewing, or terminating 
containing information on final settlement. The notice of final 
settlement contains (1) the final settlement amount; (2) relevant CMS 
banking and financial mailing information; (3) relevant CMS contact 
information and; (4) information for MA organizations and Part D 
sponsors regarding the steps for requesting a review of the final 
settlement amount calculation.
    Historically, on average, for the period 2015 through 2020, CMS 
sent 47 letters annually and received 3 responses, which typically 
requested that CMS validate the final settlement amount.
    We are proposing at new paragraphs Sec. Sec.  422.528(b) (for MA) 
and 423.521(b) (for Part D) to require MA organizations and Part D 
sponsors that disagree with the final settlement amount request an 
appeal of the final settlement amount within 15 days of the date of 
issuance of the notice of final settlement.
    Whereas under current CMS processes, we allow MA organizations and 
Part D sponsors to submit evidence supporting a review request on a 
case-by-case basis, proposed Sec. Sec.  422.529 and 422.522 specify 
that MA organizations and Part D sponsors specify the calculations with 
which they disagree and provide evidence supporting the assertion that 
CMS's calculation of the final settlement amount described in the 
notice of final settlement is incorrect.
    In calculating the burden of this proposal, we assume the 
following:
     44 contracts, on average, will accept the CMS final 
settlement amount upon issuance of the notice of final settlement.
     3 contracts will disagree with the CMS decision and 
request a review of the final settlement amount calculation.
     Burden is distributed between business operations 
specialists working at $76.20/hr and Medical and Health managers 
working at $115.21/hr, who perform a quality review of data and draft a 
response to CMS on behalf those MA organizations or Part D sponsors who 
disagree with the CMS calculated final settlement amount.
     The primary tasks of business operations specialists are 
to gather and validate data, determine the accuracy of the final 
settlement amount calculation, and draft a response.
     The primary task of the managers is to quality assure the 
work of the business operations specialist.
    The time for MA organizations and Part D sponsors is based on the 
effort needed to access and analyze data in order to validate the CMS 
final settlement amount and provide aa request for a reconsideration. 
Any other burden was not considered in this analysis. For example, 
under proposed Sec. Sec.  422.529 and 423.522, we explain that CMS will 
not accept, as part of the final settlement process or review, any new 
information that would be used for adjusting the applicable 
reconciliations and that the final settlement amount determined after a 
CMS review is final. Should a Part D sponsor request a review of the 
final settlement amount because of a belief that the Part D annual 
reconciliation was calculated inaccurately, that review would be denied 
because CMS will not be redetermining reconciliation amounts, and any 
burden associated with that request was not included in this analysis.
    In estimating time, we separately consider the 44 contracts that we 
expect to agree with the CMS decision and the 3 contracts that we 
expect to request a review. Besides calculating total costs by 
considering each case, we also calculate a single summary line for the 
summary table, by dividing total burden by the 47 contracts Table 10 
summarizes all burden estimates which could be useful in reviewing the 
bullets that follows this table. Explanatory comments for the line 
items in Table 10 are presented below it.

Table10: Summary of Aggregate Burden For Final Settlement

[[Page 79686]]

[GRAPHIC] [TIFF OMITTED] TP27DE22.019

     Staff time for validating data (hours): For the 47 
contracts (44 routine + 3 disagreeing) receiving a notice of final 
settlement from CMS, which contains the information CMS used to 
calculate the final settlement amount, we expect each of the 47 
contracts to spend 4 hours validating CMS data.
     Staff time for drafting a response (hours): For the 44 
contracts agreeing with CMS, no drafting of a response is required. 
However, for the 3 contracts disagreeing with CMS, we estimate 3 hours 
of work to develop a summary of the disagreement and compile any 
relevant evidence for CMS. Thus the aggregate burden for the 3 
disagreeing contracts is $686 (3 contracts * 3 hr/contract * $76.20/hr) 
for drafting a response.
    We next perform a similar burden analysis to arrive at the 
aggregate cost.
     For each of the 47 contracts, a business operations 
specialist working for 4 hours validating the final settlement amount 
at $76.20/hr would incur a burden of $305 (4 hr * $76.20/hr). Therefore 
the aggregate burden over all 47 contracts is $14,335 (47 contracts * 
$305)
     For the 3 contracts disagreeing with the CMS decision, a 
business operations specialist working for 3 hours drafting a response 
at a cost of $76.20/hr incurs an aggregate burden of $686 (3 contracts 
* 3 hours/contract * $76.20/hr)
     For the 3 contracts disagreeing with CMS, a manager 
working for 2 hours at a cost of $115.22/hr would incur a burden of 
$$691 (3 contracts * 2 hours * $115.22).
     The aggregate burden over all contracts is 203 hours (44 
routine contracts * 4 hours for validation + 3 disagreeing contracts * 
5 hours (3 hr to write a summary report + 2 hr for quality review) at 
an aggregate cost of $15,712 (($14,355 for 47 validations + $686 for 3 
contracts to write a summary + $691 for 3 contracts to perform a 
quality review)
    The per contract burden differs for the 44 routine contracts and 
the 3 disagreeing contracts. For the 44 routine contracts the per 
contract burden is 4 hours to perform a validation at a per contract 
cost of $305. For the 3 disagreeing contracts the per contract burden 
is 9 hours (4 hours for validation + 3 hours for writing a summary + 2 
hours for performing a quality review) at a per contract burden of 
$1,682 ($305 for validation + $686 for writing a report + $691 for 
performing a quality review).
17. ICRs Regarding Medicare Advantage/Part C and Part D Prescription 
Drug Plan Quality Rating System (Sec. Sec.  422.162, 422.164, 422.166, 
422.260, 423.182, 423.184, and 423.186)
    As described in section V.G. of this proposed rule, we are 
proposing to add, remove, and update certain measures, to replace the 
current reward factor with a new HEI reward to further incentivize Part 
C and D plans to focus on improving care for enrollees with specific 
SRFs, to reduce the weight of patient experience/complaints and access 
measures, to remove guardrails when determining measure-specific-
thresholds for non-CAHPS measures, to modify the hold harmless policy 
for the current improvement measures, to add a rule for the sub-
regulatory removal of Star Ratings measures when a measure steward 
other than CMS retires the measure, and to remove the 60 percent rule 
that is applied when adjusting Star Ratings for extreme and 
uncontrollable circumstances (for example, natural disasters like 
hurricanes or public health emergencies). The proposed HEI is a 
different way for CMS to analyze existing data and would not increase 
plan burden. Most of the new measures would be calculated from 
administrative data and, as such, there would be no increase in plan 
burden. The other measure-level changes entail moving existing measures 
from the display page to Star Ratings, which also would have no impact 
on plan burden. We are also proposing a series of technical 
clarifications related to adjusting Star Ratings for extreme and 
uncontrollable circumstances, QBP appeals processes, consolidations, 
and weighting of measures with a substantive specification change. The 
proposed provisions will not change any respondent requirements or 
burden pertaining to any of CMS's Star Ratings related PRA packages, 
including: OMB control number 0938-0732 for CAHPS (CMS-R-246), OMB 
control number 0938-0701 for HOS (CMS-10203), OMB control number 0938-
1028 for HEDIS (CMS-10219), OMB control number 0938-1054 for Part C 
Reporting Requirements (CMS-10261), OMB control number 0938-0992 for 
Part D Reporting Requirements (CMS-10185), and OMB control number 0938-
1129 for Appeals of Quality Bonus Payment Determinations (CMS-10346). 
Since the provisions will not impose any new or revised information 
collection requirements or burden, we are not proposing to make changes 
under any of the aforementioned control numbers.
18. ICRs Regarding Personnel Requirements Under PACE (Sec. Sec.  460.64 
and 460.71)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0790 (CMS-R-244).
    Section 460.64 currently includes the requirements relating to the 
qualifications of PACE personnel who have direct contact with PACE 
participants. This includes the requirement that PACE organizations 
medically clear personnel of communicable diseases. As discussed in 
section VI.E. of this proposed rule, PACE organizations are currently 
required to ensure staff (employees and contractors) are free of 
communicable diseases. We proposed to allow PACE organizations the 
option to create and implement a risk assessment tool to assist with 
this medical clearance process. Therefore, we estimate there will be a 
one-time burden for PACE organizations associated with these new 
requirements to update policies and procedures related to medical 
clearance, and when applicable, to develop a risk assessment tool. We 
believe the compliance officer and primary care physician (PCP) would 
be responsible for ensuring the necessary materials are updated, for 
determining medical

[[Page 79687]]

clearance, and developing the risk assessment tool. For revising 
policies and procedures related to medical clearance, we estimate it 
would take 1 hour at $72.90/hr for a compliance officer at each PACE 
organization to update these materials. For the development of the risk 
assessment tool, we estimate it would take each PACE organization 5 
hours consisting of: 4 hours of work by the compliance officer at 
$72.90/hr and 1 hour of work by the PCP at $232.88/hr. The weighted 
hourly wage for the compliance officer and PCP to update policies and 
procedures to create a risk assessment is $104.90/hr (((4 hr * $72.90/
hr) + (1 hr * $232.88/hr))/5 hr of aggregate burden).
    In aggregate, we estimate a one-time burden of 149 hours (149 PACE 
organizations \225\ * 1 hr) at a cost of $10,862 (149 hrs * $72.90/hr) 
for the development of policies and procedures.
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    \225\ Number of PACE organizations is current as of September 
20, 2022.
---------------------------------------------------------------------------

    To develop a risk assessment tool, we also estimate a one-time 
burden of 745 hours (149 PACE organizations * 5 hrs) at a cost of 
$78,151 (745 hrs * $104.90/hr) for both the compliance officer and PCP 
roles in developing the risk assessment tool.
19. ICRs Regarding Service Delivery Under PACE (Sec.  460.98)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0790 (CMS-R-244).
    Section 460.98 currently includes requirements related to delivery 
of services to PACE participants. This includes the minimum 
requirements for the provision of services PACE organizations must 
provide and how the services must be furnished. The current requirement 
that PACE organizations must provide all necessary services to meet the 
needs of participants as expeditiously as the participant's health 
conditions require would not change with this proposed rule, but as 
discussed in section VI.G. of this proposed rule, we are proposing to 
add required timeframes for arranging and scheduling services for PACE 
participants. We believe there will be a one-time burden for PACE 
organizations to update their policies and procedures to reflect the 
proposed timeframes. We believe the compliance officer will be 
responsible for updating the policies and procedures. We estimate that 
it would take the compliance officer 1 hour at $72.90/hr to update the 
necessary materials. Therefore, we estimate a one-time burden of 149 
hours (149 PACE organizations * 1 hr) at a cost of $10,862 (149 hrs * 
$72.90/hr).
20. ICRs Regarding PACE Participant Rights (Sec.  460.112)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0790 (CMS-R-244).
    Section 460.112 currently includes the specific rights to which 
PACE participants are entitled. As discussed in section VI.J. of this 
proposed rule, we are proposing to add new participant rights and 
modify existing participant rights to enhance participant protections. 
Specifically, we are proposing to add and/or modify the rights to 
appropriate and timely treatment; to be fully informed, in writing, of 
different treatment options including palliative, comfort, and end-of-
life care; to fully understand the PACE organization's palliative, 
comfort, and end-of-life care services; and to request services from 
the PACE organization through the process described in Sec.  460.121. 
PACE organizations are currently required to provide a copy of the 
participant rights listed in Sec.  460.112 to participants at the time 
of enrollment, and to post a copy of the rights in the PACE center. If 
our proposed changes to Sec.  460.112 are finalized, PACE organizations 
would be required to revise the materials they provide to participants 
at the time of enrollment and the posting in the PACE center to account 
for the new and modified requirements. Therefore, we estimate a one-
time burden for PACE organizations to update the participant rights 
included in the enrollment information and post the new participant 
rights in PACE centers. We believe it would take a compliance officer 2 
hours at $72.90/hr to update these materials.
    The PACE organizations would also be required under this proposal 
to develop written templates explaining palliative care, comfort care, 
and end-of-life care services. We believe the development of these 
materials is a one-time burden and would take a compliance officer 2 
hours to complete at $72.90/hr.
    In aggregate, we estimate a one-time burden of 596 hours (149 PACE 
organizations * (2 hrs + 2 hrs)) at a cost of $43,448 (596 hrs * 
$72.90/hr).
    We also estimate this provision would result in increased ongoing 
costs to PACE organizations. As discussed in section VI.J. of this 
proposed rule, we are proposing to require PACE organizations to 
provide participants with written documentation explaining the 
different treatment options including palliative, comfort, and end-of-
life care services. Specifically, we are proposing to require PACE 
organizations to describe their palliative care, comfort care, and end-
of-life care services and how they differ from the care the participant 
is currently receiving; whether these treatment options will be 
provided in addition to or in lieu of the care the participant is 
currently receiving; a detailed description of all services that will 
be impacted and how they will be impacted if the participant and/or 
designated representative elects to initiate a different treatment 
option; and that the participant has the right to revoke or withdraw 
their consent to receive these treatment options at any time and for 
any reason.
    We estimate that a registered nurse (RN) will need to tailor 
written templates for each participant based on the treatment option 
they choose and the impact that treatment option will have on their 
current services. We estimate it would take the RN 1 hour to tailor the 
written template to each participant at $79.56/hr. We also estimate the 
Master's-level Social Worker (MSW) would either provide the materials 
in person to the participant and/or their designated representative or 
they would mail the materials to the participant. We estimate it would 
take the MSW 10 minutes (0.1667 hr) to mail or present the materials to 
each participant at $59.92/hr.
    We are also proposing that PACE organizations must explain the 
treatment options to participants and/or their designated 
representatives before palliative care, comfort care, or end-of-life 
care services can be initiated. This includes fully explaining the 
treatment options, providing the participant and/or designated 
representative with the written materials discussed previously, and 
obtaining written consent from the participant and/or designated 
representative. We estimate it would take the MSW 1 hour at $59.92/hr 
to explain the services and answer any questions the participant and/or 
designated representative might have.
    To estimate the increased burden, we use the following assumptions 
about the number of participants who may pursue palliative care, 
comfort care, and/or end-of-life care services, based on our experience 
monitoring and auditing PACE organizations. We estimate that 2 out of 
every 10 participants in a given year (20 percent) will require written 
materials for palliative care, comfort care, or end-of-life care 
services. The total national enrollment in PACE as of

[[Page 79688]]

September 2022 was 54,637 \226\ with 149 active PACE organizations.
---------------------------------------------------------------------------

    \226\ This total was accurate as of September 20, 2022.
---------------------------------------------------------------------------

    For tailoring information within the written templates and 
providing written materials to participants as specified at proposed 
Sec.  460.112(c)(5), we estimate ongoing burden using the weighted 
hourly wage for the RN and MSW. The weighted average can be obtained as 
follows. The total cost per participant is $89.55/hr [(1 hr * $79.56/hr 
(RN)) + (0.1667 hr * $59.92/hr (MSW))]. The total time is 1.1667 hours 
(1 hr for the RN plus 0.1667 hr the MSW). Thus, the average hourly wage 
is $76.75/hr (total cost of $89.55/1.1667 hr).
    Using these assumptions, we estimate the ongoing burden for 
proposed requirements at Sec.  460.112(c)(5) would affect 10,927 
participants (20 percent of participants who are expected to need end-
of-life explanations * 54,637 participants). Therefore, to tailor and 
mail materials there is an annual burden of 12,749 hours (10,927 
affected participants * 1.1667 hr) at a cost of $978,486 (12,749 hr * 
$76.75/hr).
    We estimate an ongoing burden for PACE organizations' MSW to 
explain treatment options to participants as specified at Sec.  
460.112(e)(2) to be 10,927 hours ((54,637 participants * 20 percent 
participants who require materials) * 1 hr) at a cost of $ 654,746 
(10,927 hr to discuss treatment options * $59.92/hr).
    In aggregate, we estimate a one-time burden of 596 hours (149 PACE 
organizations * (2 hrs + 2 hrs)) at a cost of $43,448 (596 hr * $72.90/
hr) and an annual ongoing burden of 23,676 hours (12,749 hrs + 10,927 
hrs) at a cost of $1,633,232 ($978,486 + $654,746).
21. ICRs Regarding PACE Grievance Process (Sec.  460.120)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0790 (CMS-R-244).
    Section 460.120 currently includes the grievance process PACE 
organizations are required to follow. As discussed in section VI.K. of 
this proposed rule, PACE organizations are already required to develop 
procedures on processing grievances, and provide notification of the 
grievance process to participants upon enrollment and at least 
annually; however, our proposed changes would require the PACE 
organization to update those procedures. Additionally, we are proposing 
that written or oral notification must include such as a summary of the 
issues, a summary of the findings, the steps taken to investigate the 
grievance (if applicable), and the corrective actions taken (if 
applicable). Our proposal, which adds requirements on what must be 
included in grievance resolution notifications, would require the PACE 
organization to revise and update their notification templates. 
Therefore, we estimate a one-time burden for PACE organizations to 
update their materials to meet these new requirements. We do not 
believe the proposed changes to Sec.  460.120 will impact the annual 
hours of burden for PACE organizations, because they are already 
required provide notification of grievance resolutions to participants, 
and may opt to do so orally or in writing. Therefore, we believe that 
the ongoing burden will not change with this proposal.
    For the one-time burden for updating policies and procedures, we 
estimate that it would take the compliance officer 2 hours to update 
these materials at $72.90/hr. For the revised notification of the 
grievance process, that is provided both upon enrollment and at least 
annually, we estimate it would take the compliance officer 1 hour to 
revise these notifications at $72.90/hr. For the written grievance 
resolution notification, we estimate it will take the compliance 
officer 1 hour to revise the written resolution notification at $72.90/
hr.
    In aggregate, we estimate it would take PACE organizations 596 
hours [149 PACE organizations * (2 hrs + 1 hr + 1 hr)] at a cost of 
$43,448 (596 hrs * $72.90/hr).
22. ICRs Regarding the PACE Service Determination Process (Sec.  
460.121)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0790 (CMS-R-244).
    Section 460.121 currently includes the service determination 
process PACE organizations are required to follow and only allows PACE 
organizations to notify participants and/or their representatives of 
service determination extensions in writing. Per the burden estimate 
that is currently seeking OMB approval under the process (August 5, 
2022; 87 FR 48030), we estimate the burden of the current extension 
notification requirements at Sec.  460.121 to be 2,350 hours and 
$140,812 in aggregate. As discussed in section VI.L. of this proposed 
rule, we are proposing to allow PACE organizations to notify the 
participant or their designated representative either orally or in 
writing when the PACE organization extends the timeframe for making a 
service determination. Under this proposal, we expect that PACE 
organizations will prefer to provide oral notification more frequently 
than written notification, because oral notification is less time 
consuming. In anticipation of PACE organizations' preference for oral 
notification over written notification and the 45 minutes per response 
reduction in burden oral notification offers, we estimate that the 
proposed changes will reduce the burden of the extension notification 
requirements at Sec.  460.121.
    To estimate the decreased burden, we considered: (1) the annual 
number of extension notifications; (2) the estimated proportions of 
extension notifications that are provided orally or in writing; and (3) 
the estimated time required to complete oral and written notification.
    First, we reviewed extended service determination requests (SDRs) 
from 2019 through 2021 and found that there were 6,564 total extended 
SDRs nationally (3,942 in 2019 + 773 in 2020 + 1,849 in 2021). Then we 
averaged the number of extended SDRs from 2019-2021 to calculate 2,188 
extended SDRs annually (6,564 total extended SDRs/3 years), which is 
about 15 extended SDRs per PACE organization annually (2,188 extended 
SDRs annually/149 PACE organizations).
    Secondly, we estimate, based on our experience with audits of 
similar areas of PACE requirements where PACE organizations have an 
option of oral or written notification, that 80 percent of extension 
notifications will be provided orally, at 15 minutes per notification, 
and 20 percent will be provided in writing at 1 hour per notification. 
The hourly wage for notification by an MSW in both cases is $59.92/hr. 
In aggregate, the new burden would be 875 hours ((2,188 extension 
notifications * 0.2 written notifications * 1 hr) + (2,188 extension 
notifications * 0.8 oral notifications * 0.25 hr)) at a cost of $52,430 
(875 hrs * $59.92/hr).
    Thus, the aggregate annual time and cost savings for the proposed 
changes are minus 1,475 hours (2,350 hr under current provisions minus 
875 hr as documented in the pending OMB package) and minus $88,382 
($140,812 cost under current provisions minus $52,430 under the pending 
OMB package). Additionally, at the individual service determination 
request extension level, PACE organizations that choose to provide oral 
notification instead of written notification will save minus 0.75 hours 
and $44.94 per extension notification.

[[Page 79689]]

23. ICRs Regarding PACE Participant Notification Requirement for PACE 
Organizations With Past Performance Issues or Compliance Deficiencies 
(Sec.  460.198)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0790 (CMS-R-244).
    In this proposed rule, CMS proposes to add a new provision, Sec.  
460.198, which would give CMS the authority to, at its discretion, 
require a PACE organization to disclose to its PACE participants or 
potential PACE participants, the PACE organization's performance and 
contract compliance deficiencies in a manner specified by CMS. The 
purpose of this proposal is to enable CMS to better protect PACE 
participants by ensuring that PACE participants and their caregivers 
have adequate information to make informed decisions regarding the PACE 
organization.
    The overall PACE organization burden of this requirement is 
expected to be minimal. In the past, CMS has only required 
organizations to send these notices to enrollees when CMS sanctioned 
the organization, which is an extremely rare occurrence. Regarding PACE 
organizations, between CY 2019 and 2021, CMS sanctioned a total of 3 
PACE organizations for an average of 1 per year. As a result, CMS 
projects that between one and two PACE organizations per year would be 
required to notify participants and potential participants of their 
performance and contract compliance deficiencies. In addition, CMS 
would provide the PACE organization with a template of what to include 
in the notice, and organizations have the capability to send notices to 
participants. Therefore, we estimate a burden for PACE Organizations to 
complete and send the template to participants and potential 
participants.
    For the annual burden for completing the template and sending it to 
participants and potential participants, we estimate that it would take 
the compliance officer at the PACE organization 1 hour to complete and 
send out the template (which would be automated) at $72.90 per hour. In 
aggregate, we estimate it would take PACE organizations 2 hours (2 PACE 
organizations * (1 hr) at a cost of $146 (2 hrs * $72.90/hr).
24. ICRs Regarding Safeguarding Data and Records and Medical Record 
Requirements (Sec. Sec.  460.200 and 460.210)
    PACE organizations are currently required to retain original 
communications related to a participant's care, health, or safety in 
the medical record. In this proposal, we are removing the requirement 
that these communications be stored in the participant's medical 
record, provided certain conditions are met. Therefore, our burden 
estimates include costs incurred related to staff (1) training; (2) 
software development; (3) file cabinets for document storage; and (4) 
updating/maintaining the organizations' policies and procedures.
     Training: We estimate that a PACE organization will spend 
40 hours at a cost of $2,916 (40 hr x $72.90/hr) for a compliance 
specialist to establish training materials. In aggregate, we estimate a 
one-time burden of 5,960 hours (40 hours x 149 POs) at a cost of 
$434,484 (5,800 hr. x $72.90/hr).
     Software development: We estimate that PACE organizations 
will spend 40 hours at a cost of $4,654 (40 hours x $116.34/hr) for a 
software developer to make the appropriate software updates. In 
aggregate, we estimate a one-time burden of 5,960 hours (40 hours x 149 
POs) at a cost of $693,386 (5,960 hr. x $116.34/hr).
     Storage: We estimate that a PACE organization will spend a 
total of $300 (2 x $150/each) for 2 four-drawer locking file cabinets. 
In aggregate, we estimate a one-time non-labor cost of $44,700 ($300 x 
149 POs).
     Update policies and procedures: We estimate that PACE 
organizations will spend 10 hours at a cost of $729 (10 hours x $72.90/
hr) for a compliance specialist to update and maintain related policies 
and procedures. In aggregate, we estimate a one-time burden of 1,490 
hours (10 hours x 149 POs) at a cost of $108,621 (1,490 hr. x $72.90/
hr).
    The aggregate of this provision is a one-time impact of 13,410 
hours (5960 hours (training materials) + 5960 hours (software 
development) + 1490 hours (policy updates) at a cost of $1,282,191 
($434,484 (Training materials) + $693,386 (software updates) + $44,700 
(nonlabor purchase of storage) + $108,621 (policy updates).)
    Since PACE organizations are already required to retain original 
communications related to a participant's care, health, or safety, and 
to make these communications accessible to CMS and the SAA upon 
request, this proposal does not impose any new information collection 
requirements for PACE organizations.
25. ICRs Regarding Expanding Eligibility for Low-Income Subsidies Under 
Part D of the Medicare Program (Sec. Sec.  423.773 and 423.780)
    In this rule we are proposing to revise the Part D LIS income and 
resource standards at Sec.  423.773 to expand eligibility for the full 
benefit to individuals who currently have the partial benefit and make 
a coordinating change in Sec.  423.780. This proposal would change the 
level of assistance that an individual could qualify for in paying 
their Part D premiums, copays and deductibles. While there would be no 
change in the number of individuals eligible for the Part D LIS, it 
would create a transition of people from partial subsidy status to full 
benefit status.
    The burden associated with determining eligibility for the Part D 
LIS is the time and effort for States or SSA to verify the income and 
resources and report eligibility to beneficiaries and CMS annually. 
Most individuals qualify for the Part D LIS because they qualify for 
Medicaid or other assistance in their State. The burden for States to 
determine and report eligibility is currently approved by OMB under 
control number 0938-0467 (CMS-R-74) at 54 respondents, 3,241 annual 
responses, a variable amount of time per response, and 1,082 estimated 
annual hours. We are not making any changes to any of the requirements 
or burden under the 0938-0467 control number.

C. Summary of Information Collection Requirements and Associated Burden 
Estimates

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BILLING CODE 4120-01-C

D. Submission of PRA-Related Comments

    We have submitted a copy of this proposed rule to OMB for its 
review of the rule's information collection requirements. The 
requirements are not effective until they have been approved by OMB.
    To obtain copies of the supporting statement and any related forms 
for the proposed collections discussed above, please visit the CMS 
website at www.cms.hhs.gov/PaperworkReductionActof1995, or call the 
Reports Clearance Office at 410-786-1326.
    We invite public comments on these potential information collection 
requirements. If you wish to comment, please submit your comments 
electronically as specified in the DATES and ADDRESSES section of this 
proposed rule and identify the rule (CMS-4201-P), the ICR's CFR 
citation, and OMB control number.

VIII. Regulatory Impact Analysis

A. Statement of Need

    The primary purpose of this proposed rule is to amend the 
regulations for the Medicare Advantage (Part C) and Medicare 
Prescription Drug Benefit (Part D) programs, and Programs of All-
Inclusive Care for the Elderly (PACE). This proposed rule includes a 
number of new policies that would improve these programs for Contract 
Year 2024 as well as codify existing Part C and Part D sub-regulatory 
guidance.
    The Parts C and D programs:
     The Bipartisan Budget Act (BBA) of 2018;
     The Consolidated Appropriations Act, 2021 (CAA);
     The Substance Use-Disorder Prevention that Promotes Opioid 
Recovery and Treatment (SUPPORT) for Patients and Communities Act; and
     The Inflation Reduction Act of 2022 (IRA).

B. Overall Impact

    We examined the impact of this proposed rule as required by 
Executive Order 12866 on Regulatory Planning and Review (September 30, 
1993), Executive Order 13563 on Improving Regulation and Regulatory 
Review (January 18, 2011), the Regulatory Flexibility Act (RFA) 
(September 19, 1980, Pub. L. 96-354), 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. 804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Section 
3(f) of Executive Order 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule: (1) having an 
annual effect on the economy of $100 million or more in any 1 year, or 
adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local or Tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.
    This rule, under Executive Order 12866, is economically significant 
as it results in over $100 million in costs, benefits, or transfers 
annually. In accordance with the Congressional Review Act (5 U.S.C. 801 
et seq.), the Office of Information and Regulatory Affairs has 
designated this rule as a major rule as defined by 5 U.S.C. 804(2). 
Accordingly, we have prepared a Regulatory Impact Analysis that to the 
best of our ability presents the costs and benefits of the rulemaking.
    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 2022, that threshold is approximately $165 
million. This proposed rule is not anticipated to have an unfunded 
effect on State, local, or Tribal governments, in the aggregate, or on 
the private sector of $165 million or more.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule that imposes 
substantial direct requirement costs on State and local governments, 
preempts State law, or otherwise has federalism implications. Since 
this proposed rule does not impose any substantial costs on State or 
local governments, 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 proposed 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 PBMs). 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 
proposed rule is $115.22 per hour, including fringe benefits, overhead, 
and other indirect 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 proposed rule. 
For each entity that reviews the rule, the estimated cost is therefore 
$2,200 (19 hours x $115.22). Therefore, we estimate that the maximum 
total cost of reviewing this proposed rule is $ 5.3 million ($2200 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 $ 0.5 million.
    Note that this analysis assumes 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 proposed rule.
    In accordance with the provisions of Executive Order 12866, this 
proposed rule was reviewed by OMB.

[[Page 79695]]

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.
    A wide range of policies are being proposed in this rule. These 
policies codify, modify, and update current guidance governing MA 
organization bid requirements.
    This rule has several affected stakeholders. They include: (1) MA 
organizations such as HMOs, local and regional PPOs, MSAs, PFFS and 
Part D sponsors; (2) providers, including institutional providers, 
outpatient providers, clinical laboratories, and 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. Several Medicare Advantage plans (about 30-40 
percent) are not-for-profit resulting in a ``small entity'' status.
     Ambulatory Health Care Services, NAICS 621, including 
about 2 dozen subspecialties, 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 FC does not have a significant economic 
impact on a substantial number of small entities. To explain our 
position, we explain certain operational aspects of the Medicare 
program.
    Each year, MA plans submit a bid for furnishing Part A and B 
benefits and the entire bid amount is paid by the government to the 
plan if the plan's bid is below an administratively set benchmark. If 
the plan's bid exceeds that benchmark, the beneficiary pays the 
difference in the form of a basic premium (note that a small percentage 
of plans bid above the benchmark, whereby enrollees pay basic premium, 
thus this percentage of plans is not ``significant'' as defined by the 
RFA and as justified in this section of this rule).
    MA plans can also offer enhanced benefits, that is, benefits not 
covered under Original Medicare. These enhanced benefits are paid for 
through enrollee premiums, extra government payments or a combination. 
Under the statutory payment formula, if the bid submitted by a Medicare 
Advantage plan for furnishing Part A and B benefits is lower than the 
administratively set benchmark, the government pays a portion of the 
difference to the plan in the form of a rebate. The rebate must be used 
to provide supplemental benefits (that is. benefits not covered under 
Original Medicare) and or/lower beneficiary Part B or Part D premiums. 
Some examples of these supplemental benefits include vision, dental, 
and hearing, fitness and worldwide coverage of emergency and urgently 
needed services.
    To the extent that the government's payments to plans for the bid 
plus the rebate exceeds costs in Original Medicare, those additional 
payments put upward pressure on the Part B premium which is paid by all 
Medicare beneficiaries, including those in Original Medicare who do not 
have the additional health services available in many MA plans.
    Part D plans, including MA-PD plans,submit bids and those amounts 
are paid to plans through a combination Medicare funds and beneficiary 
premiums. In addition, for enrolled low-income beneficiaries Part D 
plans receive special government payments to cover most of premium and 
cost sharing amounts those beneficiaries would otherwise pay.
    Thus, the cost of providing services by these insurers is funded by 
a variety of government fundingand in some cases by enrollee premiums. 
As a result, MA and Part D plans are not expected to incur burden or 
losses since the private companies' costs are being supported by the 
government and enrolled beneficiaries. This lack of expected burden 
applies to both large and small health plans.
    Small entities that must comply with MA regulations, such as those 
in this proposed rule, are expected to include the costs of compliance 
in their bids, thus avoiding additional burden, since the cost of 
complying with any final rule is funded by payments from the government 
and, if applicable, enrollee premiums.
    For Direct Health and Medical Insurance Carriers, NAICS 524114, 
plans estimate their costs for the upcoming 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.
    If an MA plan bids above the benchmark, section 1854 of the Act 
requires the MA plan to charge enrollees a premium for that amount. 
Historically, only 2 percent of plans bid above the benchmark, and they 
contain roughly 1 percent of all plan enrollees. The CMS threshold for 
what constitutes a substantial number of small entities for purposes of 
the RFA is 3 to 5 percent. Since the number of plans bidding above the 
benchmark is 2 percent, this is not considered substantial for purposes 
of the RFA.
    The preceding analysis shows that meeting the direct cost of this 
proposed 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 for the 
coming year are fully paid by the Federal Government. However, the 
government additionally 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 or other 
supplemental benefits, or to lower the Part B or Part D premiums for 
enrollees. (Supplemental benefits may also partially be paid by 
enrollee premiums.) However, as noted previously, the number of plans 
bidding above the benchmark to whom this

[[Page 79696]]

burden applies do not meet the RFA criteria of a significant number of 
plans.
    It is possible that if the provisions of this rule would otherwise 
cause bids to increase, plans will reduce their profit margins, rather 
than substantially change their benefit package. This may be in part 
due to market forces; a plan lowering supplemental benefits even for 1 
year may lose its enrollees to competing plans that offer these 
supplemental benefits. Thus, it can be advantageous to the plan to 
temporarily reduce profit margins, rather than reduce supplemental 
benefits.
    We note that we do not have definitive data on this. Plans do not 
report to CMS the strategies behind their bids. 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. Notably, it may be inappropriate to consider the relevant 
regulatory impacts (and thus the profit considerations) as temporary 
because the issuance of a series of regulations sustains the 
effects.\227\ As a result, changes in benefits packages may be 
plausible and we request comment on the assessment of this outcome in 
association with this proposed rule.
---------------------------------------------------------------------------

    \227\ Indeed, see similar discussion in previous regulatory 
impact analyses: https://www.federalregister.gov/documents/2022/05/09/2022-09375/medicare-program-contract-year-2023-policy-and-technical-changes-to-the-medicare-advantage-and and https://www.federalregister.gov/documents/2022/04/14/2022-07642/medicare-program-maximum-out-of-pocket-moop-limits-and-service-category-cost-sharing-standards.
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    We next examine in detail each of the other stakeholders and 
explain how they can bear cost. Each of the following are providers 
(inpatient, outpatient, or pharmacy) that furnish plan-covered services 
to plan enrollees for: (1) Pharmacies and Drug Stores, NAICS 446110; 
(2) 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) Hospitals, 
NAICS 622, including General Medical and Surgical Hospitals, 
Psychiatric and Substance Abuse Hospitals, and Specialty Hospitals; and 
(4) SNFs, NAICS 623110. Whether these providers are contracted or, in 
the case of PPOs and PFFS, 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. CMS is prohibited from requiring MA plans to 
contract with a particular healthcare provider or to use a particular 
price structure for payment under the plan by section 
1854(a)(6)(B)(iii) of the Act. Consequently, for these providers, there 
is no additional cost burden above the already existing burden in 
original Medicare.
    Consequently, consistent with our conclusions stated earlier, the 
Secretary has certified that this proposed rule will not have a 
significant impact on a substantial number of small entities.

D. Anticipated Effects

    Many provisions of this proposed rule have negligible impact either 
because they are technical provisions or are provisions that codify 
existing guidance. Other provisions have an impact that 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 qualitative impact that cannot be 
quantified. The remaining provisions are estimated in section VIII of 
this proposed 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 proposed 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 12 and the 
discussion afterwards.
1. Transitional Coverage and Retroactive Medicare Part D Coverage for 
Certain Low-Income Beneficiaries Through the LI NET Program (Sec.  
423.2500 Through Sec.  423.2536)
    This proposal would implement section 118 of the CAA, which amends 
section 1860D-14 of the Act, to establish the Limited Income Newly 
Eligible Transition Program as a permanent part of Medicare Part D. 
This will ensure that the transitional drug coverage currently provided 
to low-income Medicare beneficiaries under the LI NET demonstration 
will continue indefinitely. Therefore, we anticipate this proposal will 
advance health equity by improving low income individuals' access to 
continuous, affordable health coverage, consistent with Executive Order 
13985, issued January 20, 2021, on Advancing Racial Equity and Support 
for Underserved Communities Through the Federal Government. We also 
believe this proposal would improve the customer service experience of 
low-income beneficiaries consistent with the goals of the Executive 
Order 14058, Transforming Federal Customer Experience and Service 
Delivery to Rebuild Trust in Government.
    Using drug cost data from 2021, the CMS Office of the Actuary 
(OACT) projects the following program costs (in millions of dollars) 
over the next 10 years:
[GRAPHIC] [TIFF OMITTED] TP27DE22.024


[[Page 79697]]


    We note that OACT has provided cost/savings estimates each year 
under the LI NET demonstration, and they have not altered their 
methodology based on the program becoming permanent. Therefore, these 
projected costs are the same as what the government would have incurred 
if the demonstration continued. Further, the costs of the payments 
provided for under this program will continue, as they were under the 
demonstration, to be covered through the Medicare Prescription Drug 
Account within the Federal Supplementary Medical Insurance (SMI) Trust 
Fund.
2. Review of Medical Necessity Decisions by a Physician or Other Health 
Care Professional With Expertise in the Field of Medicine Appropriate 
to the Requested Service (Sec. Sec.  422.566 and 422.629)
    The proposal that a physician or other health professional with 
expertise in the field of medicine appropriate to the requested service 
determine medical necessity is intended to provide a more meaningful 
clinical review informed by specific expertise. We believe this 
enhanced level of review will reduce unnecessary appeals, delays in 
treatment and the potential for adverse outcomes. The proposal requires 
obtaining the opinion of an appropriate expert at the organization 
determination level of review, which we believe will reduce denied 
organization determinations and, in turn, will reduce the number of 
cases getting into the appeals process.
    While we can (and have) quantified the expected reduced appeals in 
the Collection of Information section, quantifying the costs of effects 
of delay in treatment and consequent possible adverse medical 
complications is not possible because we lack adequate data. For 
example, we lack data on the following: (1) currently how often do 
doctors without expertise determine medical necessity; (2) what 
percentage of these determinations are appealed and what percentage of 
these appeals are overturned; (3) of the overturned appeals what 
percentage of cases have medical complications specifically arising 
from delays; (4) of the upheld appeals what percentage have adverse 
medical complications directly attributable to the lack of original 
treatment; and (5) what is the average cost of these consequent adverse 
medical complications. In addition to requesting comment related to 
estimation of these listed effects, regarding the opportunity cost of 
medical experts' time when reallocated for the purpose of compliance 
with this provision, we welcome feedback related to whether this is a 
budget neutral reallocation, or whether a more detailed analysis would 
show added cost.
3. Updating Translation Standards for Required Materials and Content 
(Sec. Sec.  422.2267 and 423.2267)
a. Standing Request for Translated Materials and Materials in 
Accessible Formats Using Auxiliary Aids and Services
    We are proposing to specify in Medicare regulations that MA 
organizations, cost plans, and Part D sponsors must provide materials 
to enrollees on a standing basis in an accessible format using 
auxiliary aids and services or any non-English languages that is the 
primary language of at least 5 percent of the individuals in a plan 
benefit package service area upon receiving a request for the materials 
or otherwise learning of the enrollee's preferred language. The 
proposal would also extend to individualized plans of care for special 
needs plans.
    Our proposed rule clarifies existing policy, therefore the impact 
to MA organizations, cost plans, and Part D plan sponsors depends on 
whether, and to what extent, they currently have processes in place to 
note an enrollee's language preference and need for auxiliary aids and 
services. As described in this section of this proposed rule, we 
believe many plans would not incur significant cost from the proposed 
requirement because plans currently comply with the proposal.
    Enrollees who need translated materials or materials in an 
accessible format using auxiliary aids and services who are enrolled in 
MA, cost, or Part D plans that do not currently create a standing 
request for these materials would likely spend less time contacting 
their plan to request these materials as a result of this proposal. Any 
MA, cost, or Part D plan that has not created a standing request for 
enrollees requiring translated materials or materials in an accessible 
format using auxiliary aids and services would likely reduce their 
efforts to accept requests and resend the translated materials or 
materials in an accessible format using auxiliary aids and services.
    CMS received information from Medicare-Medicaid Plans (MMPs) in 
Ohio and California about their requests for translated materials in 
2021 and 2022. We include our assumptions from these discussions, but 
we are seeking comment on additional information that may better inform 
our estimates. Of the five MMPs in Ohio in 2021, only one of the plans 
accepted standing requests for translated materials or materials in an 
accessible format using auxiliary aids and services. A higher 
proportion (86 percent) of seven California MMPs that responded had 
established standing requests due to State oversight ensuring 
California MMPs followed the State-specific marketing guidance; 
however, we believe the Ohio MMPs landscape betters represents MA 
organizations as a whole. Therefore, we estimate that 20 percent or 171 
\228\ MA organization, cost plan, and Part D plan sponsor contracts are 
currently accepting standing requests and would not be impacted by this 
proposal. Therefore, an estimated 80 percent or 683 MA organization, 
cost plan, and Part D plan sponsor contracts would need to implement 
this proposed requirement. We believe our analysis of MMP plans, which 
cover Part C and Part D benefits, also applies to MA organization, cost 
plan, and Part D plan sponsors. We request comment on whether MA 
organization, cost plan, and Part D plan sponsors accept standing 
requests for translated materials or materials in an accessible format 
using auxiliary aids and services at a greater or lesser extent than 
MMPs.
---------------------------------------------------------------------------

    \228\ Based on 854 MA, cost, and Part D plan sponsor contracts 
in the May 2022 Monthly Contract and Enrollment Summary Report. 
Retrieved from https://www.cms.gov/research-statistics-data-and-systemsstatistics-trends-and-reportsmcradvpartdenroldatamonthly/contract-summary-2022-05.
---------------------------------------------------------------------------

    Based on the information we received from MMPs, we are uncertain if 
establishing a standing request for translated material or materials in 
an accessible format using auxiliary aids and services will increase or 
decrease administrative cost for the estimated 683 MA organization, 
cost plan, and Part D plan sponsor contracts impacted by our proposal. 
Based on information from MMPs who have implemented a standing request, 
we believe establishing a process for standing requests would require 
about 200 hours of business operations specialist \229\ time during the 
first year or 136,600 hours (200 hr * 683 MA, cost, and Part D 
contracts) at a cost of $10,408,920 (136,600 hr x $76.20/hr wage for a 
business operations specialist).
---------------------------------------------------------------------------

    \229\ Based on the BLS wage information for business operations 
specialist (code 13-1199) whose wage we estimate at $76.20 per hour, 
including fringe benefits and overhead costs (http://www.bls.gov/oes/current/oes_nat.htm).
---------------------------------------------------------------------------

    We assume that this initial cost would be offset by a reduction 
cost for MA organizations, cost plans, and Part D plan sponsors to 
resend materials in the correct translated or accessible format. We 
also expect that implementing a standing request process would reduce

[[Page 79698]]

future costs to MA organizations, cost plans, and Part D sponsors by 
decreasing rework of sending two sets of information, one in the 
incorrect language or format and the other in the correct format. 
However, establishing a standing request for translated material or 
materials in an accessible format using auxiliary aids and services as 
proposed could result in more enrollees requesting to consistently 
receive these materials at an additional cost to MA organizations, cost 
plans, and Part D plan sponsors. We request comment on our assumptions 
and the potential savings or costs to MA organizations, cost plans, and 
Part D plan sponsors.
b. Require FIDE SNPs and HIDE SNPs and Applicable Integrated Plans To 
Translate Materials Into the Medicare Translation Standard Plus 
Additional Medicaid Languages
    We are proposing to require that FIDE SNPs, HIDE SNPs and AIPs 
translate materials into any languages required by the Medicare 
translation standard plus any additional languages required by the 
Medicaid translation standard as specified through their Medicaid 
capitated contracts.
    Our proposed rule slightly modifies existing policy, so the impact 
to FIDE SNPs, HIDE SNPs, and AIPs depends upon whether, and to what 
extent, these plans are already translating materials in ways that 
would meet our proposed requirements. We note that translation 
requirements vary by State. Therefore, we expect no impact in States 
where the applicable Medicaid and Medicaid translation requirements 
result in the same outcome. We expect marginal impacts where State 
requirements result in translation into languages not required by the 
current MA rules at Sec. Sec.  422.2267(a)(2) and 423.2267(a)(2). 
However, even in these States, FIDE SNPs, HIDE SNPs, AIPs (in 
combination with their affiliated Medicaid managed care plans) have 
translators on staff or access them via contractors because of existing 
translation requirements.
    For contract year 2022, MA organizations sponsor 292 FIDE SNPs, 
HIDE SNPs, and AIPs. We expect that some portion of these FIDE SNPs, 
HIDE SNPs, and AIPs already translate their Medicare materials in ways 
that meet our proposed requirement, but we do not have good estimate of 
how many. While HPMS identifies the Medicare translation requirements 
for each MA and Part D plan sponsor at the plan level, we do not have a 
good source of the State-specific Medicaid translation requirements 
since they differ by State and there is no one source of information 
outlining these requirements. For purposes of this analysis, we 
estimate that 75 percent of the FIDE SNPs, HIDE SNPs, and AIPs 
currently translate their Medicare materials in ways that would meet 
our proposed requirement and 25 percent or 73 of these FIDE SNPs, HIDE 
SNPs, and AIPs do not.
    Section 422.2267(e) requires MA plans to provide 29 materials to 
current and prospective MA plan enrollees, as applicable and Sec.  
423.2267(e) requires Part D sponsors to provide an additional 18 
materials to current and prospective enrollees for a total of 47 
materials. We estimate that the proposed provision would require 73 
FIDE SNPs, HIDE SNPs, and AIPs to translate 47 materials into one 
additional language. On average, we expect these plans to translate 
materials into one additional language based on our experience with 
MMPs where, out of nine states, only two states (California and Rhode 
Island) required translation of materials into additional languages 
beyond the Medicare translation standard. California required MMPs to 
translate materials into nine additional languages in certain counties 
and Rhode Island required MMPs to translate materials into two 
additional languages. Collectively, these 47 materials include an 
estimated 253,311 words.\230\ At a cost of $56.16/hr,\231\ we estimate 
a translator could translate 500 words/hr.\232\ The aggregate cost is 
$2,076,988, which is the product of the following:
---------------------------------------------------------------------------

    \230\ Extrapolated based on data from CMS-4144-F (76 CFR 21549) 
that estimated 91,623 words for translation of approximately 17 plan 
materials.
    \231\ Mean hourly wage for interpreters and translators, May 
2021 retrieved from: https://www.bls.gov/oes/current/oes273091.htm 
The mean rate of $28.08 was doubled to include fringe benefits and 
overwork time.
    \232\ Translation rates vary widely and also depend on the 
technical nature of what is translated as well as whether adequate 
review time is included. The consensus of multiple websoures i) 
https://www.proz.com/forum/money_matters/300163-words_per_hour.html 
ii) https://www.pactranz.com/translation-times/ iii) https://www.getblend.com/blog/output-words-per-day/ iv) https://www.trainingfortranslators.com/2011/01/20/webinar-question-how-many-words-per-day/ provides ranges from 200 words/hour to 1000 words per 
hour. We have selected 500 as a reasonable average and invite 
stakeholder feedback on the reasonableness of this assumption.
---------------------------------------------------------------------------

     253,311 words for one set of 47 materials.
     500 words translated per hour.
     73 FIDE SNPs.
     $56.16/hr wage.
    Translating one set of 47 materials into one other language would 
cost an estimated $28,452 (253,311 words/500 words/hr x $28.08/hr x 2 
for (100 percent for fringe benefits)). Based on these assumptions, it 
would cost $2,076,996 for 73 FIDE SNPs, HIDE SNPs, and AIPs to 
translate one set of materials into one other language. Any additional 
documents needing translation would be a one-time cost with a smaller 
cost to update the documents in future contract years.
4. Part D Medication Therapy Management (MTM) Program Targeting 
Requirements (Sec.  423.153)
    We are proposing to revise Sec.  423.153(d)(2) to: (1) codify the 
current 9 core chronic diseases in regulation, and add HIV/AIDS to the 
list of core chronic diseases for a total of 10 core chronic diseases 
and require Part D sponsors to include all core chronic diseases in 
their MTM targeting criteria; (2) lower the maximum number of Part D 
drugs a Part D sponsor may require from 8 to 5 drugs and require 
sponsors to include all Part D maintenance drugs in their targeting 
criteria; and (3) change the annual cost threshold methodology to be 
commensurate with the average annual cost of 5 generic drugs ($1,004 in 
2020). We estimate that these proposals would increase the number of 
Part D beneficiaries eligible for MTM services.
    These proposed changes would allow us to address specific problems 
identified in the Part D MTM program by improving access to MTM 
services for enrollees with multiple chronic conditions who are taking 
multiple Part D drugs, reducing marked variability in MTM eligibility 
across plans, better aligning with Congressional intent to improve 
medication use and reduce the risk of adverse events by focusing more 
on case complexity and drug regimen, and establishing a more reasonable 
cost threshold that would keep the MTM program size manageable. Almost 
all of the chronic diseases that CMS is proposing to codify as core 
chronic diseases are more prevalent among underserved populations, 
including minority and lower income populations. As a result, we 
anticipate that our proposed changes will increase eligibility rates 
among those populations, promoting consistent, equitable, and expanded 
access to MTM services.
    We estimate that these proposals would increase the number and 
percentage of Part D enrollees eligible for MTM services from 4.5 
million (9 percent) to 11.4 million (23 percent). Although the increase 
in MTM program enrollment is estimated to cost $336,121,888 for the 
provision of required MTM services, we cannot definitively score this 
proposal because there may be other administrative costs attributable 
to MTM, and MTM program costs are not a specific line item that can

[[Page 79699]]

be easily extracted from the bid. Additionally, published studies have 
found that MTM services may generate overall medical savings, for 
example, through reduced adverse outcomes including reduced 
hospitalizations and readmissions, outpatient encounters, or nursing 
home admissions.\233\ CMS is unable to generate reliable savings 
estimates from the published studies due to limitations in potential 
study design, including the lack of a control group and numerous 
intervening variables. The burden associated with these proposed 
changes is addressed in the Collection of Information section (section 
VII.) of this proposed rule in the ICR section for MTM targeting 
criteria.
---------------------------------------------------------------------------

    \233\ Ramalho de Olivera, D; Brummel, A; Miller, D. Medication 
Therapy Management: 10 Years of Experience in a Large Integrated 
Health Care System J Manag Care Pharm. 2010;16(3):185-95.
---------------------------------------------------------------------------

5. Medicare Parts A, B, C, and D Overpayment Provisions of the 
Affordable Care Act (Sec. Sec.  401.305(a)(2), 422.326(c), and 
423.360(c))
    The proposed regulatory provisions would amend the existing 
regulations at Sec. Sec.  401.305(a)(2), 422.326(c), and 423.360(c) to 
change the standard for an ``identified overpayment'' for Medicare 
Parts A, B, C, and D by adopting and codifying, by reference, the 
knowledge standard set forth in the False Claims Act at 31 U.S.C. 
3729(b)(1). The regulations implementing section 1128J(d) (C/D final 
overpayment rule 79 FR 29844 (May 23, 2014) Sec. Sec.  422.326 and 
423.360, and A/B final overpayment rule 81 FR 7654 (February 12, 2016), 
Sec. Sec.  401.301, 401.303 and 401.305) proposed only technical 
changes for overpayment reporting.
    We now propose to amend the final Parts A & B Overpayment Rule at 
Sec.  401.305(a)(2) to remove the reference to ``reasonable diligence'' 
and replace it with language at section 1128J(d)(4)(A) of the Act that 
gives the terms ``knowing'' and ``knowingly'' the same meaning given 
those terms in the False Claims Act at 31 U.S.C. 3729(b)(1)(A). We do 
not have a basis for estimating the impact associated with this 
amendment. We solicit comment on the analysis and conclusions provided 
in the RIA.
    The provision at Sec.  422.326(c) was vacated by the United States 
District Court for the District of Columbia in 2018, and the District 
Court noted in its decision that ``(t)he False Claims Act--which the 
ACA refers to for enforcement, see 42 U.S.C. 1320a-7k(d)(3)--imposes 
liability for erroneous (`false') claims for payment submitted to the 
government that are submitted `knowingly . . . a term of art defined in 
the FCA to include false information about which a person `has actual 
knowledge,' `acts in deliberate ignorance of the truth or falsity of 
the information,' or `acts in reckless disregard of the truth or 
falsity of the information.' '' Id. at 190. This proposed rule proposes 
to codify this knowledge standard.
    Since we now propose to amend the final Parts C & D Overpayment 
Rule at Sec. Sec.  422.326(c) and 423.360(c), to remove the reference 
to ``reasonable diligence'' and replace it with language at section 
1128J(d)(4)(A) that gives the terms ``knowing'' and ``knowingly'' the 
same meaning given those terms in the False Claims Act at 31 U.S.C. 
3729(b)(1)(A), we do not have a basis for estimating the impact 
associated with this amendment. We solicit comment on the analysis and 
conclusions provided in the RIA.
6. Involuntary Disenrollment for Individuals Enrolled in an MA Medical 
Savings Account (MSA) Plan (Sec.  422.74)
    This rule requires involuntary disenrollment for individuals 
enrolled in an MA MSA plan. The requirement proposed at Sec. Sec.  
422.74(b)(2)(vi) and (d)(10) would establish a process for involuntary 
disenrollment for an individual who loses eligibility mid-year and, 
more specifically, the requirement for the MA organization to give the 
individual a written notice of the disenrollment with an explanation of 
why the MA organization is planning to disenroll the individual for 
disenrollment for any of the reasons other than death or loss of 
entitlement to Part A or Part B, or unlawful presence in the United 
States.
    This disenrollment triggers three events:
     CMS will no longer make prospective monthly payments to 
the MSA plan for this individual.
     Per Sec.  422.314(c), CMS will recover the remainder of 
the lump-sum deposited into the MSA enrollee's account. MSA enrollees 
receive a lump-sum deposited at the beginning of the calendar year or 
on the first month coverage begins in the plan (if the enrollee is 
entitled to Medicare in the middle of the year and he/she joins a 
Medicare MSA plan at that time). The funds deposited in the Medical 
Savings Account for health care expenses can be used to pay for the 
enrollee's health care before the high deductible is reached.
    If an MSA enrollee is disenrolled, mid-year, for the first of the 
month after no longer meeting the MSA eligibility criteria, CMS will 
recover the remaining whole months from the disenrolled beneficiary by 
offsetting any amount Medicare pays the plan for new enrollees in a 
month.
     Involuntarily disenrolled individuals would be defaulted 
to enrollment in Original Medicare, as proposed in Sec.  422.74(e)(1), 
which will now pay claims incurred by the former MSA enrollee. The 
former MSA enrollee also has the option to elect to join another MA 
plan during a valid enrollment period.
    To analyze these three effects, we note that the sum of the risk 
adjusted capitated payment and the contribution of the lump sum payment 
amount to the individual's medical savings account should equal the 
benchmark for payment by Medicare for MA coverage of a beneficiary. In 
other words, the three effects are largely cancelled out resulting in 
an insignificant impact to the Medicare Trust Funds. MA costs and FFS 
costs are somewhat different due to differences in between the two 
programs regarding provider contracting and coding intensity, as well 
as pricing for margin and profits. However, because the number of 
individuals who are involuntarily disenrolled from MA MSA plans is 
expected to be very small, the overall impact to the Medicare Trust 
Funds is insignificant.
7. Medicare Advantage/Part C and Part D Prescription Drug Plan Quality 
Rating System (Sec. Sec.  422.162, 422.164, 422.166, 422.260, 423.182, 
423.184, and 423.186)
    We are proposing to add, remove, and update certain measures and to 
make methodological clarifications (to codify current practice and 
policies) to the Part C and D Star Ratings program. These measure 
additions, removals, and updates and methodological clarifications are 
routine, and routine changes have historically had very little or no 
impact on the highest ratings (that is, overall rating for MA-PD 
contracts, Part C summary rating for MA-only contracts, and Part D 
summary rating for PDPs). Hence, we anticipate there will be no, or 
negligible, impact on the Medicare Trust Fund from these routine 
changes we are proposing in this rule. Beyond the Trust Fund, there may 
be effects on supplemental benefits, premiums, and plan profits. These 
impacts will likely vary significantly from plan to plan (or contract 
to contract) based on the business strategies and the competitive 
landscape for each plan and contract.
    We are also proposing some methodological enhancements to the Star 
Ratings as follows: replacing the current reward factor with an HEI 
reward, reducing the weight of patient experience/complaints and access 
measures, removing guardrails,

[[Page 79700]]

modifying the hold harmless policy used for the improvement measures, 
adding a rule for the sub-regulatory removal of Star Ratings measures 
when a measure steward other than CMS retires the measure, and removing 
the 60 percent rule that is applied when adjusting Star Ratings for 
extreme and uncontrollable circumstances (for example, natural 
disasters like hurricanes or public health emergencies). We anticipate 
that removing guardrails, removing the 60 percent rule, and adding a 
rule for subregulatory measure removal would each have a negligible 
impact on the highest ratings. Three of our proposed enhancements have 
the potential to cause a contract's Star Rating to change: (1) applying 
the improvement measure highest rating hold harmless provision only to 
5 star contracts instead of for those contracts with a rating of 4 or 
higher stars; (2) decreasing the weight of patient experience, 
complaints, and access measures from four to two; and (3) replacing the 
current reward factor with an HEI that would reward contracts for doing 
well serving enrollees with various social risk factors.
    We simulated the cumulative impact of the proposed changes on MA-PD 
contracts by contract size using the 2021 Star Ratings. Consistent with 
what we have observed historically, there is more enrollment in high 
performing contracts as seen in Table 14. All enrollment categories see 
a small decrease in the average overall rating ranging from -0.06 to -
0.15 under this simulation. The amount of the decrease in the overall 
rating increases as the enrollment size categories increase, with the 
proposed changes having a somewhat larger impact for higher rated 
contracts.
[GRAPHIC] [TIFF OMITTED] TP27DE22.025

    We also simulated the cumulative impact of the proposed changes to 
the overall rating by geographical area--specifically, by State, DC, 
and Puerto Rico. Since the service area of a contract can include 
multiple states, we assigned to each enrollee the rating of their MA 
contract and calculated the average rating across all enrollees 
residing in each State. The average change in the overall rating is a 
decrease of 0.17, with the changes ranging from 0.0 to -0.37 across 
geographic areas. Table 15 shows the simulated changes by State, DC, 
and Puerto Rico. The second column is the number of MA enrollees in 
each State in contracts that received the 2021 overall rating. In most 
cases, but not all, there are larger declines in areas that had on 
average higher 2021 overall ratings.
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[[Page 79702]]


[GRAPHIC] [TIFF OMITTED] TP27DE22.027

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    We calculated the cost impacts summarized in Tables 12 and 13 due 
to these proposed Star Ratings updates by quantifying the difference in 
the MA organization's final Star Rating with the proposed changes and 
without the proposed changes. We assume Medicare Trust Fund impacts due 
to the Star Ratings changes associated with these three proposed 
revisions to the methodology. The first two of these changes would be 
effective for the 2026 Star Ratings and would impact the 2027 plan 
payments and 2027 Quality Bonus Payments. The introduction of the HEI 
reward in lieu of the current reward factor would impact the 2027 Star 
Ratings and would impact the 2028 plan payments and 2028 Quality Bonus 
Payments.
    All impacts are considered transfers, but we request comment on the 
extent to which provision of goods or services would increase or 
decrease in association with the payment changes. The impact analysis 
for the Star Ratings updates takes into consideration the final quality 
ratings for those contracts that would have Star Ratings changes under 
this proposed rule. There are two ways that Star Ratings changes will 
impact the Medicare Trust Fund:
     A Star Rating of 4.0 or higher will result in a QBP for 
the MA contract, which, in turn, leads to a higher benchmark for the MA 
plans offered by the MA organization under that contract. MA 
organizations that achieve an overall Star Rating of at least 4.0 
qualify for a QBP that is capped at 5 percent (or 10 percent for 
certain counties).
     The rebate share of the savings will be higher for those 
MA organizations that achieve a higher Star Rating. The rebate share of 
savings amounts to 50 percent for plans with a rating of 3.0 or fewer 
stars, 65 percent for plans with a rating of 3.5 or 4.0 stars, and 70 
percent for plans with a rating of 4.5 or 5.0 stars.
    In order to estimate the impact of the Star Ratings updates, the 
Private Health Baseline assumptions are updated with the assumed Star 
Ratings changes described in this proposed rule. We first estimated the 
three proposed changes to the Star Ratings calculations as independent 
of each other and, since there are likely overall Star Rating 
interactions between the three changes, the impacts, as shown in Table 
16, should be viewed separately and should not be summed. The negative 
values in this section of this proposed rule represent net savings to 
the Medicare Trust Funds. For the improvement measure hold harmless 
provision, net savings are estimated to be between $2.08 billion in 
2027 and $3.52 billion in 2033, resulting in a ten year savings 
estimate of $19.53 billion, which equates to 0.3 percent of the Private 
Health Baseline for the years 2024 through 2033. The patient 
experience/complaints and access measure weight provision is expected 
to result in net savings of between $330 million in 2027 and $580 
million in 2033, resulting in a 10 year savings estimate of $3.28 
billion. This amount equates to 0.05 percent of the Private Health 
Baseline for 2024-2033. The replacement of the current reward factor 
with the HEI reward is expected to result in net savings of between 
$670 million in 2028 and $1,050 million in 2033 resulting in a 10-year 
savings estimate of $5.12 billion. $5.12 billion represents 0.08 
percent of the Private Health Baseline for the years 2024-2033. These 
projections are based on simulations using data from the 2020 and 2021 
Star Ratings.

[[Page 79703]]

[GRAPHIC] [TIFF OMITTED] TP27DE22.028

    We also estimated the cumulative impact of the proposed changes to 
the Star Ratings calculations since there are interactions between the 
changes. The impacts are showing in Table 17. The negative values 
represent net savings to the Medicare Trust Funds. For the Star Ratings 
updates, net savings are estimated to be between $2.41 billion in 2027 
and $4.57 billion in 2033, resulting in a 10-year savings estimate of $ 
24.97 billion, which equates to 0.37 percent of the Private Health 
Baseline for the years 2024 through 2033.
[GRAPHIC] [TIFF OMITTED] TP27DE22.029

8. Expanding Eligibility for Low-Income Subsidies Under Part D of the 
Medicare Program (Sec. Sec.  423.773 and 423.780)
    In this rule we are proposing to revise the Part D LIS income and 
resource standards at Sec.  423.773 to expand eligibility for the full 
benefit to individuals who currently have the partial benefit and make 
a coordinating change in Sec.  423.780. This proposal would change the 
level of assistance that an individual could qualify for in paying 
their Part D premiums, copays and deductibles. While there would be no 
change in the number of individuals

[[Page 79704]]

eligible for the Part D LIS, it would create a transition of people 
from partial subsidy status to full benefit status.
    The result of this change is the Federal Government providing more 
subsidies to low income Medicare beneficiaries for Part D coverage 
which would result in additional costs to the Medicare Trust Fund. The 
following table reflects the scored government costs for expanding the 
full LIS subsidy to the current partially-subsidized LIS beneficiaries 
starting January 1, 2024. Included in this table are the breakdown of 
increases for both the low income cost-sharing subsidy (LICS) and the 
low income premium subsidy (LIPS). OACT arrived at the cost estimate by 
assuming that the ratio of post-LICS-out-of-pocket as a percentage to 
the total drug cost for the partial subsidy beneficiaries would be 
similar to that of the full subsidy beneficiaries. In other words, 
(plan benefits + LICS)/total drug cost for the partial subsidy 
beneficiaries will be the same as that for the full subsidy 
beneficiaries.
[GRAPHIC] [TIFF OMITTED] TP27DE22.030

E. Alternatives Considered

    In this section, CMS includes discussions of Alternatives 
Considered for several provisions. Several provisions of this proposed 
rule reflect a codification of existing policy where we have evidence, 
as discussed in the appropriate preamble sections, that the 
codification of this existing policy would not affect compliance. In 
such cases, the preamble typically discusses the effectiveness metrics 
of these provisions for public health. Also, in these cases,, different 
enforcement methods and different levels of stringency, are not fully 
relevant since the provision is already being complied with adequately. 
Alternative analysis is not provided for these provisions.
1. Medicare Final Settlement Process and Final Settlement Appeals 
Process for Organizations and Sponsors That Are Consolidating, Non-
Renewing, or Otherwise Terminating a Contract (Sec. Sec.  422.500(b), 
423.501, 422.528, 423.521, 422.529, and 423.522)
    As an alternative to our proposal to require MA organizations and 
Part D sponsors respond to CMS with a summary of their agreement or 
disagreement with the final settlement amount, we considered two others 
approaches.
    First, we considered requiring a response by all contracts, 
regardless of whether or not they disagreed with CMS's calculation of 
the final settlement amount. This would result in an aggregate burden 
of $26,931.
    Second, we considered requiring MA organizations and Part D 
sponsors that are consolidating, non-renewing, or terminating their 
contract to internally calculate the final settlement amount, have a 
financial officer attest that the final settlement amount meets 
actuarial standards, and report to CMS the results within a specified 
timeframe. For purposes of this alternative, we are using the same 
assumption detailed in the ICR regarding final settlement. We would add 
the burden of attestation which is the burden of a chief executive and 
manager taking 1 hour each for the purposes of meeting to describe the 
final settlement amount and attest to the accuracy of the calculation. 
As indicated in section VII.B.16. of this proposed rule historically, 
on average, from the period 2015 through 2020, 44 contracts agreed with 
the CMS decision on final settlement amount and 3 requested a review.
    The revised increased burden would be $1,018 (3 contracts * 2 hours 
for attestation * $169.67).
    For comparisons we list these two approaches and the approach, we 
adopted in VII.C.14. of this proposed rule.
     Finalized approach: Total burden of $15,712.
     Alternate approach where every contract writes a summary: 
$26,931.
     An addendum of attestation to either of the above 2 
approaches: An additional $1,018.
    Further information is provided in Table 19 in this section of this 
rule.
[GRAPHIC] [TIFF OMITTED] TP27DE22.031


[[Page 79705]]


    We are not proposing the first alternative because we do not 
believe that adding a requirement to our current process for MA 
organizations and Part D sponsors to acknowledge receipt of the notice 
of final determination and indicate they agree with the final 
determination amount is beneficial. CMS believes this will not enhance 
our process by providing CMS information on whether an MA organization 
or Part D sponsor agrees with the final settlement and instead propose 
that MA organizations and Part D sponsors request a review of the CMS 
calculated final settlement amount if they disagree.
    We are not proposing the second alternative because we believe that 
requiring MA organizations and Part D sponsors to calculate the final 
settlement amount would introduce a significant financial and 
administrative burden on MA organizations and Part D sponsors that are 
consolidating, non-renewing, or terminating without improving on the 
efficiency of our proposed process.
2. Part D Medication Therapy Management (MTM) Program Targeting 
Criteria (Sec.  423.153)
    We considered two alternatives to our proposal. The first 
alternative we considered would maintain our proposed changes related 
to chronic diseases and Part D drug utilization, but would establish a 
cost threshold commensurate with the average annual cost of 2 Part D 
maintenance drugs. Under this alternative, CMS would calculate the 
dollar amount based on the average daily cost of both brand and generic 
drugs identified as maintenance drugs in Medi-Span. Based on 2020 PDE 
data, the cost threshold under this alternative would be $1,657, with 
an estimated program size of about 9,363,087 beneficiaries (19.53 
percent of the total Part D population) and an estimated increased 
burden of $251,600,394.
    The second alternative we considered would include our proposed 
changes related to chronic diseases, retain the current maximum number 
of Part D drugs a sponsor may require for MTM program enrollment at 8 
drugs, require sponsors to include all Part D maintenance drugs in 
their targeting criteria, and establish a cost threshold commensurate 
with the average annual cost of 5 generic maintenance drugs. Under this 
alternative, CMS would calculate the dollar amount of the cost 
threshold as proposed but would only include generic maintenance drugs. 
Based on 2020 PDE data, the cost threshold under this alternative would 
be $840, with an estimated program size of 7,924,203 beneficiaries 
(16.53 percent of the total Part D population) and an estimated 
increased burden of $177,022,820.
    We are not proposing the first alternative primarily because a cost 
threshold at $1,657 would continue to exclude too many Part D enrollees 
who meet the other targeting criteria. Based on 2020 data, between 25 
and 50 percent of the Part D enrollees who have 3 or more core chronic 
diseases and are taking 5 or more Part D maintenance drugs would be 
ineligible because their annual Part D covered drug cost may not meet 
or exceed this cost threshold amount (25th percentile is $823; median 
is $2,778); therefore, many eligibility gaps based on Part D drug spend 
would persist. We also have concerns that including brand drugs in the 
cost threshold calculation could potentially contribute to greater 
volatility in the dollar amount each year.
    We are not proposing the second alternative because, as discussed 
in section III.R. of this proposed rule, we want to reduce MTM 
eligibility gaps to ensure that more individuals who would most benefit 
from MTM services have access. Individuals taking 5 or more 
prescription drugs are associated with a higher risk of potentially 
inappropriate medication use.\234\ Thus, we believe it is appropriate 
to reduce the maximum number of Part D drugs a sponsor may require for 
MTM program enrollment to 5 drugs, as reflected in our proposed 
changes.
---------------------------------------------------------------------------

    \234\ M.-C. Weng, et al., The impact of number of drugs 
prescribed on the risk of potentially inappropriate medication among 
outpatient older adults with chronic diseases, QJM: An International 
Journal of Medicine, Volume 106, Issue 11, November 2013, Pages 
1009-1015, https://doi.org/10.1093/qjmed/hct141.
---------------------------------------------------------------------------

    Overall, we believe our proposed changes represent the best way to 
address unmet beneficiary needs while balancing program size and burden 
on Part D sponsors.
3. Utilization Management Requirements: Clarifications of Coverage 
Criteria for Basic Benefits and Use of Prior Authorization, Additional 
Continuity of Care Requirements, and Annual Review of Utilization 
Management Tools (Sec. Sec.  422.100, 422.101, 422.112, 422.137, 
422.138)
    Both the reasons for proposing the UM Committee requirement 
provisions and the alternatives they are intended to counteract are 
discussed in the respective preambles. Because we cannot quantify any 
of these we have not included a repetition of this analysis in the RIA. 
A brief summary is as follows:
     The proposed regulation clarifies coverage criteria of 
basic benefits standards by requiring MA plans to make medical 
necessity determinations based on Traditional Medicare coverage and 
benefit criteria as reflected in Medicare statutes and regulations, 
NCDs and LCDs and prohibiting the use of internal coverage criteria or 
additional medical necessity standards except in limited situations. 
This is major policy shift in which MA plans may only deny coverage for 
Medicare items and services based on Traditional Medicare coverage 
rules. We understand that this provision will create new burden which 
is difficult to quantify.
     The proposed regulation also requires plans to follow a 
specific process in developing internal coverage policies and to 
provide a public summary of evidence that was considered during the 
development of the internal coverage criteria used to make medical 
necessity determinations. We provided an impact analysis in section 
VII.C.4 of this proposed rule of one quantifiable aspect of this 
proposal. We will also solicit stakeholder input on aspects of the 
proposal and its impact.
     The regulation requires a PA approval to be valid for the 
duration of the approved course of treatment. In combination with the 
proposals to limit when MA plans may deny coverage (or use internal 
coverage criteria that are not used in Traditional Medicare), this will 
limit an MA organization's ability to approve only part of what a 
provider has ordered or prescribed. In addition, the proposal would 
minimize repetitive PA requirements for enrollees on an appropriate, 
chronic, stable therapy. It would be qualitatively beneficial for the 
enrollee.
     The proposed regulation establishes a minimum 90-day 
transition period when an enrollee switches to a new plan, or switches 
from FFS to an MA plan (including new MA plan members who are also new 
to Medicare as well) for any ongoing courses of treatment so that 
treatment is not interrupted while UM requirements are addressed. This 
was adopted from similar transition periods in Part D; we believe it is 
appropriate to align the transition period and scope with the current 
transition requirements in Part D. This proposal is qualitatively 
beneficial for the enrollee.
     The proposed regulation requires MA organizations to 
establish a committee (similar to a P&T committee), led by the Medical 
Director, that reviews utilization management policies annually and 
keeps current of Medicare statutes and regulations, LCDs and NCDs. It 
also includes a discussion of

[[Page 79706]]

``gold-carding'' in the preamble that encourages MA plans to implement 
gold-carding programs to improve efficiency and reduce burden on 
providers with a proven track record of compliance. This is 
qualitatively beneficial for the enrollee. It was modeled on similar 
committees used for Part B step therapy programs and by Part D plans. 
Its major effect is to ask plans to review their policies.
    We re-emphasize that we are not able to fully quantify all of these 
and the discussion of reasons is discussed in the preamble.
4. Medicare Advantage/Part C and Part D Prescription Drug Plan Quality 
Rating System (Sec. Sec.  422.162, 422.164, 422.166, 422.260, 423.182, 
423.184, and 423.186)
    As an alternative to our proposal to have a tiered health equity 
index reward, we have considered a non-tiered approach. We have 
proposed a tiered HEI reward structure based on the percentage of 
enrollees in each contract who have the specified SRFs. We propose that 
contracts that have percentages of enrollees with any of the specified 
SRFs in a given year that are greater than or equal to one-half of the 
contract-level median percentage of enrollees with the specified SRFs 
up to, but not including, the contract-level median would qualify for 
one-half of the HEI reward. Contracts that have percentages of 
enrollees with any of the specified SRFs greater than or equal to the 
contract-level median would qualify for the full HEI reward.
    We have also considered and are soliciting comment on an 
alternative non-tiered HEI reward structure, where all contracts with 
percentages of enrollees with any of the specified SRF greater than or 
equal to one-half of the contract-level median would qualify for the 
full HEI reward. Both the tiered and non-tiered HEI reward structures 
align with our goals of promoting enrollment of enrollees with SRFs and 
not rewarding contracts that may do well among enrollees with SRFs but 
serve very few enrollees in this population, although the tiered HEI 
reward structure goes further in aligning with these goals. The non-
tiered HEI reward structure aligns better with the goal of ease of use 
and understanding for contracts and other stakeholders. Although the 
non-tiered approach would slightly increase the mean HEI reward, it 
does not impact the number of contracts qualifying for the reward.

F. Accounting Statement and Table

    The following Table 20 summarizes 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 20, we 
have prepared an accounting statement showing the costs and transfers 
associated with the provisions of this final rule for calendar years 
2024 through 2033. Table 20 is based on Table 21 which lists transfers 
and costs by provision and year. Table 20 is expressed in millions of 
dollars with costs listed as positive numbers and transfers of savings 
(reduction in dollar spending) to the Medicare Trust Fund listed as a 
savings. As can be seen, the net annualized cost of this rule is about 
$580 million per year. This cost is offset by a reduction in dollar 
spending (savings) to the Medicare Trust Fund of about $2 billion per 
year. Minor seeming discrepancies in totals in Tables 21 reflects use 
of underlying spreadsheets, rather than intermediate rounded amounts. A 
breakdown of these costs of this proposed rule by provision may be 
found in Table 21.
[GRAPHIC] [TIFF OMITTED] TP27DE22.032

    The following Table 21 summarizes costs, and transfers by provision 
and year and forms a basis for the accounting Table 20. In Table 21, 
costs are expressed as positive numbers while savings to the Medicare 
Trust Fund (reduced dollar spending) are expressed as negative numbers. 
All numbers are in millions. The costs in this table are true costs 
reflecting increased consumption of services and goods. However, the 
savings (reduced dollar spending) to the Medicare Trust Funds reflect a 
transfer from MA plans, Part D sponsors, and enrollees, who increase 
their spending, to the Trust Fund.
    Table 21 combines related provisions. For example, all PACE 
provisions in the COI summary table are combined into one line item. 
Similarly, the paperwork burden of the LI NET provision in the COI 
Summary Table is combined with the drug costs listed in Table 17 into 
one line item.
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G. Conclusion

    As indicated in Table 19 the star rating provisions whose impact 
begins in 2027 reduces dollar spending of the Medicare Trust Fund by 
$22.6 billion over 10 years. This is offset by the paperwork costs of 
this rule which amount to $3.5 billion over 10 years. The major driver 
of the paperwork costs is the MTM provisions. Over an infinite horizon 
the aggregate costs of this rule expressed in 2016 dollars is $384 
million per year. In accordance with requirements, this major rule has 
been reviewed by OMB.

IX. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the ``DATES'' section of this 
preamble, and, when we proceed with a subsequent document, we will 
respond to the comments in the preamble to that document.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on December 2, 2022.

List of Subjects

42 CFR Part 401

    Claims, Freedom of information, Health facilities, Medicare, and 
Privacy.

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, Health facilities, Health 
maintenance organizations (HMO), Incorporation by reference, Medicare, 
Penalties, Privacy, Reporting and recordkeeping requirements.

42 CFR Part 460

    Aged, Citizenship and naturalization, Civil rights, Health, Health 
care, Health records, Individuals with disabilities, Medicaid, 
Medicare, Religious discrimination, Reporting and recordkeeping 
requirements, Sex discrimination.

45 CFR Part 170

    Computer technology, Health, Health care, Health insurance, Health 
records, Hospitals, Incorporation by reference, Laboratories, Medicaid, 
Medicare, Privacy, Public health, Reporting and recordkeeping 
requirements, Security measures.
    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services proposes to amend 42 CFR Chapter IV and the 
Department of Health and Human Services proposes to amend 45 CFR part 
170 as set forth below:

PART 401--GENERAL ADMINISTRATIVE REQUIREMENTS

0
1. The authority citation for part 401 continues to read as follows:

    Authority: Secs. 1102, 1871, and 1874(e) of the Social Security 
Act (42 U.S.C. 1302, 1395hh, and 1395w-5) and sec. 105, Pub. L. 114-
10, 129 Stat. 87.

0
2. Section 401.305 is amended by revising paragraph (a)(2) to read as 
follows:


Sec.  401.305  Requirements for reporting and returning of 
overpayments.

    (a) * * *
    (1) * * *
    (2) A person has identified an overpayment when the person 
knowingly receives or retains an overpayment. The term ``knowingly'' 
has the meaning set forth in 31 U.S.C. 3729(b)(1)(A).
* * * * *

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

Subpart K--Enrollment, Entitlement, and Disenrollment under 
Medicare Contract

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

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

0
4. Section 417.454 is amended by revising paragraph (e)(4) to read as 
follows:


Sec.  417.454  Charges to Medicare Enrollees.

* * * * *
    (e) * * *
    (4) A COVID-19 vaccine and its administration described in section 
1861(s)(10)(A) of the Act.
0
5. Section 417.460 is amended by revising paragraphs (c)(3) and (e)(2) 
and (4) and adding paragraph (e)(7) to read as follows:


Sec.  417.460  Disenrollment of beneficiaries by an HMO or CMP.

* * * * *
    (c) * * *
    (3) Good cause and reinstatement. When an individual is disenrolled 
for failure to pay premiums or other charges imposed by the HMO or CMP 
for deductible and coinsurance amounts for which the enrollee is 
liable, CMS (or a third party to which CMS has assigned this 
responsibility, such as an HMO or CMP) may reinstate enrollment in the 
plan, without interruption of coverage, if the individual submits a 
request for reinstatement for good cause within 60 calendar days of the 
disenrollment effective date, has not previously requested 
reinstatement for good cause during the same 60 day period following 
the involuntary disenrollment, shows good cause for failure to pay, and 
pays all overdue premiums or other charges within 3 calendar months 
after the disenrollment date. The individual must establish by a 
credible statement that failure to pay premiums or other charges was 
due to circumstances for which the individual had no control, or which 
the individual could not reasonably have been expected to foresee.
* * * * *
    (e) * * *
    (2) Effort to resolve the problem. The HMO or CMP must make a 
serious effort to resolve the problem presented by the enrollee, 
including the use (or attempted use) of internal grievance procedures, 
and including providing reasonable accommodations, as determined by 
CMS, for individuals with mental or cognitive conditions, including 
mental illness and developmental disabilities. The HMO or CMP must 
inform the individual of the right to use the organization's grievance 
procedures, through the notices described in paragraph (e)(7) of this 
section.
* * * * *
    (4) Documentation. The HMO or CMP must document the problems, 
efforts, and medical conditions as described in paragraphs (e)(1) 
through (3) of this section. Dated copies of the notices required in 
paragraph (d)(2)(iv) of this section must also be submitted to CMS.
* * * * *
    (7) Other required notices. The HMO or CMP must provide the 
individual two notices prior to submitting the request for 
disenrollment to CMS. The first notice, the advance notice, informs the

[[Page 79709]]

member that continued disruptive behavior could lead to involuntary 
disenrollment and provides the individual an opportunity to cease the 
behavior in order to avoid the disenrollment action. If the disruptive 
behavior ceases after the enrollee receives the advance notice and then 
later resumes, the HMO or CMP must begin the process again. The HMO or 
CMP must wait at least 30 days after sending the advance notice before 
sending the second notice, during which 30-days period the individual 
has the to provide an opportunity for the individual to cease their 
behavior. The second notice, the notice of intent to request CMS 
permission to disenroll the member, notifies the enrollee that the HMO 
or CMP will request CMS permission to involuntarily disenroll the 
enrollee. This notice must be provided prior to submission of the 
request to CMS.
* * * * *

PART 422--MEDICARE ADVANTAGE PROGRAM

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

    Authority: 42 U.S.C. 1302, 1306, 1395w-101 through 1395w-152, 
and 1395hh

0
7. Section 422.2 is amended by--
0
a. Adding definitions in alphabetical order for ``Chronic Condition 
Special Needs Plan'', ``Facility-based Institutional Special Needs 
Plan'', ``Hybrid Institutional Special Needs Plan'', ``Institutional-
equivalent Special Needs Plan'', and ``Institutional Special Needs 
Plan''; and
0
b. Revising the definition of ``Severe or disabling chronic 
condition''.
    The additions and revision read as follows:


Sec.  422.2  Definitions.

* * * * *
    Chronic Condition Special Needs Plan (C-SNPs) means a SNP that 
restricts enrollment to MA eligible individuals who have one or more 
severe or disabling chronic conditions, as defined under this section, 
including restricting enrollment based on the multiple commonly co-
morbid and clinically-linked condition groupings specified in Sec.  
422.4(a)(1)(iv) of this chapter.
* * * * *
    Facility-based Institutional special needs plan (FI-SNP) means a 
type of I-SNP that restricts enrollment to MA eligible individuals who 
meet the definition of institutionalized; owns or contracts with at 
least one institution, specified in the definition of institutionalized 
in this section, for each county within the plan's county-based service 
area; and must own or have a contractual arrangement with each 
institutionalized facility serving enrollees in the plan.
* * * * *
    Hybrid Institutional special needs plan (HI-SNP) means a type of I-
SNP that restricts enrollment to both MA eligible individuals who meet 
the definition of institutionalized and MA eligible individuals who 
meet the definition of institutionalized-equivalent in this section. 
HI-SNPs must meet the standards specified in the definitions of FI-SNP 
and IE-SNP.
* * * * *
    Institutional-equivalent special needs plan (IE-SNP) means a type 
of I-SNP that restricts enrollment to MA eligible individuals who meet 
the definition of institutionalized-equivalent in this section.
* * * * *
    Institutional special needs plan (I-SNP) means a SNP that restricts 
enrollment to MA eligible individuals who meet the definition of 
institutionalized and institutionalized-equivalent in this section. I-
SNPs include the following subtypes: IE-SNP, HI-SNP, and FI-SNP
* * * * *
    Network-based plan is defined as a coordinated care plan as 
specified in Sec.  422.4(a)(1)(ii), a network-based MSA plan, or a 
section 1876 reasonable cost plan. A network-based plan excludes an MA 
regional plan that meets access requirements substantially through the 
authority of Sec.  422.112(a)(1)(ii) instead of written contracts.
* * * * *
    Severe or disabling chronic condition means, for the purpose of 
defining a special needs individual, the following co-morbid and 
medically complex chronic conditions that are life-threatening or 
significantly limit overall health or function, has a high risk of 
hospitalization or other significant adverse health outcomes, and 
requires intensive care coordination, and that which is designated by 
the Secretary under subsections 1859(b)(6)(B)(iii)(II) and 
1859(f)(9)(A) of the Act:
    (1) Chronic alcohol use disorder and other substance use disorders 
(SUDs).
    (2) Autoimmune disorders:
    (i) Polyarteritis nodosa.
    (ii) Polymyalgia rheumatica.
    (iii) Polymyositis.
    (iv) Dermatomyositis.
    (v) Rheumatoid arthritis.
    (vi) Systemic lupus erythematosus.
    (vii) Psoriatic arthritis.
    (viii) Scleroderma.
    (3) Cancer.
    (4) Cardiovascular disorders:
    (i) Cardiac arrhythmias.
    (ii) Coronary artery disease.
    (iii) Peripheral vascular disease.
    (iv) Valvular heart disease.
    (5) Chronic heart failure.
    (6) Dementia.
    (7) Diabetes mellitus.
    (8) Overweight, obesity, and metabolic syndrome.
    (9) Chronic gastrointestinal disease:
    (i) Chronic liver disease.
    (ii) Non-alcoholic fatty liver disease (NAFLD)
    (iii) Hepatitis B.
    (iv) Hepatitis C
    (v) Pancreatitis.
    (vi) Irritable bowel syndrome.
    (vii) Inflammatory bowel disease.
    (10) Chronic kidney disease (CKD):
    (i) CKD requiring dialysis/End-stage renal disease (ESRD).
    (ii) CKD not requiring dialysis.
    (11) Severe hematologic disorders:
    (i) Aplastic anemia.
    (ii) Hemophilia.
    (iii) Immune thrombocytopenic purpura.
    (iv) Myelodysplastic syndrome.
    (v) Sickle-cell disease (excluding sickle-cell trait).
    (vi) Chronic venous thromboembolic disorder.
    (12) HIV/AIDS;
    (13) Chronic lung disorders:
    (i) Asthma, Chronic bronchitis.
    (ii) Cystic Fibrosis.
    (iii) Emphysema.
    (iv) Pulmonary fibrosis.
    (v) Pulmonary hypertension.
    (vi) Chronic Obstructive Pulmonary Disease (COPD).
    (14) Chronic and disabling mental health conditions:
    (i) Bipolar disorders.
    (ii) Major depressive disorders.
    (iii) Paranoid disorder.
    (iv) Schizophrenia.
    (v) Schizoaffective disorder.
    (vi) Post-traumatic stress disorder (PTSD).
    (vii) Eating Disorders.
    (viii) Anxiety disorders.
    (15) Neurologic disorders:
    (i) Amyotrophic lateral sclerosis (ALS).
    (ii) Epilepsy.
    (iii) Extensive paralysis (that is, hemiplegia, quadriplegia, 
paraplegia, monoplegia).
    (iv) Huntington's disease.
    (v) Multiple sclerosis.
    (vi) Parkinson's disease.
    (vii) Polyneuropathy.
    (viii) Fibromyalgia.
    (ix) Chronic fatigue syndrome.
    (x) Spinal cord injuries.
    (xi) Spinal stenosis.
    (xii) Stroke-related neurologic deficit.

[[Page 79710]]

    (16) Stroke.
    (17) Post-organ transplantation care.
    (18) Immunodeficiency and Immunosuppressive disorders.
    (19) Conditions associated with cognitive impairment:
    (i) Alzheimer's disease.
    (ii) Intellectual disabilities and developmental disabilities.
    (iii) Traumatic brain injuries.
    (iv) Disabling mental illness associated with cognitive impairment.
    (v) Mild cognitive impairment.
    (20) Conditions with functional challenges and require similar 
services including the following: spinal cord injuries, paralysis, limb 
loss, stroke, and arthritis;
    (21) Chronic conditions that impair vision, hearing (deafness), 
taste, touch, and smell.
    (22) Conditions that require continued therapy services in order 
for individuals to maintain or retain functioning.
* * * * *
0
8. Section 422.4 is amended by adding paragraphs (a)(1)(iv)(A) and (B) 
to read as follows:


Sec.  422.4  Types of MA plans.

    (a) * * *
    (1) * * *
    (iv) * * *
    (A) A C-SNP may focus on one severe or disabling chronic condition, 
as defined in Sec.  422.2, or on a grouping of severe or disabling 
chronic conditions.
    (B) Upon CMS approval, an MA organization may offer a C-SNP that 
focuses on multiple commonly co-morbid and clinically-linked conditions 
from the following list of groupings:
    (1) Diabetes mellitus and chronic heart failure.
    (2) Chronic heart failure and cardiovascular disorders.
    (3) Diabetes mellitus and cardiovascular disorders.
    (4) Diabetes mellitus, chronic heart failure, and cardiovascular 
disorders.
    (5) Stroke and cardiovascular disorders.
    (6) Anxiety associated with COPD.
    (7) Chronic kidney disease (CKD) and post-(renal) organ 
transplantation.
    (8) Substance use disorders (SUD) and chronic mental health 
disorders.
* * * * *
0
9. Section 422.52 is amended by adding paragraph (g) to read as 
follows:


Sec.  422.52  Eligibility to elect an MA plan for special needs 
individuals.

* * * * *
    (g) Special eligibility rule for certain C-SNPs. For C-SNPs that 
use a group of multiple severe or disabling chronic conditions as 
described in Sec.  422.4(a)(1)(iv) of this chapter, special needs 
individuals need only have one of the qualifying severe or disabling 
chronic conditions in order to be eligible to enroll.
0
10. Section 422.60 is amended by adding paragraph (h) to read as 
follows:


Sec.  422.60  Election process.

* * * * *
    (h) Notification of reinstatement based on beneficiary cancellation 
of new enrollment. When an individual is disenrolled from an MA plan 
due to the election of a new plan, the MA organization must reinstate 
the individual's enrollment in that plan if the individual cancels the 
election in the new plan within timeframes established by CMS. The MA 
organization offering the plan from which the individual was 
disenrolled must send the member notification of the reinstatement 
within 10 calendar days of receiving confirmation of the individual's 
reinstatement.
0
11. Section 422.62 is amended by--
0
a. Adding a sentence to the end of paragraph (b)(2);
0
b. Revising paragraph (b)(18) introductory text;
0
c. Redesignating paragraphs (b)(18)(i) through (iii) as paragraphs 
(b)(18)(ii) through (iv);
0
d. Adding new paragraph (b)(18)(i);
0
e. Redesignating paragraph (b)(26) as paragraph (b)(27); and
0
f. Adding new paragraph (b)(26).
    The additions and revision read as follows:


Sec.  422.62  Election of coverage under an MA plan

* * * * *
    (b) * * *
    (2) * * * Also eligible for this SEP are individuals who, as a 
result of a change in permanent residence, have new MA plan options 
available to them.
* * * * *
    (18) Individuals affected by an emergency or major disaster 
declared by a Federal, State or local government entity are eligible 
for a SEP to make a MA enrollment or disenrollment election. The SEP 
starts as of the date the declaration is made, the incident start date 
or, if different, the start date identified in the declaration, 
whichever is earlier. The SEP ends 2 full calendar months following the 
end date identified in the declaration or, if different, the date the 
end of the incident is announced, the date the incident automatically 
ends under applicable State or local law, or, if incident end date is 
not otherwise identified, the incident end date specified in paragraph 
(b)(18)(i) of this section.
    (i) If the incident end date of an emergency or major disaster is 
not otherwise identified, the incident end date will be one year after 
the SEP start date or, if applicable, the date of a renewal or 
extension of the emergency or disaster declaration, whichever is later. 
Therefore, the maximum length of this SEP, if the incident end date is 
not otherwise identified, is 14 full calendar months after the SEP 
start date or, if applicable, the date of a renewal or extension of the 
emergency or disaster declaration.
* * * * *
    (26) The individual enrolls in Medicare premium-Part A or Part B 
using an exceptional condition SEP, as described in 42 CFR 406.27 and 
407.23. The SEP begins when the individual submits their application 
for premium-Part A and Part B, or Part B only, and continues for the 
first 2 months of enrollment in Part A (premium or premium-free) and 
Part B. The MA plan enrollment is effective the first of the month 
following the month the MA plan receives the enrollment request.
* * * * *
0
12. Section 422.66 is amended by adding paragraphs (b)(3)(v) and (b)(6) 
to read as follows:


Sec.  422.66  Coordination of enrollment and disenrollment through MA 
organizations.

* * * * *
    (b) * * *
    (3) * * *
    (v) In the case of an incomplete disenrollment request--
    (A) Document its efforts to obtain information to complete the 
disenrollment request;
    (B) Notify the individual (in writing or verbally) within 10 
calendar days of receipt of the disenrollment request.
    (C) The organization must deny the request if any additional 
information needed to make the disenrollment request ``complete'' is 
not received within the following timeframes:
    (1) For disenrollment requests received during the AEP, by December 
7, or within 21 calendar days of the request for additional 
information, whichever is later; and
    (2) For disenrollment requests received during all other election 
periods, by the end of the month in which the disenrollment request was 
initially received, or within 21 calendar days of the request for 
additional information, whichever is later.
* * * * *
    (6) When a disenrollment request is considered incomplete. A 
disenrollment request is considered to be incomplete if the required 
but missing information

[[Page 79711]]

is not received by the MA organization within the timeframe specified 
in paragraph (b)(3)(v)(C)of this section.
* * * * *
0
13. Section 422.74 is amended by--
0
a. Adding paragraph (b)(2)(vi);
0
b. Revising paragraphs (c), (d)(1)(i)(B)(1), and (d)(1)(v);
0
c. Revising paragraphs (d)(2)(iii) and (iv);
0
d. Adding paragraph (d)(2)(vii);
0
e. Revising paragraph (d)(4)(i);
0
f. Adding paragraphs (d)(4)(ii)(A), reserved (d)(4)(ii)(B), and 
(d)(4)(iii)(F);
0
g. Revising paragraph (d)(4)(iv)
0
h. Redesignating paragraph (d)(8) as paragraph (d)(9) and adding new 
paragraph (d)(8);
0
i. Adding paragraph (d)(10); and
0
j. Revising paragraph (e)(1).
    The revisions and additions read as follows:


Sec.  422.74  Disenrollment by the MA organization.

* * * * *
    (b) * * *
    (2) * * *
    (vi) The individual no longer meets the MA MSA's eligibility 
criteria specified under Sec.  422.56 due to a mid-year change in 
eligibility.
* * * * *
    (c) Notice requirement. If the disenrollment is for any of the 
reasons specified in paragraphs (b)(1), (b)(2)(i) and (vi), or (b)(3) 
of this section (that is, other than death or loss of entitlement to 
Part A or Part B) the MA organization must give the individual a 
written notice of the disenrollment with an explanation of why the MA 
organization is planning to disenroll the individual. Notices for 
reasons specified in paragraphs (b)(1) through (b)(2)(i) and (b)(2)(vi) 
must--
    (1) Be provided to the individual before submission of the 
disenrollment to CMS; and
    (2) Include an explanation of the individual's right to submit a 
grievance under the MA organization's grievance procedures.
    (d) * * *
    (1) * * *
    (i) * * *
    (B) * * *
    (1) Be at least 2 whole calendar months; and
* * * * *
    (v) Extension of grace period for good cause and reinstatement. 
When an individual is disenrolled for failure to pay the plan premium, 
CMS (or a third party to which CMS has assigned this responsibility, 
such as an MA organization) may reinstate enrollment in the MA plan, 
without interruption of coverage, if the individual--
    (A) Submits a request for reinstatement for good cause within 60 
calendar days of the disenrollment effective date; and
    (B) Has not previously requested reinstatement for good cause 
during the same 60 day period following the involuntary disenrollment; 
and
    (C) Shows good cause for failure to pay within the initial grace 
period; and
    (D) Pays all overdue premiums within 3 calendar months after the 
disenrollment date; and
    (E) Establishes by a credible statement that failure to pay 
premiums within the initial grace period was due to circumstances for 
which the individual had no control, or which the individual could not 
reasonably have been expected to foresee.
* * * * *
    (2) * * *
    (iii) Effort to resolve the problem. The MA organization must make 
a serious effort to resolve the problems presented by the individual, 
including providing reasonable accommodations, as determined by CMS, 
for individuals with mental or cognitive conditions, including mental 
illness and developmental disabilities. In addition, the MA 
organization must inform the individual of the right to use the 
organization's grievance procedures, through the notices described in 
paragraph (d)(2)(vii) of this section. The beneficiary has a right to 
submit any information or explanation that he or she may wish to the MA 
organization.
    (iv) Documentation. The MA organization must document the 
enrollee's behavior, its own efforts to resolve any problems, as 
described in paragraph (d)(2)(iii) of this section, and any extenuating 
circumstances. The MA organization may request from CMS the ability to 
decline future enrollment by the individual. The MA organization must 
submit this information and any documentation received by the 
beneficiary to CMS. Dated copies of the notices required in paragraph 
(d)(2)(vii) of this section must also be submitted to CMS.
* * * * *
    (vii) Required notices. The MA organization must provide the 
individual two notices prior to submitting the request for 
disenrollment to CMS. The first notice, the advance notice, informs the 
member that continued disruptive behavior could lead to involuntary 
disenrollment and provides the individual an opportunity to cease the 
behavior in order to avoid the disenrollment action. If the disruptive 
behavior ceases after the member receives the advance notice and then 
later resumes, the organization must begin the process again. The 
organization must wait at least 30 days after sending the advance 
notice before sending the second notice, during which 30- day period 
the individual has the opportunity to cease their behavior. The second 
notice, the notice of intent to request CMS permission to disenroll the 
member, notifies the member that the MA organization will request CMS 
permission to involuntarily disenroll the member. This notice must be 
provided prior to submission of the request to CMS. These notices are 
in addition to the disenrollment submission notice required under 
paragraph (c) of this section.
* * * * *
    (4) * * *
    (i) Basis for disenrollment. Unless continuation of enrollment is 
elected under Sec.  422.54, the MA organization must disenroll an 
individual, and must document the basis for such action, if the MA 
organization establishes, on the basis of a written statement from the 
individual or other evidence acceptable to CMS, that the individual has 
permanently moved--
* * * * *
    (ii) * * *
    (A) The individual is considered to be temporarily absent from the 
plan service area when one or more of the required materials and 
content referenced in Sec.  422.2267(e), if provided by mail, is 
returned to the MA organization by the US Postal Service as 
undeliverable and a forwarding address is not provided.
    (B) [Reserved]
    (iii) * * *
    (F) The individual is considered to be temporarily absent from the 
plan service area when one or more of the required materials and 
content referenced in Sec.  422.2267(e), if provided by mail, is 
returned to the MA organization by the US Postal Service as 
undeliverable and a forwarding address is not provided.
* * * * *
    (iv) Notice of disenrollment. The MA organization must give the 
individual a written notice of the disenrollment that meets the 
requirements set forth in paragraph (c) of this section within 10 
calendar days of the plan's confirmation of the individual's residence 
outside of the plan service area or within the first 10 calendar days 
of the sixth month of an individual's temporary absence from the plan 
service area or, for individuals using a visitor/traveler benefit, 
within the first 10 calendar days of the last month of the allowable 
absence. If the plan learns of an individual's temporary absence from 
the plan service area after the expiration of the allowable period,

[[Page 79712]]

the plan must send this notice within 10 calendar days of the plan 
learning of the absence.
* * * * *
    (8) Loss of Special Needs Status. If an enrollee loses special 
needs status and must be disenrolled under paragraph (b)(2)(iv) of this 
section, the SNP must provide the enrollee with a minimum of 30 days 
advance notice of disenrollment, regardless of the date of loss of 
special needs status.
    (i) The advance notice must be provided to the enrollee within 10 
calendar days of the plan learning of the loss of special needs status 
and must afford the enrollee an opportunity to prove that they are 
still eligible to remain in the plan.
    (ii) The advance notice must include the disenrollment effective 
date, a description of eligibility for the SEP described in Sec.  
422.62(b)(11), and, if applicable, information regarding the period of 
deemed continued eligibility, the duration of the period of deemed 
continued eligibility, and the consequences of not regaining special 
needs status within the period of deemed continued eligibility.
    (iii) A final involuntary disenrollment notice must be sent within 
3 business days following the disenrollment effective date, which is 
either the last day of the period of deemed continued eligibility, if 
applicable, or a minimum of 30 days after providing the advance notice 
of disenrollment. The final involuntary disenrollment notice must be 
sent before submission of the disenrollment to CMS.
    (iv) The final involuntary disenrollment notice must include an 
explanation of the enrollee's right to file a grievance under the MA 
organization's grievance procedures that are required by Sec.  422.564.
* * * * *
    (10) Mid-year change in MSA eligibility. If an individual is no 
longer eligible for an MA MSA plan due to a mid-year change in 
eligibility, disenrollment is effective the first day of the calendar 
month following the MA organization's notice to the individual that 
they are ineligible in accordance with paragraph (b)(2)(vi) of this 
section.
    (e) * * *
    (1) Disenrollment for non-payment of premiums, disruptive behavior, 
fraud or abuse, loss of Part A or Part B or mid-year loss of MSA 
eligibility. An individual who is disenrolled under paragraph 
(b)(1)(i), (ii), or (iii), or (b)(2)(ii) or (vi) of this section is 
deemed to have elected original Medicare.
* * * * *
0
14. Section 422.101 is amended by--
0
a. Revising paragraph (b)(2);
0
c. Adding paragraph (b)(6);
0
d. Revising paragraph (c);
0
e. Adding paragraph (f)(2)(vi);
0
f. Revising paragraph (f)(3)(iii); and
0
g. Adding paragraph (f)(3)(iv)
    The revisions and additions read as follows:


Sec.  422.101  Requirements relating to basic benefits

* * * * *
    (b) * * *
    (2) General coverage and benefit conditions included in Traditional 
Medicare laws, unless superseded by laws applicable to MA plans. For 
example, this includes coverage criteria for inpatient admissions at 42 
CFR 412.3, requirements for coverage of Skilled Nursing Facility (SNF) 
Care and Home Health Services under 42 CFR part 409, and Inpatient 
Rehabilitation Facilities (IRF) coverage criteria at 42 CFR 412.622(3).
* * * * *
    (6) When coverage criteria are not fully established in applicable 
Medicare statute, regulation, NCD or LCD, MA organizations may create 
internal coverage criteria that are based on current evidence in widely 
used treatment guidelines or clinical literature that is made publicly 
available. Current, widely-used treatment guidelines are those 
developed by organizations representing clinical medical specialties, 
and refers to guidelines for the treatment of specific diseases or 
conditions. Acceptable clinical literature includes large, randomized 
controlled trials or prospective cohort studies with clear results, 
published in a peer-reviewed journal, and specifically designed to 
answer the relevant clinical question, or large systematic reviews or 
meta-analyses summarizing the literature of the specific clinical 
question. For internal coverage policies, the MA organization must 
provide:
    (i) A publicly accessible summary of evidence that was considered 
during the development of the internal coverage criteria used to make 
medical necessity determinations;
    (ii) A list of the sources of such evidence; and
    (iii) Include an explanation of the rationale that supports the 
adoption of the coverage criteria used to make a medical necessity 
determination.
    (c) Medical necessity determinations and special coverage 
provisions-- (1) Medical necessity determinations. (i) MA organizations 
must make medical necessity determinations based on:
    (A) Coverage and benefit criteria as specified at paragraphs (b) 
and (c) of this section and may not deny coverage for basic benefits 
based on coverage criteria not specified in paragraph (b) or (c) of 
this section;
    (B) Whether the provision of items or services is reasonable and 
necessary under section 1862(a)(1) of the Act;
    (C) The enrollee's medical history (for example, diagnoses, 
conditions, functional status), physician recommendations, and clinical 
notes; and
    (D) Where appropriate, involvement of the organization's medical 
director as required at Sec.  422.562(a)(4).
    (ii) [Reserved]
    (2) Exception for qualifying hospital stay. MA organizations may 
elect to furnish, as part of their Medicare covered benefits, coverage 
of posthospital SNF care as described in subparts C and D of this part, 
in the absence of the prior qualifying hospital stay that would 
otherwise be required for coverage of this care.
* * * * *
    (f) * * *
    (2) * * *
    (vi) For I-SNPs, ensure that contracts with long-term care 
institutions (listed in the definition of the term institutionalized in 
Sec.  422.2) contain requirements allowing I-SNP clinical and care 
coordination staff access to enrollees of the I-SNP who are 
institutionalized.
    (3) * * *
    (iii) Each element of the model of care of a plan must meet a 
minimum benchmark score of 50 percent and each MOC must meet an 
aggregate minimum benchmark of 70 percent, and a plan's model of care 
will only be approved if each element of the model of care meets the 
minimum benchmark and the model of care meets aggregate minimum 
benchmark.
    (A) An MOC for a C-SNP that receives a passing score is approved 
for 1 year.
    (B) An MOC for an I-SNP or D-SNP that receives an aggregate minimum 
benchmark score of 85 percent or greater is approved for 3 years. An 
MOC for an I-SNP or D-SNP that receives a score of 75 percent to 84 
percent is approved for 2 years. An MOC for an I-SNP or D-SNP that 
receives a score of 70 percent to 74 percent is approved for 1 year.
    (C) For an MOC that fails to meet a minimum element benchmark score 
of 50 percent or an MOC that fails to meet the aggregate minimum 
benchmark of 70 percent, the MA organization is permitted a one-time 
opportunity to resubmit the corrected MOC for reevaluation; and an MOC 
that is corrected and resubmitted using this cure period is approved 
for only 1 year.

[[Page 79713]]

    (iv) An MA organization that offers a SNP that seeks to revise the 
MOC before the end of the MOC approval period may submit changes to the 
MOC as off-cycle MOC submissions for review by NCQA as follows:
    (A) D-SNPs and I-SNPs may submit updates and corrections to their 
NCQA-approved MOC any number of times between June 1st and November 
30th of each calendar year or when CMS requires an off-cycle submission 
to ensure compliance with applicable law.
    (B) D-SNPs and I-SNPs are required to submit updates or corrections 
as part of an off-cycle submissions based on:
    (1) Substantial changes in policies or procedures pertinent to: the 
health risk assessment (HRA) process; revising processes to develop and 
update the Individualized Care Plan (ICP); the integrated care team 
process; risk stratification methodology; or care transition protocols;
    (2) Target population changes that warrant modifications to care 
management approaches;
    (3) Changes in a SNP's plan benefit package between consecutive 
contract years that can considerably impact critical functions 
necessary to maintain member well-being and are related SNP operations;
    (4) Changes in level of authority or oversight for personnel 
conducting care coordination activities (for example, medical provider 
to non-medical provider, clinical vs. non-clinical personnel); or
    (5) Changes to quality metrics used to measure performance.
    (C) NCQA will only review off-cycle submissions after the start of 
the effective date of the current MOC unless CMS deems it necessary to 
ensure compliance with the applicable regulations.
    (D) SNPs may not implement any changes to a MOC until NCQA has 
approved the changes and the MOC is not rescored during the off-cycle 
review of changes to the MOC.
    (E) Successful revision of the MOC under paragraph (f)(3)(iii)(B) 
of this section does not change the MOC's original period of approval 
by NCQA.
    (F) C-SNPs are only eligible to submit an off-cycle MOC submission 
when CMS requires an off-cycle submission to ensure compliance with 
applicable law.
    (G) When a deficiency identified in the off-cycle revisions to a 
MOC, the SNP may cure the deficiency a single time between June 1st and 
November 30th of each calendar year.
0
15. Section 422.109 is amended by revising the section heading and 
adding paragraphs (e) and (f) to read as follows:


Sec.  422.109  Effect of national coverage determinations (NCDs) and 
legislative changes in benefits; coverage of clinical trials and A and 
B device trials

* * * * *
    (e) Clinical trials. (1) With the exception specified in paragraph 
(e)(3) of this section, original Medicare is responsible for coverage 
of MA enrollees participating in CMS-approved clinical trials to 
include routine costs, as specified in NCD 310.1, and any coverage for 
the diagnosis or treatment of complications related to the clinical 
trial.
    (2) MA enrollees are not charged traditional Medicare Part A and B 
deductibles for clinical trial coverage.
    (3) MA plans are responsible for paying the difference between 
traditional Medicare cost-sharing incurred for qualifying clinical 
trial items and services and the MA plan's in-network cost-sharing for 
the same category of items and services.
    (4) An enrollee's in-network cost-sharing portion must be included 
in the MA plan's maximum out-of-pocket calculation.
    (5) MA plans may not require prior authorization for participation 
in a Medicare-qualified clinical trial not sponsored by the plan, nor 
may it create impediments to an enrollee's participation in a non-plan-
sponsored clinical trial.
    (f) A and B IDE trials. (1) MA plans are responsible for payment of 
routine care items and services in CMS-approved Category A and Category 
B IDE studies that are covered under Sec.  405.211(a) of this chapter.
    (2) MA plans are responsible for coverage of CMS-approved Category 
B devices that are covered under Sec.  405.211(b) of this chapter.
0
16. Section 422.111 is amended by--
0
a. Revising paragraphs (b)(3)(i) and (e);
0
b. Revising pargraph (h)(1)(iii)(A); and
0
c. Revising paragraph (h)(1)(iv)(B).
    The revisions and additions read as follows:


Sec.  422.111  Disclosure Requirements.

* * * * *
    (b) * * *
    (3) * * *
    (i) The number, mix, and distribution (addresses) of providers from 
whom enrollees may reasonably be expected to obtain services; each 
provider's cultural and linguistic capabilities, including languages 
(including American Sign Language) offered by the provider or a skilled 
medical interpreter at the provider's office; notations for MOUD-
Waivered Providers as defined in Sec.  422.116(b)(1)(xxx) who are 
listed on the Substance Abuse and Mental Health Services 
Administration's Buprenorphine Practitioner Locator; any out-of network 
coverage; any point-of-service option, including the supplemental 
premium for that option; and how the MA organization meets the 
requirements of Sec. Sec.  422.112 and 422.114 for access to services 
offered under the plan.
* * * * *
    (e) Changes to provider network. The MA organization must provide 
enrollees notice of a termination of a contracted provider, 
irrespective of whether the termination was for cause or without cause, 
in accordance with Sec.  422.2267(e)(12). The MA organization must make 
a good faith effort to provide enrollees notice of a for-cause 
termination of a contracted provider within the timeframes required by 
this paragraph (e). For all terminations, the MA organization must meet 
the following requirements:
    (1) For contract terminations that involve a primary care or 
behavioral health provider:
    (i) Provide both written and telephonic notice,
    (ii) At least 45 calendar days before the termination effective 
date, and
    (iii) To all enrollees who have ever been patients of that primary 
care or behavioral health provider.
    (2) For contract terminations that involve specialty types other 
than primary care or behavioral health:
    (i) Provide written notice,
    (ii) At least 30 calendar days before the termination effective 
date, and
    (iii) To all enrollees who are patients seen on a regular basis by 
the provider whose contract is terminating. The phrase ``enrollees who 
are patients seen on a regular basis by the provider whose contract is 
terminating'' means enrollees who are assigned to, currently receiving 
care from, or have received care within the past three months from a 
provider or facility being terminated.
* * * * *
    (h) * * *
    (1) * * *
    (iii) * * *
    (A) Provides interpreters for non-English speaking and limited 
English proficient (LEP) individuals. Such interpreters must:
    (1) Adhere to generally accepted interpreter ethics principles, 
including confidentiality;
    (2) Demonstrate proficiency in speaking and understanding at least 
spoken English and the spoken language in need of interpretation; and
    (3) Interpret effectively, accurately, and impartially, both 
receptively and

[[Page 79714]]

expressively, to and from such language(s) and English, using any 
necessary specialized vocabulary, terminology, and phraseology.
* * * * *
    (iv) * * *
    (B) Establishes contact with a customer service representative 
within 7 minutes on no fewer than 80 percent of incoming calls 
requiring TTY services.
* * * * *
0
17. Section 422.112 is amended by--
0
a. Adding a sentence at the end of paragraph (a)(1)(i);
0
b. Adding paragraph (a)(1)(iii);
0
c. Removing the last sentence of paragraph (a)(3);
0
d. Revising paragraphs (a)(6)(i) and (a)(8);
0
f. Revising paragraph (b)(3); and
0
g. Adding paragraphs (b)(8) and (9).
    The additions and revisions read as follows:


Sec.  422.112  Access to services.

    (a) * * *
    (1) * * *
    (i) * * * The network must include providers that specialize in 
behavioral health services.
* * * * *
    (iii) Arrange for any medically necessary covered benefit outside 
of the plan provider network, but at in-network cost sharing, when an 
in-network provider or benefit is unavailable or inadequate to meet an 
enrollee's medical needs.
* * * * *
    (6) * * *
    (i) Timeliness of access to care and member services that meet or 
exceed standards in this paragraph. The MA organization must 
continuously monitor access to care and member services and must take 
corrective action as necessary to ensure that appointment wait times in 
the provider network comply with these standards. The minimum standards 
for appointment wait times for primary care and behavioral health 
services are as follows for appointments:
    (A) Urgently needed services or emergency--immediately;
    (B) Services that are not emergency or urgently needed, but the 
enrollee requires medical attention--within 1 week; and
    (C) Routine and preventive care--within 30 days.
* * * * *
    (8) Ensuring equitable access to Medicare Advantage (MA) Services. 
Ensure that services are provided in a culturally competent manner and 
to promote equitable access to all enrollees, including the following:
    (i) People with limited English proficiency or reading skills.
    (ii) People of ethnic, cultural, racial, or religious minorities.
    (iii) People with disabilities.
    (iv) People who identify as lesbian, gay, bisexual, or other 
diverse sexual orientations.
    (v) People who identify as transgender, nonbinary, and other 
diverse gender identities, or people who were born intersex.
    (vi) People living in rural areas and other areas with high levels 
of deprivation.
    (vii) People otherwise adversely affected by persistent poverty or 
inequality.
* * * * *
    (b) * * *
    (3) Programs for coordination of plan services with community and 
social services generally available through contracting or 
noncontracting providers in the area served by the MA plan, including 
nursing home and community-based services, and behavioral health 
services; and
* * * * *
    (8)(i) With respect to basic benefits, policies for using prior 
authorization that at a minimum include that for enrollees undergoing 
an active course of treatment--
    (A) Approval of a prior authorization request for a course of 
treatment is valid for the entire duration of the approved course of 
treatment; and
    (B) A minimum 90-day transition period for any active course(s) of 
treatment when an enrollee has enrolled in an MA plan after starting a 
course of treatment, even if the service is furnished by an out-of-
network provider. This includes enrollees new to a plan and enrollees 
new to Medicare. The MA organization must not disrupt or require 
reauthorization for an active course of treatment for new plan 
enrollees for a period of at least 90 days.
    (ii) For purposes of this paragraph (b)(8), the following 
definitions apply:
    (A) Course of treatment means as a prescribed order or ordered 
course of treatment for a specific individual with a specific condition 
is outlined and decided upon ahead of time with the patient and 
provider. A course of treatment may but is not required to be part of a 
treatment plan.
    (B) Active course of treatment means a course of treatment in which 
a patient is actively seeing the provider and following the course of 
treatment.
    (9) Procedures to identify and offer digital health education to 
enrollees with low digital health literacy to assist with accessing any 
medically necessary covered benefits that are furnished when the 
enrollee and the provider are not in the same location using electronic 
exchange, as defined in Sec.  422.135.
    (i) The MA organization must make information about its digital 
health literacy screening and digital health education programs 
available to CMS upon request. Requested information may include, but 
is not limited to, statistics on the number of enrollees identified 
with low digital health literacy and receiving digital health 
education, manner(s) or method of digital health literacy screening and 
digital health education, financial impact of the programs on the MA 
organization, evaluations of effectiveness of digital health literacy 
interventions, and demonstration of compliance with the requirements of 
this section.
    (ii) [Reserved].
* * * * *
0
18. Section 422.113 is amended by revising paragraph (b)(1)(i) 
introductory text to read as follows:


Sec.  422.113  Special rules for ambulance services, emergency and 
urgently needed services, and maintenance and post-stabilization care 
services.

* * * * *
    (b) * * *
    (1) * * *
    (i) Emergency medical condition means a medical condition, mental 
or physical, manifesting itself by acute symptoms of sufficient 
severity (including severe pain) such that a prudent layperson, with an 
average knowledge of health and medicine, could reasonably expect the 
absence of immediate medical attention to result in -
* * * * *
0
19. Section 422.114 is amended by revising paragraph (a)(3)(ii) to read 
as follows:


Sec.  422.114  Access to services under an MA private fee-for-service 
plan.

* * * * *
    (a) * * *
    (3) * * *
    (ii) Network-based plan means a plan as defined in Sec.  422.2.
* * * * *
0
20. Section 422.116 is amended by --
0
a. Removing ``Sec.  422.114(a)(3)(ii)'' and adding ``Sec.  422.2'' in 
its place in paragraph (a)(1)(i);
0
b. Adding paragraphs (b)(1)(xxviii) through (xxx);
0
c. Adding in alphabetical order entries for ``Clinical Psychology'', 
``Licensed Clinical Social Work'', and ``Prescribers of Medication for 
Opioid Use Disorder (including MOUD-Waivered Providers and/or OTPs)'' 
to Table 1 to Paragraph (d)(2);

[[Page 79715]]

0
d. Adding paragraphs (d)(5)(xiii) through (xv); and
0
e. Adding in alphabetical order entries for ``Clinical Psychology'', 
``Clinical Social Work'', and ``Prescribers of Medication for Opioid 
Use Disorder (including MOUD-Waivered Providers and/or OTPs)'' to Table 
2 to Paragraph (e)(3)(i)(C).
    The revisions and additions read as follows:


Sec.  422.116  Network adequacy.

* * * * *
    (b) * * *
    (1) * * *
    (xxviii) Clinical Psychology.
    (xxix) Clinical Social Work.
    (xxx) Prescribers of Medication for Opioid Use Disorder (MOUD) 
(including MOUD- Waivered Providers and/or Opioid Treatment Programs 
(OTPs)). For purposes of this regulation, MOUD-Waivered Providers means 
providers who are waived by the Substance Abuse and Mental Health 
Services Administration and the Drug Enforcement Agency to administer, 
dispense, or prescribe narcotic drugs in schedule III, IV, or V or 
combinations of such drugs to patients for maintenance or 
detoxification treatment for opioid use disorder in accordance with 
section 303(g)(2) of the Controlled Substances Act, and OTPs means OTPs 
as defined in section 1861(jjj)(2) of the Act.
* * * * *
    (d) * * *
    (2) * * *

                                                               Table 1 to Paragraph (d)(2)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Large metro              Metro                 Micro                 Rural                 CEAC
                                           -------------------------------------------------------------------------------------------------------------
          Provider/facility type                          Max                   Max                   Max                   Max                   Max
                                             Max time   distance   Max time   distance   Max time   distance   Max time   distance   Max time   distance
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
Clinical Psychology.......................         20         10         45         30         60         45         75         60        145        130
 
                                                                      * * * * * * *
Licensed Clinical Social Work.............         20         10         30         20         50         35         75         60        125        110
 
                                                                      * * * * * * *
Prescribers of Medication for Opioid Use           20         10         30         20         50         35         75         60        110        100
 Disorder (including MOUD[dash]Waivered
 Providers and/or OTPs)...................
 
                                                                      * * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------

* * * * *
    (5) * * *
    (xiii) Clinical Psychology.
    (xxiv) Clinical Social Work.
    (xv) Providers of Medication for Opioid Use Disorder (including 
MOUD-Waivered Providers and/or OTPs)
* * * * *
    (e) * * *
    (3) * * *
    (i) * * *
    (C) * * *

                                        Table 2 to Paragraph (e)(3)(i)(C)
----------------------------------------------------------------------------------------------------------------
                                                             Large
                      Minimum ratio                          metro      Metro      Micro      Rural       CEAC
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
Clinical Psychology......................................       0.15       0.15       0.13       0.13       0.13
Clinical Social Work.....................................       0.25       0.25       0.22       0.22       0.22
 
                                                  * * * * * * *
Prescribers of Medication for Opioid Use Disorder               0.03       0.03       0.03       0.03       0.03
 (including MOUD-Waivered Providers and/or OTPs).........
----------------------------------------------------------------------------------------------------------------

* * * * *
0
21. Section 422.137 is added to read as follows:


Sec.  422.137  Medicare Advantage Utilization Management Committee

    (a) General. An MA organization that uses utilization management 
(UM) policies and procedures, including prior authorization (PA), must 
establish a UM committee that is led by a plan's medical director 
(described in Sec.  422.562(a)(4)).
    (b) Limit on use of UM policies and procedures. An MA plan may not 
use any UM policies and procedures for basic or supplemental benefits 
on or after January 1, 2024 unless those policies and procedures have 
been reviewed and approved by the UM committee.
    (c) Utilization Management Committee Composition. The UM committee 
must--
    (1) Include a majority of members who are practicing physicians.
    (2) Include at least one practicing physician who is independent 
and free of conflict relative to the MA organization and MA plan.
    (3) Include at least one practicing physician who is an expert 
regarding care of elderly or disabled individuals.
    (4) Include members representing various clinical specialties (for 
example, primary care, behavioral health) to ensure that a wide range 
conditions are adequately considered in the development of the MA 
plan's utilization management policies.
    (d) Utilization Management Committee Responsibilities. The UM 
committee must--
    (1) At least annually, review the policies and procedures for all 
utilization management, including prior authorization, used by the MA 
plan. Such review must consider:
    (i) The services to which the utilization management applies;

[[Page 79716]]

    (ii) Coverage decisions and guidelines for Traditional Medicare, 
including NCDs, LCDs, and laws; and
    (iii) Relevant current clinical guidelines.
    (2) Approve only utilization management policies and procedures 
that:
    (i) Use or impose coverage criteria that comply with the 
requirements and standards at Sec.  422.101(b);
    (ii) For prior authorization policies, comply with requirements and 
standards at Sec.  422.138;
    (iii) Comply with the standards in Sec.  422.202(b)(1); and
    (iv) Apply and rely on medical necessity criteria that comply with 
Sec.  422.101(c)(1).
    (3) Revise the utilization management policies and procedures as 
necessary to comply with the standards in this regulation, including 
removing requirements for UM for services and items that no longer 
warrant UM.
    (4) Clearly articulate and document processes to determine that the 
requirements under paragraphs (c)(1) through (4) of this section have 
been met, including the determination by an objective party of whether 
disclosed financial interests are conflicts of interest and the 
management of any recusals due to such conflicts.
    (5) Document in writing the reason for its decisions regarding the 
development of UM policies and make this documentation available to CMS 
upon request.
0
22. Section 422.138 is added to read as follows:


Sec.  422.138  Prior authorization.

    (a) Requirement. When a coordinated care plan, as specified in 
Sec.  422.4(a)(iii) (including MSA network plans), uses prior 
authorization processes in connection with basic benefits or 
supplemental benefits, the MA organization must comply with the 
requirements in this section. (MA PFFS are not permitted to use prior 
authorization policies or ``prior notification'' policies that reduce 
cost sharing for enrollees based on whether the enrollee or provider 
notifies the PFFS plan in advance that services will be furnished).
    (b) Application. Prior authorization policies and procedures for 
coordinated care plans may only be used for one or more the following 
purposes:
    (1) To confirm the presence of diagnoses or other medical criteria 
that are the basis for coverage determinations for the specific item or 
service; or
    (2) For basic benefits, to ensure an item or service is medically 
necessary based on standards specified in Sec.  422.101(c)(1), or
    (3) For supplemental benefits, to ensure that the furnishing of a 
service or benefit is clinically appropriate.
    (c) Effect of prior authorization or pre-service approval. If the 
MA organization approved the furnishing of a covered item or service 
through a prior authorization or pre-service determination of coverage 
or payment, it may not deny coverage later on the basis of lack of 
medical necessity unless the MA organization has the authority to 
reopen the decision for good cause or fraud or similar fault per the 
reopening provisions at Sec.  422.616.
0
23. Section 422.152 is amended by adding paragraph (a)(5) to read as 
follows:


Sec.  422.152  Quality Improvement Program.

    (a) * * *
    (5) Incorporate one or more activities that reduce disparities in 
health and health care. These activities must be broadly accessible 
irrespective of race, ethnicity, national origin, religion, sex, or 
gender. These activities may be based upon health status and health 
needs, geography, or factors not listed in the previous sentence only 
as appropriate to address the relevant disparities in health and health 
care.
* * * * *
0
24. Section 422.162 is amended by--
0
a. Adding in alphabetical order to paragraph (a) a definition for 
``health equity index''; and
0
b. Revising paragraphs (b)(1) and (b)(3)(iv)(A)(1).
    The addition and revisions read as follows:


Sec.  422.162  Medicare Advantage Quality Rating System.

    (a) * * *
    Health equity index means an index that summarizes contract 
performance among those with specified social risk factors (SRFs) 
across multiple measures into a single score.
* * * * *
    (b)(1) General. CMS calculates an overall Star Rating, Part C 
summary rating, and Part D summary rating for each MA-PD contract, and 
a Part C summary rating for each MA-only contract using the 5-star 
rating system described in this subpart. Measures are assigned stars at 
the contract level and weighted in accordance with Sec.  422.166(a). 
Domain ratings are the unweighted mean of the individual measure 
ratings under the topic area in accordance with Sec.  422.166(b). 
Summary ratings are the weighted mean of the individual measure ratings 
for Part C or Part D in accordance with Sec.  422.166(c), with both the 
reward factor and CAI applied as applicable, as described in Sec.  
422.166(f). Overall Star Ratings are calculated by using the weighted 
mean of the individual measure ratings in accordance with Sec.  
422.166(d) with both the reward factor and CAI applied as applicable, 
as described in Sec.  422.166(f). CMS includes the Star Ratings 
measures in the overall and summary ratings that are associated with 
the contract type for the Star Ratings year.
* * * * *
    (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, call center measures, and improvement measures. 
The survey-based measures will 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. The Part C and D improvement measures are not calculated 
for first year consolidations.
* * * * *
0
25. Section 422.164 is amended by revising paragraph (d)(1)(v) and 
adding paragraph (e)(1)(iii) to read as follows:


Sec.  422.164  Adding, updating, and removing measures.

* * * * *
    (d) * * *
    (1) * * *
    (v) Add alternative data sources or expand modes of data 
collection.
* * * * *
    (e) * * *
    (1) * * *
    (iii) The measure steward other than CMS retires a measure.
* * * * *
0
26. Section 422.166 is amended by--
0
a. Revising paragraphs (a)(2)(i), (c)(1), (d)(1), (e)(1)(iii) and (iv), 
(e)(2), (f)(1) introductory text, and (f)(2)(i) introductory text;
0
b. Adding paragraph (f)(3); and
0
c. Revising paragraphs (g)(1), (i)(3)(iv), (i)(9)(i), and (i)(10)(i).
    The revisions and addition read as follows:


Sec.  422.166  Calculation of Star Ratings.

    (a) * * *
    (2) * * *
    (i) The method maximizes differences across the star categories and 
minimizes the differences within star categories using mean resampling 
with the

[[Page 79717]]

hierarchal clustering of the current year's data. Effective for the 
Star Ratings issued in October 2023 and subsequent years, prior to 
applying mean resampling with hierarchal clustering, Tukey outer fence 
outliers are removed. Effective for the Star Ratings issued in October 
2022 through October 2024, CMS will add a guardrail so that the 
measure-threshold-specific cut points for non-CAHPS measures do not 
increase or decrease more than the value of the cap from 1 year to the 
next. The cap is equal to 5 percentage points for measures having a 0 
to 100 scale (absolute percentage cap) or 5 percent of the restricted 
range for measures not having a 0 to 100 scale (restricted range cap). 
New measures that have been in the Part C and D Star Rating program for 
3 years or less use the hierarchal clustering methodology with mean 
resampling with no guardrail for the first 3 years in the program.
* * * * *
    (c) * * *
    (1) CMS will calculate the Part C summary ratings using the 
weighted mean of the measure-level Star Ratings for Part C, weighted in 
accordance with paragraph (e) of this section and with the applicable 
adjustments provided in paragraph (f) of this section.
* * * * *
    (d) * * *
    (1) The overall rating for a MA-PD contract will be calculated 
using a weighted mean of the Part C and Part D measure-level Star 
Ratings, weighted in accordance with paragraph (e) of this section and 
with the applicable adjustments provided in paragraph (f) of this 
section.
* * * * *
    (e) * * *
    (1) * * *
    (iii) Through the 2025 Star Ratings, patient experience and 
complaint measures receive a weight of 4. Starting with the 2026 Star 
Ratings and subsequent Star Ratings years, patient experience and 
complaint measures receive a weight of 2.
    (iv) Through the 2025 Star Ratings, access measures receive a 
weight of 4. Starting with the 2026 Star Ratings and subsequent Star 
Ratings years, access measures receive a weight of 2.
* * * * *
    (2) Rules for new and substantively updated measures. New measures 
to the Star Ratings program will receive a weight of 1 for their first 
year in the Star Ratings program. Substantively updated measures will 
receive a weight of 1 in their first year returning to the Star Ratings 
after being on the display page. In subsequent years, the measure will 
be assigned the weight associated with its category.
* * * * *
    (f) * * *
    (1) Reward factor. Through the 2026 Star Ratings, this rating-
specific reward factor is added to both the summary and overall ratings 
of contracts that qualify for this reward factor based on both high and 
stable relative performance for the rating level.
* * * * *
    (2) * * *
    (i) The CAI is added to or subtracted from the contract's overall 
and summary ratings and is applied after the reward factor adjustment 
described in paragraph (f)(1) of this section (if applicable).
* * * * *
    (3) Health equity index. Starting with the 2027 Star Ratings year 
and subsequent Star Ratings years, CMS applies a health equity index 
rating-specific factor to both the summary and overall ratings of 
contracts that qualify based on an assessment of contract performance 
on quality measures among enrollees with certain social risk factors 
(SRFs).
    (i) The health equity index (HEI) is calculated separately for the 
overall rating for MA-PDs and cost contracts including the applicable 
Part C and D measures; Part C summary rating for MA-only, MA-PD, and 
cost contracts including the applicable Part C measures; Part D summary 
rating for MA-PDs and cost contracts including the applicable Part D 
measures; and Part D summary rating for PDPs including the applicable 
Part D measures.
    (A) The SRFs included in the HEI are receipt of the low income 
subsidy or being dual eligible for Medicare and Medicaid (LIS/DE), or 
having a disability. Enrollees will be identified as LIS/DE or as 
having a disability as specified in paragraph (f)(2)(i)(B) of this 
section. If a person meets the LIS/DE criteria for only one of the two 
measurement years included in the HEI, the data for that person for 
just that year are used. Measures that are case-mix adjusted in the 
Star Ratings would be adjusted using all standard case-mix adjustors 
for the measure except for those adjusters that are the SRFs of 
interest in the index, are strongly correlated with the SRFs of 
interest, or are conceptually similar to the SRFs of interest.
    (B) The HEI is calculated by combining measure-level scores for the 
subset of enrollees with SRFs of interest included in the HEI across 
the two most recent measurement years using a modeling approach that 
includes year as an adjustor to account for potential differences in 
performance across years and to adjust the data to reflect performance 
in the second of the 2 years of data used. Data are used for contracts 
that have data for only the most recent year of the 2 years, but data 
are not used for contracts that have data for only the first of the 2 
years.
    (ii) In determining the HEI scores, a measure will be excluded from 
the calculation of the index if the measure meets any of the following:
    (A) The focus of the measurement is not the enrollee but rather the 
plan or provider.
    (B) The measure is retired, moved to display, or has a substantive 
specification change in either year of data used to construct the HEI.
    (C) The measure is applicable only to SNPs.
    (D) At least 25 percent of contracts are unable to meet the 
criteria specified in paragraph (f)(3)(iv) of this section. For Part D 
measures, this criterion is assessed separately for MA-PDs and cost 
contracts, and for PDPs.
    (iii) The Star Ratings measures that remain after the exclusion 
criteria in paragraph (f)(3)(ii) of this section have been applied will 
be included in the calculation of the health equity index. CMS will 
announce the measures being evaluated for inclusion in the calculation 
of the health equity index under this paragraph (f)(3) through the 
process described for changes in and adoption of payment and risk 
adjustment policies in section 1853(b) of the Act.
    (iv) For a measure to be included in the calculation of a 
contract's health equity index, the measure must meet the following 
criteria:
    (A) The measure must have a reliability of at least 0.7 for the 
contract when calculated for the combined subset of enrollees with the 
SRF(s) specified in paragraph (f)(3)(i)(A) of this section across 2 
years of data.
    (B) The measure-specific denominator criteria must be met for the 
contract using only the combined subset of enrollees in the contract 
with the SRF(s) specified in paragraph (f)(3)(i)(A) of this section 
across 2 years of data.
    (v) To calculate the rating-specific HEI score, the distribution of 
contract performance on each measure for the subset enrollees that have 
one or more of the specified SRFs will be assessed and separated into 
thirds, with the top third of contracts receiving 1 point, the middle 
third of contracts receiving 0 points, and the bottom third of 
contracts receiving -1 point. The rating-specific HEI will then be 
calculated as the weighted sum of points across all

[[Page 79718]]

measures included in the index using the Star Ratings measure weight 
for each measure divided by the weighted sum of the number of eligible 
measures for the given contract. The measure weight for each measure is 
the weight used for the measure in the current Star Ratings year as 
specified in paragraph (e) of this section.
    (vi) To have the HEI calculated, contracts must have at least 500 
enrollees in the most recent measurement year used in the HEI and have 
at least half of the measures included in the HEI meet the criteria 
specified under paragraph (f)(3)(iv) of this section.
    (vii) In order to qualify for the full HEI reward, contracts must 
have percentages of enrollees with the specified SRFs combined greater 
than or equal to the contract-level median in the most recent year of 
data used to calculate the HEI and a rating-specific minimum index 
score of greater than zero. In order to qualify for one-half of the HEI 
reward, contracts must have percentages of enrollees with SRFs greater 
than or equal to one-half of the contract-level median up to, but not 
including, the contract-level median percentage of enrollees with SRFs 
in the most recent year of data used to calculate the HEI and a rating-
specific minimum index score of greater than zero. One-half of the 
contract-level median and the contract-level median percentages are 
assessed separately for contracts that offer Part C and stand-alone 
Part D contracts.
    (A) For contracts with service areas wholly located in Puerto Rico, 
the percentage of enrollees that are LIS/DE or disabled is calculated 
by adding the number of DE/disabled enrollees to the estimated LIS 
percentage calculated by taking the percentage LIS/DE as calculated at 
Sec. Sec.  422.166(f)(2)(vi) and (vii) and 423.186(f)(2)(vi) and (vii) 
and subtracting the percentage of DE enrollees.
    (B) Contracts with service areas wholly located in Puerto Rico are 
excluded from the calculation of one-half of the contract-level median 
and the contract-level median.
    (viii) For contracts that have percentages of enrollees with SRFs 
greater than or equal to the contract-level median enrollment 
percentage, the HEI reward added to the contract's summary and overall 
ratings will vary from 0 to 0.4 on a linear scale, with a contract 
receiving 0 if the contract receives a score of 0 or less on the health 
equity index and 0.4 if the contract receives a score of 1 on the 
health equity index. For contracts that have percentages of enrollees 
with SRFs greater than or equal to one-half the median percentage of 
enrollees with SRFs up to, but not including, the contract-level median 
percentage of enrollees with SRFs, the health equity index reward added 
to the contract's summary and overall ratings will vary from 0 to 0.2 
on a linear scale, with a contract receiving 0 if the contract receives 
a score of 0 or less on the health equity index and 0.2 if the contract 
receives a score of 1 on the HEI. The HEI reward is rounded and 
displayed with 6 decimal places. Contracts that cannot have an HEI 
score calculated (that is, contracts that are not scored on at least 
half of the measures included in the index) would not receive a HEI 
reward.
    (ix) The HEI reward is added to the overall rating, Part C rating 
for MA-PDs and MA-only contracts (and cost contracts), Part D rating 
for MA-PDs (and cost contracts), and Part D rating for PDPs after the 
addition of the CAI as specified in paragraph (f)(2) of this section 
and application of the improvement measures as specified in paragraph 
(g) of this section and before the final overall and Part C and D 
summary ratings are calculated by rounding to the nearest half star.
* * * * *
    (g) * * *
    (1) CMS runs the calculations twice for the highest level rating 
for each contract-type (overall rating for MA-PD contracts and Part C 
summary rating for MA-only contracts), with the reward factor 
adjustment if applicable and the CAI adjustment, once including the 
improvement measure(s) and once without including the improvement 
measure(s). In deciding whether to include the improvement measures in 
a contract's final highest rating, CMS applies the following rules:
    (i) If the highest rating for each contract-type is 5 stars without 
the use of the improvement measure(s) and with the reward factor 
adjustment if applicable and the CAI adjustment under paragraph (f) of 
this section, a comparison of the highest rating with and without the 
improvement measure(s) is done. The higher rating is used for the 
rating.
    (ii) If the highest rating is less than 5 stars without the use of 
the improvement measure(s) and with the reward factor adjustment if 
applicable and CAI adjustment, the rating will be calculated with the 
improvement measure(s).
* * * * *
    (i) * * *
    (3) * * *
    (iv) For an affected contract with at least 25 percent of enrollees 
in FEMA-designated Individual Assistance areas at the time of the 
extreme and uncontrollable circumstance, the affected contract receives 
the higher of the previous year's Star Rating or the current year's 
Star Rating (and corresponding measure score) for each HOS and HEDIS-
HOS measure. The adjustment is for 3 years after the extreme and 
uncontrollable circumstance.
* * * * *
    (9) * * *
    (i) Through the 2025 Star Ratings, CMS excludes the numeric values 
for affected contracts with 60 percent or more of their enrollees in 
the FEMA-designated Individual Assistance area at the time of the 
extreme and uncontrollable circumstance from the clustering algorithms 
described in paragraph (a)(2) of this section.
* * * * *
    (10) * * *
    (i) Through the 2025 Star Ratings, CMS excludes the numeric values 
for affected contracts with 60 percent or more of their enrollees in 
the FEMA-designated Individual Assistance area at the time of the 
extreme and uncontrollable circumstance from the determination of the 
performance summary and variance thresholds for the reward factor 
described in paragraph (f)(1) of this section.
* * * * *
0
27. Section 422.202 is amended by revising paragraph (b)(1)(i) to read 
as follows:


Sec.  422.202  Participation procedures.

    (b) * * *
    (1) * * *
    (i) Are based on current evidence in widely used treatment 
guidelines or clinical literature;
* * * * *
0
28. Section 422.254 is amended by adding paragraph (a)(5) to read as 
follows.


Sec.  422.254  Submission of bids.

    (a) * * *
    (5) After an MA organization is permitted to begin marketing 
prospective plan year offerings for the following contract year 
(consistent with Sec.  422.2263(a)), the MA organization shall not 
change and must provide the benefits described in its CMS-approved plan 
benefit package (PBP) (as defined in Sec.  422.162) for the following 
contract year without modification, except where a modification in 
benefits is required by law. This prohibition on changes applies to 
cost sharing and premiums as well as benefits.
* * * * *

[[Page 79719]]

0
29. Section 422.260 is amended by -
0
a. Revising paragraphs (c)(1)(i) and (c)(2)(v);
0
b. Adding paragraph (c)(3)(iii); and
0
c. Revising paragraph (d).
    The revisions and addition read as follows:


Sec.  422.260  Appeals of quality bonus payment determinations.

* * * * *
    (c) * * *
    (1) * * *
    (i) The MA organization requesting reconsideration of its QBP 
status must do so by providing written notice to CMS within 10 business 
days of the release of its QBP status. The request must specify the 
given measure(s) in question and the basis for reconsideration such as 
a calculation error or incorrect data was used to determine the QBP 
status. Requests are limited to those circumstances where the error 
could impact an individual measure's value or the overall Star Rating. 
Based on any corrections, any applicable measure-level Star Ratings 
could go up, stay the same, or go down. The overall Star Rating also 
may go up, stay the same, or go down based on any corrections.
* * * * *
    (2) * * *
    (v) The MA organization must prove by a preponderance of evidence 
that CMS' calculations of the measure(s) and value(s) in question were 
incorrect. The burden of proof is on the MA organization to prove an 
error was made in the calculation of the QBP status.
* * * * *
    (3) * * *
    (iii) The MA organization may not request a review based on data 
inaccuracy for the following data sources: HEDIS, CAHPS, HOS, Part C 
and D Reporting Requirements, PDE, Medicare Plan Finder pricing files, 
data from the Medicare Beneficiary Database Suite of Systems, Medicare 
Advantage Prescription Drug (MARx) system, and other Federal data 
sources.
* * * * *
    (d) Reopening of QBP determinations. CMS may, on its own 
initiative, revise an MA organization's QBP status at any time after 
the initial release of the QBP determinations through April 1 of each 
year. CMS may take this action on the basis of any credible 
information, including the information provided during the 
administrative review process that demonstrates that the initial QBP 
determination was incorrect. If a contract's QBP determination is 
reopened as a result of a systemic calculation issue that impacts more 
than the MA organization that submitted an appeal, the QBP rating for 
MA organizations that did not appeal will only be updated if it results 
in a higher QBP rating.
0
30. Section 422.326 is amended by revising paragraph (c) to read as 
follows:


Sec.  422.326  Reporting and returning of overpayments.

* * * * *
    (c) Identified overpayment. The MA organization has identified an 
overpayment when the MA organization knowingly receives or retains an 
overpayment. The term ``knowingly'' has the meaning set forth in 31 
U.S.C. 3729(b)(1)(A).
* * * * *
0
31 Section 422.500 is amended by adding in alphabetical order to 
paragraph (b) definitions for ``Final Settlement Adjustment Period'', 
``Final Settlement Amount'', and ``Final Settlement Process'' to read 
as follows:


Sec.  422.500  Scope and Definitions.

* * * * *
    (b) * * *
    Final settlement adjustment period means the period of time between 
when the contract terminates and the date the MA organization is issued 
a notice of the final settlement amount.
    Final settlement amount is the final payment amount that CMS owes 
and ultimately pays to an MA organization, or that an MA organization 
owes and ultimately pays to CMS, with respect to an MA contract that 
has consolidated, non-renewed, or terminated. The final settlement 
amount is calculated by summing final retroactive payment adjustments 
for a specific contract that accumulated after that contract ceases 
operation but before the calculation of the final settlement amount and 
the following applicable reconciliation amounts that have been 
completed as of the date the notice of final settlement has been 
issued, without accounting for any data submitted after the data 
submission deadlines for calculating these reconciliation amounts:
    (i) Risk adjustment reconciliation (described in Sec.  422.310);
    (ii) Part D annual reconciliation (described in Sec.  423.343);
    (iii) Coverage Gap Discount Program annual reconciliation 
(described in Sec.  423.2320) and;
    (iv) MLR remittances (described in Sec. Sec.  422.2470 and 
423.2470).
    Final settlement process means for a contract that has been 
consolidated, nonrenewed, or terminated, the process by which CMS 
calculates the final settlement amount, issues the final settlement 
amount along with supporting documentation in the notice of final 
settlement to the MA organization, receives responses from the MA 
organization requesting an appeal of the final settlement amount, and 
takes final actions to adjudicate an appeal (if requested) and make 
payments to or receive payments from the MA organization. The final 
settlement amount will be calculated after all applicable 
reconciliations have occurred after a contract has been consolidated, 
nonrenewed, or terminated.
* * * * *
0
32. Section 422.502 is amended by adding paragraph (a)(3) to read as 
follows:


Sec.  422.502  Evaluation and determination procedures.

    (a) * * *
    (3)(i) CMS does not evaluate or issue a notice of determination 
described in paragraph (c) of this section when an organization submits 
a substantially incomplete application.
    (ii) An application is substantially incomplete when the submission 
as of the deadline for applications established by CMS is missing 
content or responsive materials for one or more sections of the 
application form required by CMS.
    (iii) A determination that an application is substantially 
incomplete is not a contract determination as defined in Sec.  422.641 
and a determination that an organization submitted a substantially 
incomplete application is not subject to the appeals provisions of 
subpart N of this part.
* * * * *
0
33. Section 422.503 is amended by revising paragraphs (e)(1) and (2) to 
read as follows:


Sec.  422.503  General provisions.

* * * * *
    (e) * * *
    (1) The contract will be amended to exclude any MA plan, MA plan 
segment, or State-licensed entity specified by CMS; and
    (2) A separate contract for any such excluded plan, segment, or 
entity will be deemed to be in place when such a request is made.
0
34. Section 422.504 is amended by adding paragraph (a)(19) to read as 
follows:


Sec.  422.504  Contract provisions.

* * * * *
    (a) * * *
    (19) Not to establish a segment of an MA plan that meets the 
criteria in Sec.  422.514(d), as determined in the procedures described 
in Sec.  422.514(e)(3),

[[Page 79720]]

with the addition of the newly enrolled individuals.
* * * * *
0
35. Section 422.510 is amended by adding paragraph (a)(4)(xvi) to read 
as follows:


Sec.  422.510  Termination of contract by CMS.

* * * * *
    (a) * * *
    (4) * * *
    (xvi) Meets the criteria in Sec.  422.514(d)(1) or (2).
* * * * *
0
36. Section 422.514 is amended by revising paragraph (d)(1) and adding 
paragraph (g) to read as follows:


Sec.  422.514  Enrollment requirements.

* * * * *
    (d) * * *
    (1) Enter into or renew a contract under this subpart, for plan 
year 2024 and subsequent years, for a MA plan that--
    (i) Is not a specialized MA plan for special needs individuals as 
defined in Sec.  422.2; and
    (ii) Projects enrollment in its bid submitted under Sec.  422.254 
that 80 percent or more enrollees of the plan's total enrollment are 
enrollees entitled to medical assistance under a State plan under title 
XIX.
* * * * *
    (g) Applicability to segments. The rules under paragraphs (d) 
through (f) of this section also apply to segments of the MA plan as 
provided for local MA plans under Sec.  422.262(c)(2).
0
32. Section 422.528 is added to read as follows:


Sec.  422.528  Final settlement process and payment

    (a) Notice of final settlement. After the calculation of the final 
settlement amount, CMS sends the MA organization a notice of final 
settlement. The notice of final settlement contains at least the 
following information:
    (1) A final settlement amount, which may be either an amount due to 
the MA organization, or an amount due from the MA organization, or $0 
if nothing is due to or from the MA organization, for the contract that 
has been consolidated, nonrenewed, or terminated;
    (2) Relevant banking and financial mailing instructions for MA 
organizations that owe CMS a final settlement amount;
    (3) Relevant CMS contact information, and;
    (4) A description of the steps for requesting an appeal of the 
final settlement amount calculation, in accordance with the 
requirements specified in Sec.  422.529.
    (b) Request for an appeal. An MA organization that disagrees with 
the final settlement amount will have 15 calendar days from issuance of 
the notice of final settlement, as described in paragraph (a) of this 
section, to request an appeal of the final settlement amount under the 
process described in Sec.  422.529.
    (1) If a MA organization agrees with the final settlement amount, 
no response is required.
    (2) If an MA organization disagrees with the final settlement 
amount but does not request an appeal within 15 calendar days from the 
date of the issuance of the notice of final settlement, CMS will not 
consider subsequent requests for appeal.
    (c) Actions if a MA organization does not request an appeal. (1) 
For MA organizations that are owed money by CMS, CMS will remit payment 
to the MA organization within 60 calendar days from the date of the 
issuance of the notice of final settlement.
    (2) For MA organizations that owe CMS money, the MA organization 
will be required to remit payment to CMS within 120 calendar days from 
issuance of the notice of final settlement. If the MA organization 
fails to remit payment within that 120-calendar-day period, CMS will 
refer the debt owed to CMS to the Department of Treasury for 
collection.
    (d) Actions following submission of a request for appeal. If an MA 
organization responds to the notice of final settlement disagreeing 
with the final settlement amount and requesting appeal, CMS will 
conduct a review under the process described atSec.  422.529.
    (e) No additional payment adjustments. After the final settlement 
amount is calculated and the notice of final settlement, as described 
under paragraph (a) of this section, is issued to the MA organization, 
CMS will no longer apply retroactive payment adjustments to the 
terminated, consolidated or nonrenewed contract and there will be no 
adjustments applied to amounts used in the calculation of the final 
settlement amount.
0
33. Section 422.529 is added to read as follows:


Sec.  422.529  Requesting an appeal of the final settlement amount

    (a) Appeals process. If an MA organization does not agree with the 
final settlement amount described in Sec.  422.528(a) of this section, 
it may appeal under the following three-level appeal process:
    (1) Reconsideration. An MA organization may request reconsideration 
of the final settlement amount described in Sec.  422.528(a) according 
to the following process:
    (i) Manner and timing of request. A written request for 
reconsideration must be filed within 15 calendar days from the date 
that CMS issued the notice of final settlement to the MA organization.
    (ii) Content of request. The written request for reconsideration 
must:
    (A) Specify the calculations with which the MA organization 
disagrees and the reasons for its disagreement,
    (B) include evidence supporting the assertion that CMS' calculation 
of the final settlement amount is incorrect, and
    (C) Not include new reconciliation data or data that was submitted 
to CMS after the final settlement notice was issued. CMS will not 
consider information submitted for the purposes of retroactively 
adjusting a prior reconciliation.
    (iii) Conduct of reconsideration. In conducting the 
reconsideration, the CMS reconsideration official reviews the 
calculations that were used to determine the final settlement amount 
and any additional evidence timely submitted by the MA organization.
    (iv) Reconsideration decision. The CMS reconsideration official 
informs the MA organization of its decision on the reconsideration in 
writing.
    (v) Effect of reconsideration decision. The decision of the CMS 
reconsideration official is final and binding unless a timely request 
for an informal hearing is filed in accordance with paragraph (a)(2) of 
this section.
    (2) Informal hearing. An MA organization dissatisfied with CMS' 
reconsideration decision made under paragraph (a)(1) of this section is 
entitled to an informal hearing as provided for under paragraphs 
(a)(2)(i) through (iv) of this section.
    (i) Manner and timing of request. A request for an informal hearing 
must be made in writing and filed with CMS within 15 calendar days of 
the date of CMS' reconsideration decision.
    (ii) Content of request. The request for an informal hearing must 
include a copy of the reconsideration decision and must specify the 
findings or issues in the decision with which the MA organization 
disagrees and the reasons for its disagreement.
    (iii) Informal hearing procedures. The informal hearing will be 
conducted in accordance with the following:
    (A) CMS provides written notice of the time and place of the 
informal hearing at least 30 days before the scheduled date.
    (B) CMS provides a copy of the record that was before CMS when CMS 
made its decision to the hearing officer.

[[Page 79721]]

    (C) The hearing officer review is conducted by a CMS hearing 
officer who neither receives testimony nor accepts any new evidence. 
The CMS hearing officer is limited to the review of the record that was 
before CMS when CMS made its decision.
    (iv) Decision of the CMS hearing officer. The CMS hearing officer 
decides the case and sends a written decision to the MA organization 
explaining the basis for the decision.
    (v) Effect of hearing officer's decision. The hearing officer's 
decision is final and binding, unless the decision is reversed or 
modified by the CMS Administrator in accordance with paragraph (a)(3) 
of this section.
    (3) Review by the Administrator. The Administrator's review will be 
conducted in the following manner:
    (i) Manner and timing of request. An MA organization that has 
received a hearing officer's decision may request review by the 
Administrator within 15 calendar days of the date of issuance of the 
hearing officer's decision under paragraph (2)(iv) of this section. An 
MA organization may submit written arguments to the Administrator for 
review.
    (ii) Discretionary review. After receiving a request for review, 
the Administrator has the discretion to elect to review the hearing 
officer's determination in accordance with paragraph (3)(iii) of this 
section or to decline to review the hearing officer's decision within 
30 calendar days of receiving the request for review. If the 
Administrator declines to review the hearing officer's decision, the 
hearing officer's decision is final and binding.
    (iii) Administrator's review. If the Administrator elects to review 
the hearing officer's decision, the Administrator will review the 
hearing officer's decision, as well as any information included in the 
record of the hearing officer's decision and any written argument 
submitted by the MA organization, and determine whether to uphold, 
reverse, or modify the hearing officer's decision.
    (iv) Effect of Administrator's decision. The Administrator's 
decision is final and binding.
    (b) Matters subject to appeal and burden of proof. (1) The MA 
organization's appeal is limited to CMS' calculation of the final 
settlement amount. CMS will not consider information submitted for the 
purposes of retroactively adjusting a prior reconciliation.
    (2) The MA organization bears the burden of proof by providing 
evidence demonstrating that CMS' calculation of the final settlement 
amount is incorrect.
    (c) Stay of financial transaction until appeals are exhausted. If 
an MA organization requests review of the final settlement amount, the 
financial transaction associated with the issuance or payment of the 
final settlement amount will be stayed until all appeals are exhausted. 
Once all levels of appeal are exhausted or the MA organization fails to 
request further review within the applicable 15-calendar-day timeframe, 
CMS will communicate with the MA organization to complete the financial 
transaction associated with the issuance or payment of the final 
settlement amount, as appropriate.
    (d) Continued compliance with other law required. Nothing in this 
section limits an MA organization's responsibility to comply with any 
other applicable statute or regulation, including under section 
1128J(d) of the Social Security Act.
0
34. Section 422.550 is amended by revising paragraph (d) to read as 
follows:


Sec.  422.550  General provisions.

* * * * *
    (d) Effect of change of ownership without novation agreement. 
Except to the extent provided in paragraph (b)(2) of this section, the 
effect of a change of ownership without a novation agreement is that--
    (1) The current MA organization, with respect to the affected 
contract, has substantially failed to comply with the regulatory 
requirements pursuant to Sec.  422.510(a)(4)(ix) and the contract may 
be subject to intermediate enrollment and marketing sanctions as 
outlined in Sec.  422.750(a)(1) and (3); intermediate sanctions imposed 
as part of this section will remain in place until CMS approves the 
change of ownership (including execution of an approved novation 
agreement), or the contract is terminated.
    (i) If the new owner does not participate in the Medicare program 
in the same service area as the affected contract, it must apply for, 
and enter into, a contract in accordance with subpart K of this part 
and part 423 of this chapter if applicable; and, if the application is 
conditionally approved, must submit, within 30 days of the conditional 
approval, the documentation required under paragraph (c) of this 
section for review and approval by CMS; or
    (ii) If the new owner currently participates in the Medicare 
program and operates in the same service area as the affected contract, 
it must, within 30 days of imposition of intermediate sanctions as 
outlined in (d)(1) of this section, submit the documentation required 
under paragraph (c) of this section for review and approval by CMS.
    (2) If the new owner fails to begin the processes required under 
paragraph (d)(1)(i) or (ii) of this section within 30 days of 
imposition of intermediate sanctions as outlined in paragraph (d)(1) of 
this section, the existing contract will be subject to termination in 
accordance with Sec.  422.510(a)(4)(ix).
* * * * *
0
35. Section 422.566 is amended by revising paragraph (d) to read as 
follows:


Sec.  422.566  Organization determinations.

* * * * *
    (d) Who must review organization determinations. If the MA 
organization expects to issue a partially or fully adverse medical 
necessity (or any substantively equivalent term used to describe the 
concept of medical necessity) decision based on the initial review of 
the request, the organization determination must be reviewed by a 
physician or other appropriate health care professional with expertise 
in the field of medicine or health care that is appropriate for the 
services at issue, including knowledge of Medicare coverage criteria, 
before the MA organization issues the organization determination 
decision. The physician or health care professional reviewing the 
request need not, in all cases, be of the same specialty or 
subspecialty as the treating physician or other health care provider. 
The physician or other health care professional must have a current and 
unrestricted license to practice within the scope of his or her 
profession in a State, Territory, Commonwealth of the United States 
(that is, Puerto Rico), or the District of Columbia.
0
36. Section 422.590 is amended by revising paragraph (b)(1) to read as 
follows:


Sec.  422.590  Timeframes and responsibility for reconsiderations.

* * * * *
    (b) * * *
    (1) If the MA organization makes a reconsidered determination that 
is completely favorable to the enrollee, the MA organization must issue 
its reconsidered determination to the enrollee (and effectuate it in 
accordance with Sec.  422.618(a)(2)) no later than 60 calendar days 
from the date it receives the request for a standard reconsideration.
* * * * *
0
37. Section 422.629 is amended by revising paragraph (k)(3) to read as 
follows:

[[Page 79722]]

Sec.  422.629  General requirements for applicable integrated plans.

* * * * *
    (k) * * *
    (3) Integrated organization determinations. If the applicable 
integrated plan expects to issue a partially or fully adverse medical 
necessity (or any substantively equivalent term used to describe the 
concept of medical necessity) decision based on the initial review of 
the request, the integrated organization determination must be reviewed 
by a physician or other appropriate health care professional with 
expertise in the field of medicine or health care that is appropriate 
for the services at issue, including knowledge of Medicare and Medicaid 
coverage criteria, before the applicable integrated plan issues the 
integrated organization determination. The physician or health care 
professional reviewing the request need not, in all cases, be of the 
same specialty or subspecialty as the treating physician or other 
health care provider. Any physician or other health care professional 
who reviews an integrated organization determination must have a 
current and unrestricted license to practice within the scope of his or 
her profession.
* * * * *
0
38. Section 422.760 is amended by revising 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)(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.
    (ii) Calculation of penalty amounts. (A) CMS will set minimum 
penalty amounts in accordance with paragraphs (b)(1) and (2) of this 
section.
    (B) CMS will announce the standard minimum penalty amounts and 
aggravating factor amounts for per determination and per enrollee 
penalties on an annual basis.
    (C) CMS has the discretion to issue penalties up to the maximum 
amount under paragraphs (b)(1) and (2) of this section when CMS 
determines that an organization's non-compliance warrants a penalty 
that is higher than would be applied under the minimum penalty amounts 
set by CMS.
* * * * *
0
39. Section 422.2261 is amended by revising paragraph (a)(2) and 
removing paragraph (a)(3).
    The revision reads as follows:


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

    (a) * * *
    (2) Materials must be submitted to the HPMS Marketing Module by the 
MA organization or, where materials have been developed by a Third 
Party Marketing Organization for multiple MA organizations or plans, by 
a Third Party Marketing Organization with prior approval of each MA 
organization on whose behalf the materials were created.
* * * * *
0
40. Section 422.2262 is amended by revising paragraph (a)(1)(ii) and 
adding paragraph (a)(1)(xix) to read as follows:


Sec.  422.2262  General communications materials and activity 
requirements.

* * * * *
    (a) * * *
    (1) * * *
    (ii) Use of superlatives, unless sources of documentation or data 
supportive of the superlative is also referenced in the material. Such 
supportive documentation or data must reflect data, reports, studies, 
or other documentation that has been published in either the current 
contract year or prior contract year.
* * * * *
    (xix) Use the Medicare name, CMS logo, and products or information 
issued by the Federal Government, including the Medicare card, in a 
misleading way.
* * * * *
0
41. Section 422.2263 is amended by adding paragraphs (b)(8) through 
(10) to read as follows:


Sec.  422.2263  General marketing requirements.

* * * * *
    (b) * * *
    (8) Advertise benefits that are not available to beneficiaries in 
the service area where the marketing appears, unless unavoidable in a 
local market.
    (9) Market any products or plans, benefits, or costs, unless the MA 
organization or marketing name(s) as listed in HPMS of the entities 
offering the referenced products or plans, benefits, or costs are 
identified in the marketing material.
    (i) MA organization or marketing names must be in 12-point font in 
print and may not be in the form of a disclaimer or fine print.
    (ii) For television, online, or social media, the MA organization 
or marketing name(s) must be either read at the same pace as the phone 
number or must be displayed throughout the entire advertisement in a 
font size equivalent to the advertised phone number or benefits.
    (iii) For radio or other voice-based advertisements, MA 
organization or marketing names must be read at the same pace as the 
advertised phone numbers.
    (10) MA organizations may not include information about savings 
available to potential enrollees that are based on a comparison of 
typical expenses borne by uninsured individuals, unpaid costs of dually 
eligible beneficiaries, or other unrealized costs of a Medicare 
beneficiary.
* * * * *
0
42. Section 422.2264 is amended by--
0
a. Adding paragraphs (a)(2)(i)(A) and reserved (a)(2)(i)(B);
0
b. Revising paragraph (b)(2);
0
c. Removing paragraphs (c)(1)(ii)(C) and (E).
0
d. Redesignating paragraph (c)(1)(ii)(D) as paragraph (c)(1)(ii)(C); 
and
0
e. Revising paragraphs (c)(2)(i), (c)(3)(i), and (c)(3)(iii)(A) and 
(B).
    The additions and revisions read as follows:


Sec.  422.2264  Beneficiary contact.

* * * * *
    (a) * * *
    (2) * * *
    (i) * * *
    (A) Contact is considered to be unsolicited door-to-door contact 
unless an appointment, at the beneficiary's home at the applicable date 
and time, was previously scheduled.
    (B) [Reserved].
    (b) * * *
    (2) If the MA organization reaches out to beneficiaries regarding 
plan business, as outlined in this section, the MA organization must 
provide notice to all beneficiaries whom the plan contacts as least 
once annually, in writing, of the individual's ability to opt out of 
future calls regarding plan business.
* * * * *
    (c) * * *
    (2) * * *

[[Page 79723]]

    (i) Marketing events are prohibited from taking place within 12 
hours of an educational event, in the same location. The same location 
is defined as the entire building or adjacent buildings.
* * * * *
    (3) * * *
    (i) At least 48 hours 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).
* * * * *
    (iii) * * *
    (A) Market any health care related product during a marketing 
appointment beyond the scope agreed upon by the beneficiary, and 
documented by the plan in a Scope of Appointment, business reply card, 
or request to receive additional information, which is valid for 6 
months following the date of beneficiary's signature date or the date 
of the beneficiary's initial request for information.
    (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; such Scope of Appointment is valid for six (6) months 
following the beneficiary's signature date.
* * * * *
0
43. Section 422.2265 is amended by revising paragraph (b)(4) to read as 
follows:


Sec.  422.2265  Websites.

* * * * *
    (b) * * *
    (4) A provider directory searchable by every element required in 
the model provider directory, such as name, location, specialty.
* * * * *
0
44. Section 422.2267 is amended by--
0
a. Redesignating paragraph (a)(3) as paragraph (a)(5);
0
b. Adding new paragraph (a)(3) and paragraph (a)(4);
0
c. Revising paragraph (e)(4) introductory text;
0
d. Adding paragraph (e)(4)(viii);
0
e. Revising paragraphs (e)(5)(ii)(A) introductory text, (e)(10) 
introductory text, and (e)(12); and
0
f. Revising paragraphs (e)(30)(vi) and (e)(41).
    The additions and revisions read as follows:


Sec.  422.2267  Required materials and content.

* * * * *
    (a) * * *
    (3) Be provided to enrollees on a standing basis in any non-English 
language identified in paragraphs (a)(2) and (4) of this section or 
accessible format using auxiliary aids and services upon receiving a 
request for the materials in another language or accessible format 
using auxiliary aids and services or when otherwise learning of the 
enrollee's preferred language or need for an accessible format using 
auxiliary aids and services. This requirement also applies to the 
individualized plans of care described in Sec.  422.101(f)(1)(ii) for 
special needs plan enrollees.
    (4) For any fully integrated dual eligible special needs plan or 
highly integrated dual eligible special needs plan, as defined at Sec.  
422.2, or applicable integrated plan, as defined at Sec.  422.561, be 
translated into the language(s) required by the Medicaid translation 
standard as specified through their capitated Medicaid managed care 
contract in addition to the language(s) required by the Medicare 
translation standard in paragraph (a)(2) of this section.
    (5) * * *
    (e) * * *
    (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. For telephonic enrollments, the 
contents of the PECL must be reviewed with the prospective enrollee 
prior to the completion of the enrollment. It references information on 
the following:
* * * * *
    (viii) Effect on current coverage.
    (5) * * *
    (ii) * * *
    (A) Information on the following medical benefits, starting in the 
top half of the first page and in the order as identified in paragraphs 
(A)(1) through (A)(10), including--
* * * * *
    (10) Non-renewal Notice. This is a standardized communications 
material through which plans must provide the information required 
under Sec.  422.506.
* * * * *
    (12) Provider Termination Notice. This is a model communications 
material through which plans must provide the information required 
under Sec.  422.111(e).
    (i) The written Provider Termination Notice must be provided in 
hard copy via U.S. mail (first class postage is recommended, but not 
required).
    (ii) The written Provider Termination Notice must do all of the 
following:
    (A) Inform the enrollee that the provider will no longer be in the 
network and the date the provider will leave the network.
    (B) Include names and phone numbers of in-network providers that 
the enrollee may access for continued care (this information may be 
supplemented with information for accessing a current provider 
directory, including both online and direct mail options).
    (C) Explain how the enrollee may request a continuation of ongoing 
medical treatment or therapies with their current provider.
    (D) Provide information about the annual coordinated election 
period and the MA open enrollment period, as well as explain that an 
enrollee who is impacted by the provider termination may contact 1-800-
MEDICARE to request assistance in identifying and switching to other 
coverage, or to request consideration for a special election period, as 
specified in Sec.  422.62(b)(26), based on the individual's unique 
circumstances and consistent with existing parameters for this SEP.
    (E) Include the MA organization's call center telephone number, TTY 
number, and hours and days of operation.
    (iii) The telephonic Provider Termination Notice specified in Sec.  
422.111(e)(1)(i) must relay the same information as the written 
Provider Termination Notice as described in paragraph (e)(12)(ii) of 
this section.
* * * * *
    (30) * * *
    (vi) Is excluded from the translation requirement under paragraphs 
(a)(2) through (4) of this section; and
* * * * *
    (41) Third-party marketing organization disclaimer. This is 
standardized content. If a TPMO does not sell for all MA organizations 
in the service area the disclaimer consists of the statement: ``We do 
not offer every plan available in your area. Any information we provide 
is limited to those plans we do offer in your area which are plans 
offered by [insert list of MA organizations here]. Please contact 
Medicare.gov, 1-800-MEDICARE, or your local State Health Insurance 
Program to get information on all of your options.'' If the TPMO sells 
for all MA organizations in the service area the disclaimer consists of 
the statement: ``We offer the following plans in your area [insert list 
of MA organizations]. You can always contact Medicare.gov, 1-800-
MEDICARE, or your local State

[[Page 79724]]

Health Insurance Program for help with plan choices.'' The MA 
organization must ensure that the disclaimer is as follows:
    (i) Used by any TPMO, as defined under Sec.  422.2260, that sells 
plans on behalf of more than one MA organization.
    (ii) Verbally conveyed within the first minute of a sales call.
    (iii) Electronically conveyed when communicating with a beneficiary 
through email, online chat, or other electronic means of communication.
    (iv) Prominently displayed on TPMO websites.
    (v) Included in any marketing materials, including print materials 
and television advertisements, developed, used or distributed by the 
TPMO.
0
45. Section 422.2272 is amended by adding paragraph (e) to read as 
follows:


Sec.  422.2272  Licensing of marketing representatives and confirmation 
of marketing resources.

* * * * *
    (e) Establish and implement an oversight plan that monitors agent 
and broker activities, identifies non-compliance with CMS requirements, 
and reports non-compliance to CMS.
0
46. Section 422.2274 is amended by adding paragraph (c)(12), revising 
paragraph (g)(2)(ii), and adding paragraph (g)(4) to read as follows:


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

* * * * *
    (c) * * *
    (12) Ensure that, prior to an enrollment, CMS' required questions 
and topics regarding beneficiary needs in a health plan choice are 
fully discussed. Topics include information regarding primary care 
providers and specialists (that is, whether or not the beneficiary's 
current providers are in the plan's network), prescription drug 
coverage and costs (including whether or not the beneficiary's current 
prescriptions are covered), costs of health care services, premiums, 
benefits, and specific health care needs.
* * * * *
    (g) * * *
    (2) * * *
    (ii) Record all marketing, sales, and enrollment calls, including 
calls via web-based technology, in their entirety.
* * * * *
    (4) Personal beneficiary data collected by a TPMO may not be 
distributed to other TPMOs.

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

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

    Authority:  42 U.S.C. 1302, 1306, 1395w-101 through 1395w-152, 
and 1395hh.

0
48. Section 423.4 is amended by adding in alphabetical definitions for 
``Authorized generic drug'', ``Biological product'', ``Brand name 
biological product'', ``Immediate need individual'', ``Interchangeable 
biological product'', ``Limited Income Newly Eligible Transition (LI 
NET) sponsor'', ``MTM program'', ``Reference biological product'', and 
``Unbranded biological product'' to read as follows:


Sec.  423.4  Definitions.

* * * * *
    Authorized generic drug means a drug as defined in section 
505(t)(3) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
355(t)).
    Biological product means a product licensed under section 351 of 
the Public Health Service Act (42 U.S.C. 262).
    Brand name biological product means a product licensed under 
section 351(a) or 351(k) of the Public Health Service Act and marketed 
under a brand name.
* * * * *
    Immediate need individual means a beneficiary whose enrollment into 
LI NET is on the basis of presumed low income subsidy eligibility and 
immediate need of a Part D drug.
* * * * *
    Interchangeable biological product means a product licensed under 
section 351(k) of the Public Health Service Act (42 U.S.C. 262(k)) that 
FDA has determined to be interchangeable with a reference product in 
accordance with sections 351(i)(3) and 351(k)(4) of the Public Health 
Service Act (42 U.S.C. 262(i)(3) and 262(k)(4)).
    Limited Income Newly Eligible Transition (LI NET) sponsor means a 
Part D sponsor selected by CMS to administer the LI NET program.
* * * * *
    MTM program means a medication therapy management program described 
at Sec.  423.153(d).
* * * * *
    Reference biological product means a product as defined in section 
351(i)(4) of the Public Health Service Act (42 U.S.C. 262(i)(4)).
* * * * *
    Unbranded biological product means a product licensed under a 
biologics license application (BLA) under section 351(a) or 351(k) of 
the Public Health Service Act (42 U.S.C. 262(a) or 262(k)) and marketed 
without a brand name. It is licensed under the same BLA as the 
corresponding brand name biological product.
0
49. Section 423.32 is amended by adding paragraphs (h) and (i) to read 
as follows:


Sec.  423.32  Enrollment process.

* * * * *
    (h) Notification of reinstatement based on beneficiary cancellation 
of new enrollment. When an individual is disenrolled from a Part D plan 
due to the election of a new plan, the Part D plan sponsor must 
reinstate enrollment if the individual cancels the election in the new 
plan timeframes established by CMS. The Part D plan sponsor offering 
the plan from which the individual was disenrolled must send the member 
notification of the reinstatement within 10 calendar days of receiving 
confirmation of the individual's reinstatement.
    (i) Exception for employer group health plans. (1) In cases when a 
PDP sponsor has both a Medicare contract and a contract with an 
employer, and in which the PDP sponsor arranges for the employer to 
process election forms for Part D eligible group members who wish to 
enroll under the Medicare contract, the effective date of the election 
may be retroactive. Consistent with Sec.  423.343(a), payment 
adjustments based on a retroactive effective date may be made for up to 
a 90-day period.
    (2) In order to obtain the effective date described in paragraph 
(i)(1) of this section, the beneficiary must certify that, at the time 
of enrollment in the PDP, he or she received the disclosure statement 
specified in Sec.  423.128.
    (3) Upon receipt of the election from the employer, the PDP sponsor 
must submit the enrollment to CMS within timeframes specified by CMS.
0
50. Section 423.36 is amended by adding paragraphs (b)(4), (d), (e), 
and (f) to read as follows:


Sec.  423.36  Disenrollment process.

* * * * *
    (b) * * *
    (4) In the case of an incomplete disenrollment request--
    (i) Document its efforts to obtain information to complete the 
disenrollment request;
    (ii) Notify the individual (in writing or verbally) within 10 
calendar days of receipt of the disenrollment request.
    (iii) The organization must deny the request if any additional 
information needed to make the disenrollment request ``complete'' is 
not received within the following timeframes:
    (A) For disenrollment requests received during the AEP by December 
7,

[[Page 79725]]

or within 21 calendar days of the request for additional information, 
whichever is later; and
    (B) For disenrollment requests received during all other election 
periods, by the end of the month in which the disenrollment request was 
initially received, or within 21 calendar days of the request for 
additional information, whichever is later.
* * * * *
    (d) Incomplete disenrollment. A disenrollment request is considered 
to be incomplete if the required but missing information is not 
received by the PDP sponsor within the timeframe specified in paragraph 
(b)(4)(iii) of this section.
    (e) Exception for employer group health plans. (1) In cases when a 
PDP sponsor has both a Medicare contract and a contract with an 
employer, and in which the PDP sponsor arranges for the employer to 
process election forms for Part D eligible group members who wish to 
disenroll from the Medicare contract, the effective date of the 
election may be retroactive. Consistent with Sec.  423.343(a), payment 
adjustments based on a retroactive effective date may be made for up to 
a 90-day period.
    (2) Upon receipt of the election from the employer, the PDP sponsor 
must submit the disenrollment to CMS within timeframes specified by 
CMS.
    (f) Effect of failure to submit disenrollment notice to CMS 
promptly. If the PDP sponsor fails to submit the correct and complete 
notice required in paragraph (c)(1) of this section, the PDP sponsor 
must reimburse CMS for any capitation payments received after the month 
in which payment would have ceased if the requirement had been met 
timely.
0
51. Section 423.38 is amended by--
0
a. Revising paragraphs (c)(7), (16), and (23).
0
b. Redesignating paragraph (c)(34) as paragraph (c)(35); and
0
c. Adding new paragraph (c)(34).
    The revisions and addition read as follows:


Sec.  423.38  Enrollment periods

* * * * *
    (c) * * *
    (7) The individual is no longer eligible for the PDP because of a 
change in his or her place of residence to a location outside of the 
PDP region(s) in which the PDP is offered. Also eligible for this SEP 
are individuals who, as a result of a change in permanent residence, 
have new Part D plan options available to them.
* * * * *
    (16) The individual who is not entitled to premium free Part A and 
enrolls in Part B during the General Enrollment Period for Part B that 
starts January 1, 2023, is eligible to request enrollment in a Part D 
plan. The special enrollment period begins when the individual submits 
their Part B application and continues for the first 2 months of Part B 
enrollment. The Part D plan enrollment is effective the first of the 
month following the month the Part D sponsor receives the enrollment 
request.
* * * * *
    (23) Individuals affected by an emergency or major disaster 
declared by a Federal, State or local government entity are eligible 
for a SEP to make a Part D enrollment or disenrollment election. The 
SEP starts as of the date the declaration is made, the incident start 
date or, if different, the start date identified in the declaration, 
whichever is earlier. The SEP ends 2 full calendar months following the 
end date identified in the declaration or, if different, the date the 
end of the incident is announced, the date the incident automatically 
ends under applicable State or local law, or, if the incident end date 
is not otherwise identified, the incident end date specified in 
paragraph (c)(23)(i) of this section.
    (i) If the incident end date of an emergency or major disaster is 
not otherwise identified, the incident end date will be 1 year after 
the SEP start date or, if applicable, the date of a renewal or 
extension of the emergency or disaster declaration, whichever is later. 
Therefore, the maximum length of this SEP, if the incident end date is 
not otherwise identified, is 14 full calendar months after the SEP 
start date or, if applicable, the date of a renewal or extension of the 
emergency or disaster declaration.
    (ii) The individual is eligible for this SEP provided the 
individual--
    (A) Resides, or resided at the start of the SEP eligibility period 
described in this paragraph (c)(23), in an area for which a Federal, 
State or local government entity has declared an emergency or major 
disaster; or
    (B) Does not reside in an affected area but relies on help making 
healthcare decisions from one or more individuals who reside in an 
affected area; and
    (C) Was eligible for another election period at the time of the SEP 
eligibility period described in this paragraph (c)(23); and
    (D) Did not make an election during that other election period due 
to the emergency or major disaster.
* * * * *
    (34) The individual enrolls in Medicare premium-Part A or Part B 
using an exceptional condition SEP, as described in 42 CFR parts 406.27 
and 407.23. The SEP begins when the individual submits their premium-
Part A or Part B application and continues for the first 2 months of 
enrollment in premium Part A or Part B. The Part D plan enrollment is 
effective the first of the month following the month the Part D plan 
receives the enrollment request.
* * * * *
0
52. Section 423.44 is amended by--
0
a. Adding paragraph (b)(1)(iii);
0
b. Revising paragraphs (d)(1) introductory text, (d)(1)(iii)(A), and 
(d)(1)(v) and (vi);
0
c. Revising paragraphs (d)(2)(iii) and (iv);
0
d. Adding paragraph (d)(2)(viii);
0
e. Revising paragraphs (d)(5)(i) and (ii); and
0
f. Adding paragraph (d)(9).
    The additions and revisions read as follows:


Sec.  423.44  Involuntary disenrollment from Part D coverage.

* * * * *
    (b) * * *
    (1) * * *
    (iii) The individual provides fraudulent information on his or her 
election form or permits abuse of his or her enrollment card as 
specified in paragraph (d)(9) of this section.
* * * * *
    (d) * * *
    (1) Except as specified in paragraph (d)(1)(v) of this section, a 
PDP sponsor may disenroll an individual from the PDP for failure to pay 
any monthly premium under the following circumstances:
* * * * *
    (iii) * * *
    (A) Be at least 2 whole calendar months; and
* * * * *
    (v) A PDP sponsor may not disenroll an individual who had monthly 
premiums withheld per Sec.  423.293(a) and (e) of this part or who is 
in premium withhold status, as defined by CMS. In addition, sponsors 
may not disenroll a member or initiate the disenrollment process if the 
sponsor has been notified that an SPAP, or other payer, is paying the 
Part D portion of the premium, and the sponsor has not yet coordinated 
receipt of the premium payments with the SPAP or other payer.
    (vi) When an individual is disenrolled for failure to pay the plan 
premium, CMS (or a third party to which CMS has assigned this 
responsibility, such as a Part D sponsor) may reinstate enrollment in 
the PDP, without interruption of coverage, if the

[[Page 79726]]

individual submits a request for reinstatement for good cause within 60 
calendar days of the disenrollment effective date, has not previously 
requested reinstatement for good cause during the same 60 day period 
following the involuntary disenrollment, shows good cause for failure 
to pay within the initial grace period, and pays all overdue premiums 
within 3 calendar months after the disenrollment date. The individual 
must establish by a credible statement that failure to pay premiums 
within the initial grace period was due to circumstances for which the 
individual had no control, or which the individual could not reasonably 
have been expected to foresee.
* * * * *
    (2) * * *
    (iii) Effort to resolve the problem. The PDP sponsor must make a 
serious effort to resolve the problems presented by the individual, 
including providing reasonable accommodations, as determined by CMS, 
for individuals with mental or cognitive conditions, including mental 
illness, Alzheimer's disease, and developmental disabilities. In 
addition, the PDP sponsor must inform the individual of the right to 
use the PDP's grievance procedures, through the notices described in 
paragraph (d)(2)(viii) of this section. The individual has a right to 
submit any information or explanation that he or she may wish to the 
PDP.
    (iv) Documentation. The PDP sponsor must document the enrollee's 
behavior, its own efforts to resolve any problems, as described in 
paragraph (d)(2)(iii) of this section, and any extenuating 
circumstances. The PDP sponsor may request from CMS the ability to 
decline future enrollment by the individual. The PDP sponsor must 
submit this information and any documentation received by the 
individual to CMS. Dated copies of the notices required in paragraph 
(d)(2)(viii) of this section must also be submitted to CMS.
* * * * *
    (viii) Required notices. The PDP sponsor must provide the 
individual two notices prior to submitting the request for 
disenrollment to CMS. The first notice, the advance notice, informs the 
member that continued disruptive behavior could lead to involuntary 
disenrollment and provides the individual an opportunity to cease the 
behavior in order to avoid the disenrollment action. If the disruptive 
behavior ceases after the member receives the advance notice and then 
later resumes, the sponsor must begin the process again. The sponsor 
must wait at least 30 days after sending the advance notice before 
sending the second notice, during which 30-day period the individual 
has the opportunity to cease their behavior. The second notice, the 
notice of intent to request CMS permission to disenroll the member, 
notifies the member that the PDP sponsor will request CMS permission to 
involuntarily disenroll the member. This notice must be provided prior 
to submission of the request to CMS. These notices are in addition to 
the disenrollment submission notice required under Sec.  423.44(c).
* * * * *
    (5) * * *
    (i) The PDP must disenroll an individual, and must document the 
basis for such action, if the PDP establishes, on the basis of a 
written statement from the individual or other evidence acceptable to 
CMS, that the individual has permanently moved out of the PDP service 
area and must give the individual a written notice of the disenrollment 
that meets the requirements set forth in paragraph (c) of this section 
within 10 calendar days of the plan's confirmation of the individual's 
residence outside of the plan service area.
    (ii) Special rule. If the individual has not moved from the PDP 
service area, but has been determined by the PDP sponsor to be absent 
from the service area for more than 12 consecutive months, the PDP 
sponsor must disenroll the individual from the plan, and document the 
basis for such action, effective on the first day of the 13th month 
after the individual left the service area and must give the individual 
a written notice of the disenrollment that meets the requirements set 
forth in paragraph (c) of this section within the first ten calendar 
days of the twelfth month of an individual's temporary absence from the 
plan service area or, if the sponsor learns of the individual's 
temporary absence from the plan service area after the expiration of 
the 12 month period, within 10 calendar days of the sponsor learning of 
the absence. The individual is considered to be temporarily absent from 
the plan service area when one or more of the required materials and 
content referenced in Sec.  423.2267(e), if provided by mail, is 
returned to the Part D plan sponsor by the US Postal Service as 
undeliverable and a forwarding address is not provided.
* * * * *
    (9) Individual commits fraud or permits abuse of enrollment card--
(i) Basis for disenrollment. A PDP may disenroll the individual from a 
Part D plan if the individual--
    (A) Knowingly provides, on the election form, fraudulent 
information that materially affects the individual's eligibility to 
enroll in the PDP; or
    (B) Intentionally permits others to use his or her enrollment card 
to obtain drugs under the PDP
    (ii) Notice of disenrollment. The Part D plan must give the 
individual a written notice of the disenrollment that meets the 
requirements set forth in paragraph (c) of this section.
    (iii) Report to CMS. The Part D plan must report to CMS any 
disenrollment based on fraud or abuse by the individual.
* * * * *
0
53. Section 423.100 is amended by:
0
a. Revising the definition for ``Affected enrollee''; and
0
b. Adding, in alphabetical order, definitions for ``Corresponding 
drug''; ``Formulary crosswalk''; ``Immediate negative formulary 
change''; ``Maintenance change''; ``Negative formulary change''; ``Non-
maintenance change''; ``Other specified entities''; and ``Safety-based 
claim edit''.
    The revision and addtions read as follows:


Sec.  423.100  Definitions.

* * * * *
    Affected enrollee, as used in this subpart, means a Part D enrollee 
who is currently taking a covered Part D drug that is subject to a 
negative formulary change that affects the Part D enrollee's access to 
the drug during the current plan year.
* * * * *
    Corresponding drug means, respectively, a generic or authorized 
generic of a brand name drug, an interchangeable biological product of 
a reference biological product, or an unbranded biological product of a 
biological product.
* * * * *
    Formulary crosswalk means the process during bid submission by 
which a formulary (as defined at Sec.  423.4) is assigned to one or 
more Part D plans with single- or multi-tier benefit structures.
* * * * *
    Immediate negative formulary change means an immediate substitution 
or market withdrawal that meets the requirements of Sec.  
423.120(e)(2)(i) or (ii) respectively.
* * * * *
    Maintenance change means the following negative formulary changes:
    (1) making any negative formulary changes to a drug and at the same 
time

[[Page 79727]]

adding a corresponding drug at the same or lower cost-sharing tier and 
with the same or less restrictive prior authorization (PA), step 
therapy (ST), or quantity limit (QL) requirements (other than immediate 
substitutions that meet the requirements of Sec.  423.120(e)(2)(i));
    (2) Removing a non-Part D drug;
    (3) Adding or making more restrictive PA, ST, or QL requirements 
based upon a new FDA-mandated boxed warning;
    (4) Removing a drug deemed unsafe by FDA or withdrawn from sale by 
the manufacturer if the Part sponsor chooses not to treat it as an 
immediate negative formulary change;
    (5) Removing a drug based on long-term shortage and market 
availability;
    (6) Making negative formulary changes based upon new clinical 
guidelines or information or to promote safe utilization; or
    (7) Adding PA to help determine Part B versus Part D coverage.
    Negative formulary change means the following changes with respect 
to a covered Part D drug: removing a drug from a formulary; moving a 
drug to a higher cost-sharing tier; or 3) adding or making more 
restrictive prior authorization (PA), step therapy (ST), or quantity 
limit (QL) requirements. Negative formulary changes do not include 
safety-based claim edits which are not submitted to CMS as part of the 
formulary.
* * * * *
    Non-maintenance change means a negative formulary change that is 
not a maintenance change or an immediate negative formulary change.
* * * * *
    Other specified entities means State Pharmaceutical Assistance 
Programs (as defined in Sec.  423.454), entities providing other 
prescription drug coverage (as described in Sec.  423.464(f)(1)), 
authorized prescribers, network pharmacies, and pharmacists.
* * * * *
    Safety-based claim edit means a claim edit consistent with drug 
utilization review (DUR) requirements described at Sec.  423.153(c)(2).
* * * * *


Sec.  423.104  [Amended]

0
54. Section 423.104 is amended in paragraph (d)(2)(iv)(A)(6) by:
0
a. Removing the phrase ``subparagraph (d)(2)(iv)(A)(2)'' and adding its 
place the phrase ``paragraph (d)(2)(iv)(A)(2) of this section; and
0
b. Removing the phrase ``subject to the requirements at Sec.  
423.120(b)'' and adding in its place the phrase ``subject to the 
requirements at Sec. Sec.  423.120(b), (e), and (f)''.
0
55. Section 423.120 is amended by--
0
a. Revising paragraph (b)(3) introductory text;
0
b. Adding (b)(3)(i)(A)(5);
0
c. Revising paragraphs (b)(3)(i)(B) and (b)(3)(iii) and (iv);
0
d. Adding paragraphs (b)(3)(vii) and (viii);
0
e. Revising paragraphs (b)(5) and (6); and
0
f. Adding paragraphs (b)(8) and (9);
0
g. Revising the paragraph (c) subject heading; and
0
h. Adding paragraphs (c)(7) and (e) through (g).
    The revisions and additions read as follows:


Sec.  423.120  Access to covered Part D drugs.

* * * * *
    (b) * * *
    (3) Transition process. A Part D sponsor must provide for an 
appropriate transition process for enrollees prescribed Part D drugs 
that are not on its Part D plan's formulary, including Part D drugs 
that are on a sponsor's formulary, but require prior authorization, 
step therapy, or under a plan's drug utilization management rules, are 
subject to a quantity limit that is not a safety-based claim edit as 
defined in Sec.  423.100. The transition process must:
    (i) * * *
    (A) * * *
    (5) Current enrollees experiencing a level of care change, if the 
sponsor is notified of such change by the enrollee or their 
representative, their prescriber, the hospital or facility, or a 
pharmacy before or at the time of the request for the fill referenced 
in Sec.  423.120(b)(3)(iii).
* * * * *
    (B) Not apply in cases of immediate changes as permitted under 
paragraph (e)(2) of this section.
* * * * *
    (iii) Ensure the provision of a temporary fill when an enrollee 
requests a fill of a non-formulary drug (including Part D drugs that 
are on a plan's formulary but under a plan's utilization management 
rules require prior authorization, step therapy, or are subject to a 
quantity limit that is not a safety-based claim edit as defined in 
Sec.  423.100 during the time period specified in paragraph (b)(3)(ii) 
of this section by providing a one-time, temporary supply of at least 
an approved month's supply of medication, unless the prescription is 
written by a prescriber for less than an approved month's supply and 
requires the Part D sponsor to allow multiple fills to provide up to a 
total of an approved month's supply of medication.
    (iv) Ensure written notice is provided to each affected enrollee 
within 3 business days after adjudication of the temporary fill, 
counting the end of the first business day after adjudication as the 
end of business day 1. For long-term care residents dispensed multiple 
supplies of a Part D drug, in increments of 14-days-or-less, consistent 
with the requirements under Sec.  423.154, the written notice must be 
provided within 3 business days after adjudication of the first 
temporary fill.
* * * * *
    (vii)(A) If a Part D sponsor has access prior drug claims history 
for an enrollee (through an affiliated plan or otherwise), the sponsor 
must use a minimum 108-day claims history lookback period to determine 
whether a pharmacy claim represents a new prescription which does not 
require a transition fill or ongoing drug therapy which requires a 
transition fill.
    (B) If a Part D sponsor does not have access to prior claims 
history for the enrollee and cannot determine at point-of-sale whether 
a pharmacy claim represents a new prescription or ongoing therapy, the 
sponsor must treat the prescription as ongoing therapy which requires a 
transition fill.
    (viii) A sponsor's transition policies and procedures must include 
assurances that the Part D sponsor's Pharmacy & Therapeutics Committee 
has reviewed, provided recommendations as warranted, and approved the 
plan's transition policies and procedures to comply with this paragraph 
(b)(3) and any applicable requirement under subpart M. Such policies 
and procedures must be submitted through a process specified by CMS as 
part of the plan's annual bid.
* * * * *
    (5) Notice of formulary changes. Part D sponsors must provide 
notice of changes to CMS-approved formularies as specified in Sec.  
423.120(f). Paragraph (e)(2)(i) of this section is the successor 
regulation to paragraph (b)(5)(iv) of this section for purposes of 
section 1860D-4(b)(3)(I)(ii) of the Act .
    (6) Changes to CMS-approved formularies. Changes to CMS-approved 
formularies may be made only in accordance with paragraph (e) of this 
section.
* * * * *
    (8) Emergency supplies. A Part D sponsor must cover an emergency 
supply of a non-formulary Part D drug for a long-term care facility 
resident after any applicable transition period under paragraph (b)(3) 
of this section, including Part D drugs that are on a sponsor's 
formulary but require prior

[[Page 79728]]

authorization, step therapy, or are subject to a quantity limit that is 
not a safety-based claim edit as defined in Sec.  423.100. An emergency 
supply must be for at least 31 days of medication, regardless of 
dispensing increments, unless the prescription is written by a 
prescriber for less than 31 days.
    (9) Single-tier benefit requirement for defined standard coverage. 
A Part D plan offering Defined Standard coverage may not apply multi-
tier benefit structures to the formulary (as defined in Sec.  423.4) to 
which it has been assigned via the formulary crosswalk (as defined in 
Sec.  423.100). The formulary for such Part D plan must be assigned to 
a single-tier benefit structure, except when such formulary has also 
been assigned to one or more other Part D plans that use multi-tier 
benefit structures. When a formulary has been assigned to a Part D plan 
offering Defined Standard coverage and to one or more other Part D 
plans with multi-tier benefit structures, such multi-tier benefit 
structures do not apply to the plan offering Defined Standard coverage.
* * * * *
    (c) Use of standardized technology and identifiers.
* * * * *
    (7)(i) A Part D sponsor must attempt to confirm the validity of a 
prescriber Drug Enforcement Administration (DEA) registration number 
for a pharmacy claim for a Part D drug that is a Schedule II, III, IV 
or V drug, and if and that if the DEA registration number is not on the 
claim, the sponsor must cross-reference the prescriber's Type 1 
National Provider Identifier (NPI) on the claim to any associated 
individual prescriber DEA number.
    (ii) If the DEA registration number is not valid or active, or does 
not have an associated Schedule that is consistent with the drug for 
which a claim was submitted, the Part D sponsor must:
    (A) Reject the claim, and
    (B) Provide the pharmacy with the electronic reason code when 
rejecting the claim.
    (iii) If the pharmacy confirms the validity of the DEA registration 
number via electronic override code, or the sponsor is not able to 
cross-reference the Type 1 NPI to a prescriber DEA registration number, 
the sponsor must process the claim under the applicable benefit plan 
rules.
    (iv) With respect to written member requests for reimbursement, the 
Part D sponsor must determine whether the DEA registration number of 
the prescriber was valid and active for the date of service, and if the 
DEA registration number had an associated Schedule that was consistent 
with the drug for which the member request for reimbursement was 
submitted for the date of service. If the DEA number was not valid or 
active, or there was not an associated Schedule that was consistent 
with the drug, the Part D sponsor must:
    (A) Deny the member request for reimbursement, and
    (B) Provide the beneficiary with a written notice consistent with 
Sec.  423.568(g).
* * * * *
    (e) Approval of changes to CMS-approved formularies. A Part D 
sponsor may not make any negative formulary changes to its CMS-approved 
formulary except as specified in this section.
    (1) Negative change request. Except as provided in paragraph (e)(2) 
of this section, prior to implementing a negative formulary change, 
Part D sponsors must submit to CMS, at a time and in a form and manner 
specified by CMS, a negative formulary change request.
    (2) Exception for immediate negative formulary changes, A negative 
change request is not required in the following circumstances:
    (i) Immediate substitutions. A Part D sponsor may immediately make 
negative formulary changes to a brand name drug, a reference biological 
product, or a brand name biological product provided that at the same 
time, it adds a corresponding drug to its formulary on the same or 
lower cost-sharing tier and with the same or less restrictive formulary 
prior authorization (PA), step therapy (ST), or quantity limit (QL) 
requirements, so long as the Part D sponsor previously could not have 
included such corresponding drug on its formulary when it submitted its 
initial formulary for CMS approval consistent with paragraph (b)(2) of 
this section because such drug was not yet available on the market, and 
the Part D sponsor has provided advance general notice as specified in 
paragraph (f)(2) of this section.
    (ii) Market withdrawals. A Part D sponsor may immediately remove 
from its formulary any Part D drugs deemed unsafe by the Food and Drug 
Administration (FDA) or withdrawn from sale by their manufacturer.
    (3) Approval process for negative formulary changes--(i) 
Maintenance changes. Negative change requests for maintenance changes 
are deemed approved 30 days after submission unless CMS notifies the 
Part D sponsor otherwise.
    (ii) Non-maintenance changes. Part D sponsors must not implement 
non-maintenance changes until they receive notice of approval from CMS. 
Affected enrollees are exempt from non-maintenance changes for the 
remainder of the contract year.
    (4) Limitation on formulary changes prior to the beginning of a 
contract year. Except as provided in paragraph (e)(2) of this section, 
a Part D sponsor may not make a negative formulary change that takes 
effect between the beginning of the annual coordinated election period 
described in Sec.  423.38(b) and 60 days after the beginning of the 
contract year associated with that annual coordinated election period.
    (f) Provision of notice regarding changes to CMS-approved 
formularies--(1) Notice of negative formulary changes: Except as 
specified in paragraphs (f)(2) and (3) of this section, prior to making 
any negative formulary change, a Part D sponsor must provide notice to 
CMS and other specified entities at least 30 days prior to the date 
such change becomes effective, and must either: provide written notice 
to affected enrollees at least 30 days prior to the date the change 
becomes effective, or when an affected enrollee requests a refill of 
the Part D drug, provide such enrollee with an approved month's supply 
of the Part D drug under the same terms as previously allowed and 
written notice of the formulary change. The requirement to provide 
notice to CMS is satisfied upon a Part D sponsor's submission of a 
negative change request described in paragraph (e) of this section. The 
requirement to provide notice to other specified entities is satisfied 
by the Part D sponsor's compliance with Sec.  423.128(d)(2).
    (2) Advance general notice of immediate negative formulary changes. 
In the case of immediate negative formulary changes described in 
paragraph (e)(2) of this section, a Part D sponsor must provide advance 
general notice to all current and prospective enrollees and other 
specified entities in its formulary and other applicable beneficiary 
communication materials advising that the Part D sponsor may make 
immediate negative formulary changes consistent with the requirements 
of paragraph (e)(2) at any time. Such advance general notice must 
include information about how to access the plan's online formulary; 
how to contact the plan; and that written notice of any change made 
will describe the specific drugs involved. Advance general notice of 
immediate substitutions must also specify that the written notice will 
contain information on the steps that enrollees may take to request 
coverage determinations and exceptions. Advance general notice of 
immediate substitutions is provided to

[[Page 79729]]

CMS during bid submission. Advance general notice of market withdrawals 
is provided to CMS in the advance notice of immediate negative 
formulary changes that Part D sponsors provide to enrollees and other 
specified entities required earlier in this paragraph (f)(2).
    (3) Retrospective notice and update. In the case of a negative 
formulary change described in paragraph (e)(2) of this section, the 
Part D sponsor must provide notice to other specified entities and 
written notice to affected enrollees as soon as possible, but no later 
than by the end of the month following any month in which the change 
takes effect. The requirement to provide notice to other specified 
entities is satisfied by the Part D sponsor's compliance with Sec.  
423.128(d)(2). Part D sponsors also must submit such changes to CMS, in 
a form and manner specified by CMS, in their next required or scheduled 
formulary update.
    (4) Content of written notice: Any written notice required under 
this paragraph (other than advance general notice) must contain the 
following information--
    (i) The name of the affected covered Part D drug;
    (ii) Whether the plan is removing the covered Part D drug from the 
formulary, moving it to a higher cost-sharing tier, or adding or making 
more restrictive PA, ST, or QL requirements;
    (iii) The reason for the negative formulary change;
    (iv) Appropriate alternative drugs in the same or a lower cost-
sharing tier and the expected cost-sharing for those drugs; and
    (v) For formulary changes other than those described in paragraph 
(e)(2)(B) of this section, the means by which enrollees may obtain a 
coverage determination under Sec.  423.566 or exception under Sec.  
423.578.
    (5) Notice of other formulary changes. Part D sponsors provide 
appropriate notice of all formulary changes other than negative 
formulary changes by (A) providing advance general notice to all 
current and prospective enrollees, CMS, and other specified entities in 
formulary and other applicable beneficiary communication materials 
advising them that the Part D sponsor may make formulary changes other 
than negative formulary changes at any time and providing information 
about how to access the plan's online formulary and how to contact the 
plan; and (B) providing notice of specific formulary changes to other 
specified entities by complying with Sec.  423.128(d)(2) and to CMS by 
submitting such changes to CMS in their next required or scheduled 
formulary update.
    (g) Drug shortages. For the purpose of this section, a drug or 
biological product is subject to a shortage if it is on the U.S. Food 
and Drug Administration drug shortages list. With respect to a product 
on a Part D plan's formulary that is subject to a shortage, a Part D 
sponsor must--
    (1) For at least the duration of the shortage, permit enrollees 
affected by the shortage to obtain coverage of--
    (i) A therapeutically equivalent non-formulary drug or 
interchangeable biological product, if any, without requiring enrollees 
affected by the shortage to meet formulary exception requirements at 
Sec.  423.578(b); or
    (ii) A therapeutically equivalent formulary drug or interchangeable 
biological product, if any, that requires prior authorization or step 
therapy without requiring enrollees affected by the shortage to meet 
prior authorization or step therapy requirements.
    (2) Part D sponsors may charge the applicable cost sharing based on 
the therapeutically equivalent drug's or interchangeable biological 
product's formulary status and plan benefit design for claims submitted 
consistent with paragraph (g)(1)(i) or (ii) of this section.
0
56. Section 423.128 is amended by revising paragraphs (d)(1)(iii)(A), 
(d)(1)(v)(B), (d)(2)(iii), and (e)(6) to read as follows:


Sec.  423.128  Dissemination of Part D plan information.

* * * * *
    (d) * * *
    (1) * * *
    (iii)(A) Provides interpreters for non-English speaking and limited 
English proficient (LEP) individuals. Such interpreters must:
    (1) Adhere to generally accepted interpreter ethics principles, 
including confidentiality;
    (2) Demonstrate proficiency in speaking and understanding at least 
spoken English and the spoken language in need of interpretation; and
    (3) Interpret effectively, accurately, and impartially, both 
receptively and expressively, to and from such language(s) and English, 
using any necessary specialized vocabulary, terminology, and 
phraseology.
* * * * *
    (v) * * *
    (B) Establishes contact with a customer service representative 
within 7 minutes on no fewer than 80 percent of incoming calls 
requiring TTY services.
* * * * *
    (2) * * *
    (iii) Provides current and prospective Part D enrollees with notice 
that is timely under Sec.  423.120(f) regarding any negative formulary 
changes on its Part D plan's formulary.
* * * * *
    (e) * * *
    (6) Include any negative formulary changes applicable to an 
enrollee for which Part D plans are required to provide notice as 
described in Sec.  423.120(f).
* * * * *


Sec.  423.150  [Amended]

0
57. Section 423.150 is amended in paragraph (a) by removing the phrase 
``medication therapy management programs (MTMP)'' and adding in its 
place ``MTM programs''.
0
58. Section 423.153 is amended by:
0
a. Revising the section heading;
0
b. Removing the paragraph (d) subject heading;
0
c. Removing the phrase ``MTMP'' and adding in its place the phrase 
``MTM program'' in paragraph (d)(1) introductory text;
0
d. Revising paragraphs (d)(1)(vii)(B)(1)(i) and (d)(1)(vii)(B)(2),
0
e. Removing the phrase ``MTMP'' and adding in its place the phrase 
``MTM program'' in paragraph (d)(2) introductory text;
0
f. Revising paragraphs (d)(2)(i)(B) and (C);
0
g. Adding paragraphs (d)(2)(iii) and (iv);
0
h. Removing the phrase ``MTMP'' and adding in its place the phrase 
``MTM program'' in paragraphs (d)(3) and (4);
0
i. Revising paragraph (d)(5)(i) and (ii); and
0
j. Removing the phrase ``MTMP'' and adding in its place the phrase 
``MTM program'' in paragraph (d)(6);
    The revisions and additions read as follows:


Sec.  423.153  Drug utilization management, quality assurance, MTM 
programs, drug management programs, and access to Medicare Parts A and 
B claims data extracts.

* * * * *
    (d) MTM program.
    (1) * * *
    (vii) * * *
    (B) * * *
    (1) * * *
    (i) Must include an interactive consultation, performed by a 
pharmacist or other qualified provider, that is either in person or 
performed via synchronous telehealth; and
* * * * *
    (2) If a beneficiary is offered the annual comprehensive medication 
review and is unable to accept the offer to participate due to 
cognitive impairment, the pharmacist or other qualified provider may 
perform the

[[Page 79730]]

comprehensive medication review with the beneficiary's prescriber, 
caregiver, or other authorized individual.
* * * * *
    (2) * * *
    (i) * * *
    (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 for a plan year starting before January 1, 2024, 
and five Part D drugs being the maximum number of drugs a Part D plan 
sponsor may require for targeted enrollment for a plan year starting on 
or after January 1, 2024; and
    (C) Are likely to incur annual covered Part D drug costs greater 
than or equal to the MTM cost threshold determined by CMS, as specified 
in this paragraph (d)(2)(i)(C).
    (1) For 2011, the MTM cost threshold is set at $3,000.
    (2) For 2012 through 2023, the MTM cost threshold is set at $3,000 
increased by the annual percentage specified in Sec.  
423.104(d)(5)(iv).
    (3) Beginning January 1, 2024, the MTM cost threshold is set at the 
average annual cost of five generic drugs, as defined at Sec.  423.4, 
as determined using the PDE data specified at Sec.  
423.104(d)(2)(iv)(C).
* * * * *
    (iii) Beginning January 1, 2024, in identifying beneficiaries who 
have multiple chronic diseases under paragraph (d)(2)(i)(A) of this 
section, Part D plan sponsors must include all of the following 
diseases, and may include additional chronic diseases:
    (A) Alzheimer's disease;
    (B) Bone disease-arthritis (including osteoporosis, osteoarthritis, 
and rheumatoid arthritis);
    (C) Chronic congestive heart failure (CHF);
    (D) Diabetes;
    (E) Dyslipidemia;
    (F) End-stage renal disease (ESRD);
    (G) Human immunodeficiency virus/acquired immunodeficiency syndrome 
(HIV/AIDS);
    (H) Hypertension;
    (I) Mental health (including depression, schizophrenia, bipolar 
disorder, and other chronic/disabling mental health conditions); and
    (J) Respiratory disease (including asthma, chronic obstructive 
pulmonary disease (COPD), and other chronic lung disorders).
    (iv) Beginning January 1, 2024, in identifying the number of Part D 
drugs under paragraph (d)(2)(i)(B) of this section, Part D plan 
sponsors must include all maintenance drugs, relying on information in 
a widely accepted, commercially or publicly available drug database to 
make such determinations.
* * * * *
    (5) * * *
    (i) Describe in its application how it takes into account the 
resources used and time required to implement the MTM program it 
chooses to adopt in establishing fees for pharmacists or others 
providing MTM services for covered Part D drugs under a Part D plan.
    (ii) Disclose to CMS upon request the amount of the management and 
dispensing fees and the portion paid for MTM services to pharmacists 
and others upon request. Reports of these amounts are protected under 
the provisions of section 1927(b)(3)(D) of the Act.
* * * * *
0
59. Section 423.154 is amended by revising paragraph (c) to read as 
follows:


Sec.  423.154  Appropriate dispensing of prescription drugs in long-
term care facilities under PDPs and MA-PD plans

* * * * *
    (c) Waivers. CMS waives the requirements under paragraph (a) of 
this section, except paragraphs (a)(2) and (3), for pharmacies when 
they service intermediate care facilities for individuals with 
intellectual disabilities (ICFs/IID) and institutes for mental disease 
(IMDs) as defined in Sec.  435.1010 and for I/T/U pharmacies (as 
defined in Sec.  423.100).
* * * * *
0
60. Section 423.160 is amended by--
0
a. Revising paragraphs (b)(1)(i) through (v);
0
b. Adding paragraphs (b)(1)(vi) and (vii);
0
c. Adding paragraphs (b)(2)(v) and (b)(3)(iii);
0
d. Revising paragraph (b)(4)(ii);
0
e. Adding paragraphs (b)(4)(iii), (b)(7)(i), and a reserved (b)(7)(ii);
0
f. Revising paragraph (b)(8)(ii); and
0
g. Adding paragraph (b)(8)(iii).
    The revisions read as follows:


Sec.  423.160  Standards for electronic prescribing.

* * * * *
    (b) * * *
    (1) * * *
    (i) Prior to April 1, 2009, the standards specified in paragraphs 
(b)(2)(i), (b)(3)(i) and (ii), (b)(4), (b)(5)(i), and (b)(6).
    (ii) On or after April 1, 2009, to February 7, 2014, the standards 
specified in paragraphs (b)(2)(ii), (b)(3)(i) and (ii), (b)(4), 
(b)(5)(i) and (b)(6).
    (iii) From February 8, 2014, until February 28, 2015, the standards 
specified in paragraphs (b)(2)(ii), (b)(3)(i) and (ii), (b)(4), 
(b)(5)(ii), and (b)(6).
    (iv) From March 1, 2015 until December 31, 2019, the standards 
specified in paragraphs (b)(2)(iii), (b)(3)(i) and (ii), (b)(4)(i), 
(b)(5)(iii), and (b)(6).
    (v) From January 1, 2020 until June 30, 2023, the standards 
specified in paragraphs (b)(2)(iv) and (b)(3)(i) and (ii), (b)(4)(ii), 
(b)(5)(iii), and (b)(6) of this section.
    (vi) Beginning July 1, 2023, the standards required by paragraphs 
(b)(2)(v), (b)(3)(iii), (b)(4)(iii), (b)(5)(iii), and (b)(6) of this 
section.
    (vii) Beginning January 1, 2025, the standard specified in 
paragraph (b)(7)(i) of this section.
* * * * *
    (2) * * *
    (v) Communication of a prescription or related prescription-related 
information between prescribers and dispensers or between dispensers 
must comply with 45 CFR 170.205(b) for the business functions supported 
by the following transactions:
    (A) GetMessage.
    (B) Status.
    (C) Error.
    (D) NewRxRequest.
    (E) NewRx.
    (F) RxChangeRequest.
    (G) RxChangeResponse.
    (H) RxRenewalRequest.
    (I) Resupply.
    (J) RxRenewalResponse.
    (K) Verify.
    (L) CancelRx.
    (M) CancelRxResponse.
    (N) RxFill.
    (O) DrugAdministration.
    (P) NewRxResponseDenied.
    (Q) RxTransferInitiationRequest.
    (R) RxTransfer.
    (S) RxTransferConfirm.
    (T) RxFillIndicatorChange.
    (U) Recertification.
    (V) REMSIinitiationRequest.
    (W) REMSIinitiationResponse.
    (X) REMSRequest.
    (Y) REMSResponse.
* * * * *
    (3) * * *
    (iii) Eligibility inquiries and responses between the Part D 
sponsor and prescribers and between the Part D sponsor and dispensers 
must comply with 45 CFR 162.1202.
    (4) * * *
    (ii) From January 1, 2020, until June 30, 2023 the National Council 
for Prescription Drug Programs SCRIPT Standard, Implementation Guide 
Version 2017071, approved July 28, 2017 (incorporated by reference in 
paragraph (c)(1)(vii) of this section).

[[Page 79731]]

    (iii) Beginning July 1, 2023, comply with 45 CFR 170.205(b).
* * * * *
    (7) * * *
    (i) Beginning January 1, 2025, Part D sponsors' RTBT must comply 
with 45 CFR 170.205(c).
    (ii) [Reserved]
    (8) * * *
    (ii) From January 1, 2022 until June 30, 2023, Part D sponsors and 
prescribers must use the standard specified in paragraph (b)(8)(i) of 
this section for the transactions listed in paragraphs (b)(8)(i)(A) 
through (D) of this section.
    (iii) Beginning July 1, 2023, Part D sponsors and prescribers must 
comply with 45 CFR 170.205(b) for the business functions supported by 
the following applicable transactions:
    (A) PAInitiationRequest.
    (B) PAInitiationResponse.
    (C) PARequest.
    (D) PAResponse.
    (E) PAAppealRequest.
    (F) PAAppealResponse.
    (G) PACancelRequest.
    (H) PACancelResponse.
    (I) PANotification.
* * * * *


Sec.  423.165  [Amended]

0
15. Section 423.165 is amended in paragraph (b)(2) by removing the 
phrase ``MTMPs'' and adding the phrase ``MTM programs'' in its place.
0
61. Section 423.182 is amended by in paragraph (a) by adding in 
alphabetical order a definition for ``health equity index'' and 
revising paragraphs (b)(1) and (b)(3)(ii)(A)(1) to read as follows:


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

    (a) * * *
    Health equity index means an index that summarizes contract 
performance among those with specified social risk factors (SRFs) 
across multiple measures into a single score.
* * * * *
    (b) * * *
    (1) General. CMS calculates an overall Star Rating, Part C summary 
rating, and Part D summary rating for each MA-PD contract and a Part D 
summary rating for each PDP contract using the 5-star rating system 
described in this subpart. For PDP contracts, the Part D summary rating 
is the highest rating. Measures are assigned stars at the contract 
level and weighted in accordance with Sec.  423.186(a). Domain ratings 
are the unweighted mean of the individual measure ratings under the 
topic area in accordance with Sec.  423.186(b). Summary ratings are the 
weighted mean of the individual measure ratings for Part C or Part D in 
accordance with Sec.  423.186(c), with both the reward factor and CAI 
applied as applicable, as described in Sec.  423.186(f). Overall Star 
Ratings are calculated by using the weighted mean of the individual 
measure ratings in accordance with Sec.  423.186(d) with both the 
reward factor and CAI applied as applicable, as described in Sec.  
423.186(f). CMS includes the Star Ratings measures in the overall and 
summary ratings that are associated with the contract type for the Star 
Ratings year.
* * * * *
    (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, call center measures, and improvement measures. 
The survey-based measures will 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. The Part C and D improvement measures are not calculated 
for first year consolidations.
* * * * *
0
62. Section 423.184 is amended by revising paragraph (d)(1)(v) and 
adding paragraph (e)(1)(iii) to read as follows:


Sec.  423.184  Adding, updating, and removing measures.

* * * * *
    (d) * * *
    (1) * * *
    (v) Add alternative data sources or expand modes of data 
collection.
* * * * *
    (e) * * *
    (1) * * *
    (iii) The measure steward other than CMS retires a measure.
* * * * *
0
63. Section 423.186 is amended by--
0
a. Revising paragraphs (a)(2)(i), (c)(1), (d)(1), (e)(1)(iii) and (iv), 
(e)(2), (f)(1) introductory text, and (f)(2)(i) introductory text;
0
b. Adding paragraphs at (f)(3); and
0
c. Revising paragraphs (g)(1), (i)(7)(i), and (i)(8)(i).
    The revisions and addition read as follows:


Sec.  423.186  Calculation of Star Ratings.

    (a) * * *
    (2) * * *
    (i) The method maximizes differences across the star categories and 
minimizes the differences within star categories using mean resampling 
with the hierarchal clustering of the current year's data. Effective 
for the Star Ratings issued in October 2023 and subsequent years, prior 
to applying mean resampling with hierarchal clustering, Tukey outer 
fence outliers are removed. Effective for the Star Ratings issued in 
October 2022 through October 2024, CMS will add a guardrail so that the 
measure-threshold-specific cut points for non-CAHPS measures do not 
increase or decrease more than the value of the cap from 1 year to the 
next. The cap is equal to 5 percentage points for measures having a 0 
to 100 scale (absolute percentage cap) or 5 percent of the restricted 
range for measures not having a 0 to 100 scale (restricted range cap). 
New measures that have been in the Part C and D Star Rating program for 
3 years or less use the hierarchal clustering methodology with mean 
resampling with no guardrail for the first 3 years in the program.
* * * * *
    (c) * * *
    (1) CMS will calculate the Part D summary ratings using the 
weighted mean of the measure-level Star Ratings for Part D, weighted in 
accordance with paragraph (e) of this section and with the applicable 
adjustments provided in paragraph (f) of this section.
* * * * *
    (d) * * *
    (1) The overall rating for a MA-PD contract will be calculated 
using a weighted mean of the Part C and Part D measure-level Star 
Ratings, weighted in accordance with paragraph (e) of this section and 
with the applicable adjustments provided in paragraph (f) of this 
section.
* * * * *
    (e) * * *
    (1) * * *
    (iii) Through the 2025 Star Ratings, patient experience and 
complaint measures receive a weight of 4. Starting with the 2026 Star 
Ratings and subsequent Star Ratings years, patient experience and 
complaint measures receive a weight of 2.
    (iv) Through the 2025 Star Ratings, access measures receive a 
weight of 4. Starting with the 2026 Star Ratings and subsequent Star 
Ratings years, access measures receive a weight of 2.
* * * * *
    (2) Rules for new and substantively updated measures. New measures 
to the Star Ratings program will receive a weight of 1 for their first 
year in the Star Ratings program. Substantively updated measures will 
receive a weight of 1 in their first year returning to the Star Ratings 
after being on the display page. In subsequent years, the measure will 
be

[[Page 79732]]

assigned the weight associated with its category.
* * * * *
    (f) * * *
    (1) Reward factor. Through the 2026 Star Ratings, this rating-
specific reward factor is added to both the summary and overall ratings 
of contracts that qualify for this reward factor based on both high and 
stable relative performance for the rating level.
* * * * *
    (2) * * *
    (i) The CAI is added to or subtracted from the contract's overall 
and summary ratings and is applied after the reward factor adjustment 
described in paragraph (f)(1) of this section (if applicable).
* * * * *
    (3) Health equity index. Starting with the 2027 Star Ratings year 
and subsequent Star Ratings years, CMS applies a health equity index 
rating-specific factor to both the summary and overall ratings of 
contracts that qualify based on an assessment of contract performance 
on quality measures among enrollees with certain social risk factors 
(SRFs).
    (i) The health equity index (HEI) is calculated separately for the 
overall rating for MA-PDs and cost contracts including the applicable 
Part C and D measures; Part C summary rating for MA-only, MA-PD, and 
cost contracts including the applicable Part C measures; Part D summary 
rating for MA-PDs and cost contracts including the applicable Part D 
measures; and Part D summary rating for PDPs including the applicable 
Part D measures.
    (A) The SRFs included in the HEI are receipt of the low income 
subsidy or being dual eligible for Medicare and Medicaid (LIS/DE), or 
having a disability. Enrollees will be identified as LIS/DE or as 
having a disability as specified in paragraph (f)(2)(i)(B) of this 
section. If a person meets the LIS/DE criteria for only one of the two 
measurement years included in the HEI, the data for that person for 
just that year are used. Measures that are case-mix adjusted in the 
Star Ratings would be adjusted using all standard case-mix adjustors 
for the measure except for those adjusters that are the SRFs of 
interest in the index, are strongly correlated with the SRFs of 
interest, or are conceptually similar to the SRFs of interest.
    (B) The HEI is calculated by combining measure-level scores for the 
subset of enrollees with SRFs of interest included in the HEI across 
the two most recent measurement years using a modeling approach that 
includes year as an adjustor to account for potential differences in 
performance across years and to adjust the data to reflect performance 
in the second of the 2 years of data used. Data are used for contracts 
that have data for only the most recent of the 2 years, but data are 
not used for contracts that have data for only the first of the 2 
years.
    (ii) In determining the HEI scores, a measure will be excluded from 
the calculation of the index if the measure meets any of the following:
    (A) The focus of the measurement is not the enrollee but rather the 
plan or provider.
    (B) The measure is retired, moved to display, or has a substantive 
specification change in either year of data used to construct the HEI.
    (C) The measure is applicable only to SNPs.
    (D) At least 25 percent of contracts are unable to meet the 
criteria specified in paragraph (f)(3)(iv) of this section. For Part D 
measures, this criterion is assessed separately for MA-PDs and cost 
contracts, and for PDPs.
    (iii) The Star Ratings measures that remain after the exclusion 
criteria in paragraph (f)(3)(ii) of this section have been applied will 
be included in the calculation of the health equity index. CMS will 
announce the measures being evaluated for inclusion in the calculation 
of the health equity index under this paragraph (f)(3) of this section 
through the process described for changes in and adoption of payment 
and risk adjustment policies in section 1853(b) of the Act.
    (iv) For a measure to be included in the calculation of a 
contract's health equity index, the measure must meet the following 
criteria:
    (A) The measure must have a reliability of at least 0.7 for the 
contract when calculated for the combined subset of enrollees with the 
SRF(s) specified in paragraph (f)(3)(i)(A) of this section across 2 
years of data.
    (B) The measure-specific denominator criteria must be met for the 
contract using only the combined subset of enrollees with the SRF(s) 
specified in paragraph (f)(3)(i)(A) of this section across 2 years of 
data.
    (v) To calculate the rating-specific HEI score, the distribution of 
contract performance on each measure for the subset enrollees that have 
one or more of the specified SRFs will be assessed and separated into 
thirds, with the top third of contracts receiving 1 point, the middle 
third of contracts receiving 0 points, and the bottom third of 
contracts receiving -1 point. The rating-specific HEI will then be 
calculated as the weighted sum of points across all measures included 
in the index using the Star Ratings measure weight for each measure 
divided by the weighted sum of the number of eligible measures for the 
given contract. The measure weight for each measure is the weight used 
for the measure in the current Star Ratings year as specified in 
paragraph (e) of this section.
    (vi) To have the HEI calculated, contracts must have at least 500 
enrollees in the most recent measurement year used in the HEI and have 
at least half of the measures included in the HEI meet the criteria 
specified under paragraph (f)(3)(iv) of this section.
    (vii) In order to qualify for the full HEI reward, contracts must 
have percentages of enrollees with the specified SRFs combined greater 
than or equal to the contract-level median in the most recent year of 
data used to calculate the HEI and a rating-specific minimum index 
score of greater than zero. In order to qualify for one-half of the HEI 
reward, contracts must have percentages of enrollees with SRFs greater 
than or equal to one-half of the contract-level median up to, but not 
including, the contract-level median percentage of enrollees with SRFs 
in the most recent year of data used to calculate the HEI and a rating-
specific minimum index score of greater than zero. One-half of the 
contract-level median and the contract-level median percentages are 
assessed separately for contracts that offer Part C and stand-alone 
Part D contracts.
    (A) For contracts with service areas wholly located in Puerto Rico, 
the percentage of enrollees that are LIS/DE or disabled is calculated 
by adding the number of DE/disabled enrollees to the estimated LIS 
percentage calculated by taking the percentage LIS/DE as calculated at 
Sec. Sec.  422.166(f)(2)(vi) and (vii) and 423.186(f)(2)(vi) and (vii) 
and subtracting the percentage of DE enrollees.
    (B) Contracts with service areas wholly located in Puerto Rico are 
excluded from the calculation of one-half of the contract-level median 
and the contract-level median.
    (viii) For contracts that have percentages of enrollees with SRFs 
greater than or equal to the contract-level median enrollment 
percentage, the HEI reward added to the contract's summary and overall 
ratings will vary from 0 to 0.4 on a linear scale with a contract 
receiving 0 if the contract receives a score of 0 or less on the health 
equity index and 0.4 if the contract receives a score of 1 on the 
health equity index. For contracts that have percentages of enrollees 
with SRFs

[[Page 79733]]

greater than or equal to one-half the median percentage of enrollees 
with SRFs up to, but not including, the contract-level median 
percentage of enrollees with SRFs, the HEI reward added to the 
contract's summary and overall ratings will vary from 0 to 0.2 on a 
linear scale, with a contract receiving 0 if the contract receives a 
score of 0 or less on the HEI and 0.2 if the contract receives a score 
of 1 on the health equity index. The HEI reward is rounded and 
displayed with 6 decimal places. Contracts that cannot have a health 
equity index score calculated (that is, contracts that are not scored 
on at least half of the measures included in the index) would not 
receive a HEI reward.
    (ix) The HEI reward is added to the overall rating, Part C rating 
for MA-PDs and MA-only contracts (and cost contracts), Part D rating 
for MA-PDs (and cost contracts), and Part D rating for PDPs after the 
addition of the CAI as specified in paragraph (f)(2) of this section 
and application of the improvement measures as specified in paragraph 
(g) of this section and before the final overall and Part C and D 
summary ratings are calculated by rounding to the nearest half star.
    (g) * * *
    (1) CMS runs the calculations twice for the highest level rating 
for each contract-type (overall rating for MA-PD contracts and Part D 
summary rating for PDPs), with the reward factor adjustment if 
applicable and the CAI adjustment, once including the improvement 
measure(s) and once without including the improvement measure(s). In 
deciding whether to include the improvement measures in a contract's 
final highest rating, CMS applies the following rules:
    (i) If the highest rating for each contract-type is 5 stars without 
the use of the improvement measure(s) and with the reward factor 
adjustment if applicable and the CAI adjustment under paragraph (f) of 
this section, a comparison of the highest rating with and without the 
improvement measure(s) is done. The higher rating is used for the 
rating.
    (ii) If the highest rating is less than 5 stars without the use of 
the improvement measure(s) and with the reward factor adjustment if 
applicable and CAI adjustment, the rating will be calculated with the 
improvement measure(s).
* * * * *
    (i) * * *
    (7) * * *
    (i) Through the 2025 Star Ratings, CMS excludes the numeric values 
for affected contracts with 60 percent or more of their enrollees in 
the FEMA-designated Individual Assistance area at the time of the 
extreme and uncontrollable circumstance from the clustering algorithms 
described in paragraph (a)(2) of this section.
* * * * *
    (8) * * *
    (i) Through the 2025 Star Ratings, CMS excludes the numeric values 
for affected contracts with 60 percent or more of their enrollees in 
the FEMA-designated Individual Assistance area at the time of the 
extreme and uncontrollable circumstance from the determination of the 
performance summary and variance thresholds for the reward factor 
described in paragraph (f)(1) of this section.
* * * * *
0
64. Section 423.265 is amended by
0
a. Redesignating paragraphs (b)(2) and (3) as paragraphs (b)(3) and 
(4), respectively;
0
b. Adding paragraph heading to the newly redesignated paragraph (b)(4); 
and
0
c. Adding new paragraph (b)(2) and paragraph (b)(5).
    The additions read as follows:


Sec.  423.265  Submission of bids and related information.

* * * * *
    (b) * * *
    (2) Substantial differences between bids--(i) General rule. Except 
as provided in paragraph (b)(2)(ii) of this section, potential Part D 
sponsors' bid submissions must reflect differences in benefit packages 
or plan costs that CMS determines to represent substantial differences 
relative to a sponsor's other bid submissions. In order to be 
considered ``substantially different,'' each bid must be significantly 
different from the sponsor's other bids with respect to beneficiary 
out-of-pocket costs or formulary structures.
    (ii) Exception. A potential Part D sponsor's enhanced bid 
submission does not have to reflect the substantial differences as 
required in paragraph (b)(2)(i) of this section relative to any of its 
other enhanced bid submissions.
* * * * *
    (4) Bid acceptance. * * *
    (5) Limitations on changes. After a Part D sponsor is permitted to 
begin marketing prospective plan year offerings for the following 
contract year (consistent with Sec.  423.2263(a)), the Part D sponsor 
must not change, and must provide the benefits described in its CMS-
approved plan benefit package (PBP) (as defined at Sec.  423.182) for 
the contract year without modification, except where a modification in 
benefits is required by law.
* * * * *
0
65. Section 423.272 is amended by adding paragraph (b)(5) to read as 
follows:


Sec.  423.272  Review and negotiation of bid and approval of plans 
submitted by potential Part D sponsors.

* * * * *
    (b) * * *
    (5) Limit on number of PDP contracts held by subsidiaries of the 
same parent organization in a region--(i) General. Except as provided 
in paragraphs (b)(5)(ii) and (iii) of this section, CMS does not 
approve a bid when it would result in a PDP sponsor (or a PDP sponsor's 
parent organization), directly or through its subsidiaries, offering 
plan benefit packages under more than one PDP contract in a PDP region.
    (ii) Transition period for PDP sponsors with new acquisitions. CMS 
does not approve a bid offered by a PDP sponsor (or a PDP sponsor's 
parent organization, directly or through a subsidiary) that purchased, 
otherwise acquired, or merged with another PDP sponsor if, after a 
transition period of two bid cycles after such purchase, acquisition, 
or merger, as determined by CMS, such bid approval would result in the 
PDP sponsor (or the PDP sponsor's parent organization), directly or 
through its subsidiaries, offering plan benefit packages under more 
than one PDP contract in a PDP region.
    (iii) Transition period for PDP sponsors offering plans in a region 
under more than one contract on January 1, 2024. After a transition 
period of two bid cycles, as determined by CMS, CMS does not approve a 
bid offered by a PDP sponsor (or a PDP sponsor's parent organization, 
directly or through a subsidiary) that offered plan benefit packages in 
a PDP region under more than one PDP contract if it such bid approval 
would result in the PDP sponsor (or a PDP sponsor's parent 
organization), directly or through its subsidiaries, offering plan 
benefit packages under more than one PDP contract in a PDP region.
    (iv) Limitation on PDP contracts per region not applicable to 
employer group waiver plans. Notwithstanding any other provisions of 
this paragraph, a PDP sponsor may offer a PDP contract in the same 
region as another contract held by the sponsor or the sponsor's parent 
organization, directly or through its subsidiaries, if one or both 
contracts only offer employer group waiver plans in that region.
* * * * *

[[Page 79734]]

Sec.  423.293  [Amended]

0
66. Section 423.293 is amended in paragraph (a)(4) by removing the 
phrase ``Medicare Advantage organization'' and adding in its place 
``Part D sponsor''.
0
67. Section 423.294 is added to subpart F to read as follows:


Sec.  423.294  Failure to collect and incorrect collections of premiums 
and cost sharing.

    (a) Requirement to collect premiums and cost sharing. A Part D 
sponsor violates the uniform benefit provisions at Sec.  423.104(b) if 
it fails to collect or incorrectly collects applicable cost sharing, or 
fails to collect or incorrectly collects premiums as required by Sec.  
422.262(e) of this chapter:
    (1) In accordance with the timing of premium payments; or
    (2) At the time a drug is dispensed; or
    (3) By billing the enrollee or another appropriate party after the 
fact.
    (b) Refunds of incorrect collections--
    (1) Definitions. As used in this section the following definitions 
are applicable:
    Amounts incorrectly collected. (A) Means amounts that exceed the 
monthly Part D enrollee premium limits under Sec.  423.286 or exceed 
permissible cost-sharing or copayment amounts as specified in Sec.  
423.104(d) through (f), whether paid by or on behalf of the enrollee;
    (B) Includes amounts collected with respect to an enrollee who was 
believed to be entitled to Medicare benefits but was later found not to 
be entitled; and
    (C) Excludes de minimis amounts, as calculated per PDE transaction 
or per monthly premium billing.
    De minimis amounts means an amount per PDE transaction for claims 
adjustments and per month for premium adjustments that does not exceed 
the de minimis amount determined for purposes of Sec.  423.34(c)(2).
    Other amounts due means amounts due to affected enrollees or others 
on their behalf (other than de minimis amounts) for covered Part D 
drugs that were--
    (A) Accessed at an out-of-network pharmacy in accordance with the 
requirements at Sec.  423.124; or
    (B) Initially denied but, upon appeal, found to be covered Part D 
drugs the enrollee was entitled to have provided by the Part D plan.
    (2) General rule. A Part D sponsor must make a reasonable effort to 
identify all amounts incorrectly collected and to pay any other amounts 
due during the timeframe for coordination of benefits as established at 
Sec.  423.466(b). A Part D sponsor must issue a refund for an 
identified enrollee overpayment within the timeframe specified at Sec.  
423.466(a).
    (3) Refund methods--(i) Lump-sum payment. The Part D sponsor must 
use lump-sum payments for the following:
    (A) Amounts incorrectly collected as cost-sharing.
    (B) Other amounts due.
    (C) All amounts due if the Part D plan is going out of business or 
terminating its Part D contract for a prescription drug plan(s).
    (ii) Premium adjustment, lump-sum payment, or both. If the amounts 
incorrectly collected were in the form of premiums, or included 
premiums as well as other charges, the Part D sponsor may refund by 
adjustment of future premiums or by a combination of premium adjustment 
and lump-sum payments.
    (iii) Refund when enrollee has died or cannot be located. If an 
enrollee has died or cannot be located after reasonable effort, the 
Part D sponsor must make the refund in accordance with State law.
    (4) Premium reduction and compliance. If the Part D sponsor does 
not issue the refund as required under this section within the 
timeframe specified at Sec.  423.466(a), CMS will reduce the premium 
the Part D sponsor is allowed to charge a Part D enrollee by the 
amounts incorrectly collected or otherwise due. In addition, the Part D 
plan may receive compliance notices from CMS or, depending on the 
extent of the non-compliance, be the subject of an intermediate 
sanction (for example, suspension of marketing and enrollment 
activities) in accordance with subpart O of this part.
    (c) Collections of cost-sharing and premium amounts--(1) General 
rule. A Part D sponsor must make a reasonable effort to attempt to 
collect cost sharing from a beneficiary or to bill cost sharing or 
premiums to another appropriate party for all amounts other than de 
minimis amounts.
    (2) Timeframe. Recovery notices must be processed and issued in 
accordance with the timeframe specified at Sec.  423.466(a). A Part D 
sponsor must make a reasonable effort to attempt to collect these 
amounts during the timeframe for coordination of benefits as 
established at Sec.  423.466(b).
    (3) Retroactive collection of premiums. Nothing in this section 
alters the requirements of Sec.  423.293(a)(4) of this part with 
respect to retroactive collection of premiums.
0
68. Section 423.308 is amended by:
0
a. Revising the introductory text and paragraph (1) of the definition 
of ``Gross covered prescription drug costs''; and
0
b. Adding in alphabetical order a definition for ``Reopening''.
    The revisions and addition read as follows:


Sec.  423.308  Definitions and terminology.

* * * * *
    Gross covered prescription drug costs means those costs incurred 
under a Part D plan, excluding administrative costs, but including 
dispensing fees, during the coverage year. They equal the sum of the 
following:
    (1) The share of actual costs (as defined by Sec.  423.100 of this 
part) paid by the Part D plan that is received as reimbursement by the 
pharmacy, or other dispensing entity, reimbursement paid to indemnify 
an enrollee when the reimbursement is associated with an enrollee 
obtaining covered Part D drugs under the Part D plan, or payments made 
by the Part D sponsor to other parties listed in Sec.  423.464(f)(1) of 
this part with which the Part D sponsor must coordinate benefits, 
including other Part D plans, or as the result of any reconciliation 
process developed by CMS under Sec.  423.464 of this part.
* * * * *
    Reopening--(1) Global reopening means a reopening under Sec.  
423.346 in which CMS includes all Part D sponsor contracts that meet 
the inclusion criteria at Sec.  423.346(g).
    (2) Targeted reopening means a reopening under Sec.  423.346 in 
which CMS includes one or more (but not all) Part D sponsor contracts 
that meet the inclusion criteria at Sec.  423.346(g).
* * * * *
0
69. Section 423.346 is amended by--
0
a. Revising paragraph (a) introductory text;
0
b. Removing ``within 4 years'' and adding ``within 6 years'' in its 
place in paragraph (a)(2); and
0
c. Adding paragraphs (e) through (g).
    The revision and additions read as follows:


Sec.  423.346  Reopening.

    (a) CMS may conduct a global or targeted reopening to reopen and 
revise an initial or reconsidered final payment determination 
(including a determination on the final amount of direct subsidy 
described in Sec.  423.329(a)(1), final reinsurance payments described 
in Sec.  423.329(c), the final amount of the low income subsidy 
described in Sec.  423.329(d), or final risk corridor payments as 
described in Sec.  423.336) or the Coverage Gap Discount Reconciliation 
(as described at Sec.  423.2320(b))--
* * * * *
    (e) CMS will notify the sponsor(s) that will be included in the 
reopening of its intention to conduct a global or targeted

[[Page 79735]]

reopening when it is necessary for the sponsor(s) to submit 
prescription drug event (PDE) data and/or direct and indirect 
remuneration (DIR) for the reopening. The notification to sponsor(s) 
will include the following:
    (1) The date by which PDE and/or DIR data must be accepted by CMS 
to be included in the reopening, which will be at least 90 calendar 
days after the date of the notification, and
    (2) A statement indicating the Part D contracts or types of 
contracts that will be included in the reopening.
    (f) CMS will announce when it has completed a reopening and provide 
the sponsor(s) with the following information:
    (1) A description of the data used in the reopening,
    (2) A statement indicating the Part D contracts or types of 
contracts that were included in the reopening,
    (3) The date by which reports describing the reopening results will 
be available to the sponsor, and
    (4) The date by which a sponsor must submit an appeal, pursuant to 
Sec.  423.350, if the sponsor disagrees with the reopening results.
    (g) Inclusion criteria:
    (1) For a global reopening, CMS includes only those Part D sponsor 
contracts that were in effect for the contract year being reopened and 
for whom CMS has not sent the final settlement ``Notice of final 
settlement,'' as described at Sec.  423.521(a), as of the date CMS 
announces the completion of the reopening pursuant to paragraph (f) of 
this section.
    (2) For a target reopening, CMS includes only Part D sponsor 
contracts that meet the criteria for inclusion in a global reopening as 
specified in paragraph (1) of this section and that CMS specifies for 
inclusion in the reopening as provided in paragraph (e)(2) or (f)(2) of 
this section.
0
70. Section 423.360 is amended by revising paragraph (c) to read as 
follows:


Sec.  423.360  Reporting and returning of overpayments.

* * * * *
    (c) Identified overpayment. The Part D sponsor has identified an 
overpayment when the Part D sponsor knowingly receives or retains an 
overpayment. The term ``knowingly'' has the meaning set forth in 31 
U.S.C. 3729(b)(1)(A).
* * * * *
0
71. Section 423.501 is amended by adding in alphabetical order 
definitions for ``Final settlement amount'', ``Final settlement 
process'', and ``Final settlement adjustment period'' to read as 
follows:


Sec.  423.501  Definitions.

* * * * *
    Final settlement amount is the final payment amount that CMS owes 
and ultimately pays to a Part D sponsor, or that a Part D sponsor owes 
and ultimately pays to CMS, with respect to a Part D contract that has 
consolidated, non-renewed, or terminated. The final settlement amount 
is calculated by summing final retroactive payment adjustments for a 
specific contract that accumulated after that contract ceases operation 
but before the calculation of the final settlement amount and the 
following applicable reconciliation amounts that have been completed as 
of the date the notice of final settlement has been issued, without 
accounting for any data submitted after the data submission deadlines 
for calculating these reconciliation amounts:
    (1) Risk adjustment reconciliation, as applicable (described in 
Sec.  422.310);
    (2) Part D annual reconciliation (described in Sec.  423.343);
    (3) Coverage Gap Discount Program annual reconciliation (described 
in Sec.  423.2320) and;
    (4) MLR remittances (described in Sec. Sec.  422.2470 and 
423.2470).
    Final settlement process means for a contract that has been 
consolidated, nonrenewed, or terminated, the process by which CMS 
calculates the final settlement amount, issues the final settlement 
amount along with supporting documentation in the notice of final 
settlement to the Part D sponsor, receives responses from the Part D 
sponsor requesting an appeal of the final settlement amount, and takes 
final actions to adjudicate an appeal (if requested) and make payments 
to or receive payments from the Part D sponsor. The final settlement 
amount will be calculated after all applicable reconciliations have 
occurred after a contract has been consolidated, nonrenewed, or 
terminated.
    Final settlement adjustment period means the period of time between 
when the contract terminates and the date the Part D sponsor is issued 
a notice of the final settlement amount.
* * * * *
0
72. Section 423.503 is amended by adding paragraph (a)(4) to read as 
follows:


Sec.  423.503  Evaluation and determination procedures.

    (a) * * *
    (4)(i) CMS does not evaluate or issue a notice of determination 
described in paragraph (c) of this section when an organization submits 
a substantially incomplete application.
    (ii) An application is substantially incomplete when the submission 
as of the deadline for applications established by CMS is missing 
content or responsive materials for one or more sections of the 
application form required by CMS.
    (iii) A determination that an application is substantially 
incomplete is not a contract determination as defined in Sec.  423.641 
and a determination that an organization submitted a substantially 
incomplete application is not subject to the appeals provisions of 
subpart N of this part.
* * * * *
0
73. Section 423.505 is amended by revising paragraph (b)(22), adding 
paragraph (b)(28), and adding paragraph (i)(6) 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 Part D sponsor.
* * * * *
    (28) Require network pharmacies that offer automatic shipment of 
prescription refills to comply with the following requirements--
    (i) Voluntary participation. Provide automatic shipments only to 
Part D enrollees that opt-in, on a drug-by-drug basis, after an initial 
fill.
    (ii) Enrollee notification. (A) Send a minimum of two (2) shipping 
reminders to the Part D enrollee prior to shipment of each prescription 
refill.
    (B) Network pharmacies must provide the shipping reminders by hard 
copy mailing, telephone, electronic delivery, or other comparable means 
of communication.
    (C) All types of reminders must, at a minimum, include the name of 
the Part D drug, any applicable cost sharing, the scheduled shipping 
date, instructions on how to cancel the pending automatic shipment, and 
instructions on how to opt-out of any future automatic shipments.
    (iii) Refund policy. Return any cost sharing paid by the Part D 
enrollee for any shipped prescription refills that such Part D enrollee 
reports as unneeded or otherwise unwanted, regardless of whether the 
drug is returned to the network pharmacy, and reverse the claim.
    (iv) Discontinuation. (A) Stop automatic shipments if the enrollee, 
the enrollee's provider, or the enrollee's authorized representative 
requests to opt-out of automatic shipments at any time.
    (B) Stop automatic shipments upon receiving notification that the 
Part D

[[Page 79736]]

enrollee has entered a skilled nursing facility or elected hospice 
coverage.
* * * * *
    (i) * * *
    (6) If the Part D Plan sponsor delegates any of the following 
functions to a first tier, downstream, or related entity, the Part D 
sponsor's written arrangements must state that a termination initiated 
by such entity must provide, at minimum, 60-days' prior notice and have 
an effective termination date that coincides with the end of a calendar 
month:
    (i) Authorization, adjudication, and processing of prescription 
drug claims at the point of sale;
    (ii) Administration and tracking of enrollees' drug benefits in 
real time, including automated coordination of benefits with other 
payers;
    (iii) Operation of an enrollee appeals and grievance process; or
    (iv) Contracting with or selection of prescription drug providers 
for inclusion in the Part D sponsor's network.
* * * * *
0
74. Section 423.507 is amended by revising paragraph (a)(3) to read as 
follows:


Sec.  423.507  Nonrenewal of contract.

* * * * *
    (a) * * *
    (3)(i) If a Part D plan sponsor does not renew a contract under 
this paragraph (a), CMS cannot enter into a contract with the 
organization for 2 years in the PDP region or regions served by the 
contract unless there are circumstances that warrant special 
consideration, as determined by CMS.
    (ii) If a PDP sponsor does not renew any of its PBPs in a PDP 
region, CMS cannot approve plan bids submitted by the organization in 
that PDP region for 2 years unless there are circumstances that warrant 
special consideration, as determined by CMS.
    (iii) The provisions of this paragraph do not apply to employer 
group waiver plans offered by a Part D plan sponsor.
* * * * *
0
75. Section 423.508 is amended by revising paragraph (e) to read as 
follows:


Sec.  423.508  Modification or termination of contract by mutual 
consent.

* * * * *
    (e) Agreement to limit new Part D applications. (1) As a condition 
of the consent to a mutual termination, CMS will require, as a 
provision of the termination agreement language prohibiting the Part D 
plan sponsor from applying for new contracts or service area expansions 
in the PDP region or regions served by the contract for a period up to 
2 years unless there are circumstances that warrant special 
consideration, as determined by CMS.
    (2) A PDP sponsor that agrees to terminate its offering of PBPs in 
a PDP region also agrees that it will not be eligible to apply to 
resume offering plans in that region for 2 years.
    (3) The provisions of this paragraph do not apply to employer group 
waiver plans offered by a Part D plan sponsor.
* * * * *
0
76. Section 423.521 is added to subpart K to read as follows:


Sec.  423.521  Final settlement process and payment.

    (a) Notice of final settlement. After the calculation of the final 
settlement amount, CMS sends the Part D sponsor a notice of final 
settlement. The notice of final settlement contains at least the 
following information:
    (1) A final settlement amount, which may be either an amount due to 
the Part D sponsor, or an amount due from the Part D sponsor, or $0 if 
nothing is due to or from the Part D sponsor, for the contract that has 
been consolidated, nonrenewed, or terminated;
    (2) Relevant banking and financial mailing instructions for Part D 
sponsors that owe CMS a final settlement amount;
    (3) Relevant CMS contact information, and;
    (4) A description of the steps for requesting an appeal of the 
final settlement amount calculation, in accordance with the 
requirements specified in Sec.  423.522.
    (b) Request for an appeal. A Part D sponsor that disagrees with the 
final settlement amount will have 15 calendar days from issuance of the 
notice of final settlement, as described in paragraph (a) of this 
section, to request an appeal of the final settlement amount under the 
process described in Sec.  423.522.
    (1) If a Part D sponsor agrees with the final settlement amount, no 
response is required.
    (2) If a Part D sponsor disagrees with the final settlement amount 
but does not request an appeal within 15 calendar days from the date of 
the issuance of the notice of final settlement, CMS will not consider 
subsequent requests for appeal.
    (c) Actions if a Part D sponsor does not request an appeal. (1) For 
Part D sponsors that are owed money by CMS, CMS will remit payment to 
the Part D sponsor within 60 calendar days from the date of the 
issuance of the notice of final settlement.
    (2) For Part D sponsors that owe CMS money, the Part D sponsor will 
be required to remit payment to CMS within 120 calendar days from 
issuance of the notice of final settlement. If the Part D sponsor fails 
to remit payment within that 120-calendar-day period, CMS will refer 
the debt owed to CMS to the Department of Treasury for collection.
    (d) Actions following a request for appeal. If a Part D sponsor 
responds to the notice of final settlement disagreeing with the final 
settlement amount and requesting appeal, CMS will conduct a review 
process under the process described at Sec.  423.522.
    (e) No additional payment adjustments. After the final settlement 
amount is calculated and the notice of final settlement, as described 
under paragraph (a) of this section, is issued to the Part D sponsor, 
CMS will no longer apply retroactive payment adjustments to the 
terminated, consolidated or nonrenewed contract and there will be no 
adjustments applied to amounts used in the calculation of the final 
settlement amount.
0
77. Section 423.522 is added to subpart K to read as follows:


Sec.  423.522  Requesting an appeal of the final settlement amount.

    (a) Appeals process. If a Part D sponsor does not agree with the 
final settlement amount described in Sec.  423.521(a) of this section, 
it may appeal under the following three-level appeal process:
    (1) Reconsideration. A Part D sponsor may request reconsideration 
of the final settlement amount described in Sec.  423.521(a) according 
to the following process:
    (i) Manner and timing of request. A written request for 
reconsideration must be filed within 15 days from the date that CMS 
issued the notice of final settlement to the Part D sponsor.
    (ii) Content of request. The written request for reconsideration 
must:
    (A) Specify the calculations with which the Part D sponsor 
disagrees and the reasons for its disagreement;
    (B) Include evidence supporting the assertion that CMS' calculation 
of the final settlement amount is incorrect; and
    (C) Not include new reconciliation data or data that was submitted 
to CMS after the final settlement notice was issued. CMS will not 
consider information submitted for the purposes of retroactively 
adjusting a prior reconciliation.
    (iii) Conduct of reconsideration. In conducting the 
reconsideration, the CMS reconsideration official reviews the 
calculations that were used to determine the final settlement amount 
and any additional evidence timely submitted by the Part D sponsor.

[[Page 79737]]

    (iv) Reconsideration decision. The CMS reconsideration official 
informs the Part D sponsor of its decision on the reconsideration in 
writing.
    (v) Effect of reconsideration decision. The decision of the CMS 
reconsideration official is final and binding unless a timely request 
for an informal hearing is filed in accordance with paragraph (a)(2) of 
this section.
    (2) Informal hearing. A Part D sponsor dissatisfied with CMS' 
reconsideration decision made under paragraph (a)(1) of this section is 
entitled to an informal hearing as provided for under paragraphs 
(a)(2)(i) through (iv) of this section.
    (i) Manner and timing of request. A request for an informal hearing 
must be made in writing and filed with CMS within 15 calendar days of 
the date of CMS' reconsideration decision.
    (ii) Content of request. The request for an informal hearing must 
include a copy of the reconsideration decision and must specify the 
findings or issues in the decision with which the Part D sponsor 
disagrees and the reasons for its disagreement.
    (iii) Informal hearing procedures. The informal hearing will be 
conducted in accordance with the following:
    (A) CMS provides written notice of the time and place of the 
informal hearing at least 30 calendar days before the scheduled date;
    (B) CMS provides a copy of the record that was before CMS when CMS 
made its decision to the hearing officer;
    (C) The hearing officer review is conducted by a CMS hearing 
officer who neither receives testimony nor accepts any new evidence. 
The CMS hearing officer is limited to the review of the record that was 
before CMS when CMS made its decision.
    (iv) Decision of the CMS hearing officer. The CMS hearing officer 
decides the case and sends a written decision to the Part D sponsor 
explaining the basis for the decision.
    (v) Effect of hearing officer's decision. The hearing officer's 
decision is final and binding, unless the decision is reversed or 
modified by the CMS Administrator in accordance with paragraph (a)(3) 
of this section.
    (3) Review by the Administrator. The Administrator's review will be 
conducted in the following manner:
    (i) Manner and timing of request. A Part D sponsor that has 
received a hearing officer's decision may request review by the 
Administrator within 15 calendar days of the date of issuance of the 
hearing officer's decision under paragraph (2)(iv) of this section. The 
Part D sponsor may submit written arguments to the Administrator for 
review;
    (ii) Discretionary review. After receiving a request for review, 
the Administrator has the discretion to elect to review the hearing 
officer's determination in accordance with paragraph (3)(iii) of this 
section or to decline to review the hearing officer's decision within 
30 calendar days of receiving the request for review. If the 
Administrator declines to review the hearing officer's decision, the 
hearing officer's decision is final and binding;
    (iii) Administrator's review. If the Administrator elects to review 
the hearing officer's decision, the Administrator will review the 
hearing officer's decision, as well as any information included in the 
record of the hearing officer's decision and any written argument 
submitted by the Part D sponsor, and determine whether to uphold, 
reverse, or modify the hearing officer's decision;
    (iv) Effect of Administrator's decision. The Administrator's 
decision is final and binding.
    (b) Matters subject to appeal and burden of proof. (1) The Part D 
sponsor's appeal is limited to CMS' calculation of the final settlement 
amount. CMS will not consider information submitted for the purposes of 
retroactively adjusting a prior reconciliation.
    (2) The Part D sponsor bears the burden of proof by providing 
evidence demonstrating that CMS' calculation of the final settlement 
amount is incorrect.
    (c) Stay of financial transaction until appeals are exhausted. If a 
Part D sponsor requests review of the final settlement amount, the 
financial transaction associated with the issuance or payment of the 
final settlement amount will be stayed until all appeals are exhausted. 
Once all levels of appeal are exhausted or the Part D sponsor fails to 
request further review within the applicable 15-calendar-day timeframe, 
CMS will communicate with the Part D sponsor to complete the financial 
transaction associated with the issuance or payment of the final 
settlement amount, as appropriate.
    (d) Continued compliance with other law required. Nothing in this 
section limits a Part D sponsor's responsibility to comply with any 
other statute or regulation, including under section 1128J(d) of the 
Social Security Act.
0
78. Section 423.530 is added to subpart K to read as follows:


Sec.  423.530  Plan crosswalks.

    (a) General rules--(1) Definition of plan crosswalk. A plan 
crosswalk is the movement of enrollees from one plan benefit package 
(PBP) in a PDP contract to another PBP under a PDP contract between a 
Part D Sponsor and CMS. To crosswalk enrollees from one PBP to another 
is to change the enrollment from the first PBP to the second.
    (2) Prohibitions. (i) Plan crosswalks between PBPs under one PDP 
contract and PBPs under another PDP contract are prohibited unless both 
the PDP sponsors with which CMS contracts are the same legal entity or 
have the same parent organization.
    (ii) Plan crosswalks are prohibited that split the enrollment of 
one PBP into multiple PBPs.
    (iii) Plan crosswalks are prohibited from a PBP offering basic 
prescription drug coverage to a PBP offering enhanced alternative 
coverage.
    (3) Compliance with renewal/non-renewal rules. The PDP sponsor must 
comply with renewal and non-renewal rules in Sec. Sec.  423.506 and 
423.507 in order to complete plan crosswalks.
    (4) Eligibility. Enrollees must be eligible for enrollment under 
Sec.  423.30 in order to be moved from one PBP to another PBP.
    (5) Applicability to employer group health or waiver plans. Nothing 
in this section permits the crosswalk of enrollees in an employer group 
health or waiver plan PBP to another PBP outside the usual process for 
enrollment in employer group health or waiver plans.
    (b) Mandatory plan crosswalks. A Part D sponsor of a PDP must 
perform a plan crosswalk in the following circumstances:
    (1) Renewal of a PBP offering basic prescription drug coverage. A 
PDP sponsor that plans to continue operating a PBP offering basic 
prescription coverage in the same service area for the upcoming 
contract year must crosswalk enrollment from the PBP offering basic 
prescription drug coverage in the current contract year into a PBP 
offering basic prescription drug coverage under the same PDP contract 
in the upcoming contract year. The PBP for the upcoming contract year 
must retain the same plan ID as the PBP for the current contract year;
    (2) Renewal of a PBP offering enhanced alternative drug coverage. A 
PDP sponsor that plans to continue operating a PBP offering enhanced 
alternative coverage in the same service area for the upcoming contract 
year must crosswalk enrollment from the PBP offering enhanced 
alternative drug coverage in the current contract year into a PBP 
offering enhanced alternative drug coverage in the upcoming contract 
year. The PBP for the upcoming contract

[[Page 79738]]

year PBP must retain the same plan ID as the PBP for the current 
contract year.
    (c) Plan crosswalk exceptions. A Part D sponsor of a PDP may 
perform a plan crosswalk in the following circumstances after receiving 
approval from CMS under the procedures described in paragraph (d) of 
this section.
    (1) Consolidated renewals. If a PDP sponsor wishes to non-renew a 
PBP offering enhanced alternative prescription drug coverage under a 
PDP contract that is not non-renewing or reducing its service area so 
that the contract no longer includes the service area of the non-
renewing PBP, it may crosswalk enrollment from the non-renewing PBP 
into a PBP offered under the contract in the upcoming contract year.
    (i) The plan ID for the upcoming contract year PBP must be the same 
plan ID as one of PBPs for the current contract year.
    (ii) The PBPs being consolidated must be under the same PDP 
contract.
    (iii) A PBP offering basic prescription drug coverage may not be 
discontinued if the PDP contract continues to offer coverage (other 
than employer group waiver plans) in the service area of the PBP.
    (iv) Enrollment from a PBP offering enhanced alternative coverage 
may be crosswalked into a PBP offering either enhanced alternative or 
basic prescription drug coverage.
    (v) If the PDP contract includes more than one renewing PBP into 
which enrollment of the non-renewing PBP can be crosswalked, the 
enrollment of the non-renewing PBP must be crosswalked into the 
renewing PBP that will result in lowest increase in monthly premiums 
for the enrollees.
    (vi) A plan crosswalk will not be approved under this paragraph if 
it will result in a premium increase for the following benefit year (as 
reflected in the bid for the receiving PBP submitted on the first 
Monday in June) that is higher than the greater of:
    (A) The current year's premium for the non-renewing PBP; or
    (B) The current year's average base beneficiary premium, as 
described in Sec.  423.286(c) of this part, for the PDP region in which 
the PBP operates.
    (vii) If an organization that non-renews an enhanced alternative 
PBP does not request and receive a plan crosswalk exception as provided 
in paragraph (d) of this section, CMS will not approve a new enhanced 
alternative PBP in the same service area as the non-renewing PBP in the 
following contract year.
    (2) Contract consolidations. If a PDP sponsor non-renews all or 
part of the service area of its contract with CMS pursuant to 
Sec. Sec.  423.507 or 423.508, the enrollees of the non-renewing PBPs 
may be crosswalked into one or more PBPs in another PDP contract (the 
surviving contract).
    (i) The non-renewing PDP contract and the surviving contract must 
be held by the same legal entity or by legal entities with the same 
parent organization.
    (ii) The approved service area of the surviving contract must 
include the service area of the non-renewing PBPs whose enrollment will 
be crosswalked into the surviving contract.
    (iii) Enrollment may be crosswalked between PBPs offering the same 
type of prescription drug coverage (basic or enhanced alternative).
    (iv) Enrollment from a PBP offering enhanced alternative coverage 
may be crosswalked into a PBP offering basic prescription drug 
coverage.
    (v) Enrollment from a PBP offering enhanced alternative coverage 
must be crosswalked into the PBP in the surviving contract that will 
result in the lowest premium increase.
    (vi) A plan crosswalk will not be approved under this paragraph if 
it will result in a premium increase for the following benefit year (as 
reflected in the bid for the receiving PBP submitted on the first 
Monday in June) that is higher than the greater of:
    (A) The current year's premium for the non-renewing PBP; or
    (B) The current year's average base beneficiary premium, as 
described in Sec.  423.286(c) of this part, for the region in which the 
PBP operates.
    (d) Procedures. (1) A PDP sponsor must submit all plan crosswalks 
described in paragraph (b) of this section in writing through the bid 
submission process in HPMS by the bid submission deadline.
    (2) A PDP sponsor must submit all plan crosswalk exception requests 
described in paragraph (c) of this section in writing through the plan 
crosswalk exceptions process in HPMS by the plan crosswalk exception 
request deadline announced annually by CMS. CMS verifies the requests 
and notifies requesting PDP sponsors of the approval or denial after 
the crosswalk exception request deadline.
0
79. Section 423.551 is amended by revising paragraph (e) to read as 
follows


Sec.  423.551  General provisions.

* * * * *
    (e) Effect of change of ownership without novation agreement. 
Except to the extent provided in paragraph (c)(2) of this section, the 
effect of a change of ownership without a novation agreement is that--
    (1) The current PDP sponsor, with respect to the affected contract, 
has substantially failed to comply with the regulatory requirements 
pursuant to Sec.  423.510(a)(4)(ix) and the contract may be subject to 
intermediate enrollment and marketing sanctions as outlined in Sec.  
423.750(a)(1) and (3); intermediate sanctions imposed as part of this 
section will remain in place until CMS approves the change of ownership 
(including execution of an approved novation agreement), or the 
contract is terminated.
    (i) If the new owner does not participate in the Medicare program 
in the same service area as the affected contract, it must apply for, 
and enter into, a contract in accordance with subpart K of this part 
and part 422 if applicable; and, if the application is conditionally 
approved, must submit, within 30 days of the conditional approval, the 
documentation required under Sec.  423.551(d) for review and approval 
by CMS; or
    (ii) If the new owner currently participates in the Medicare 
program and operates in the same service area as the affected contract, 
it must, within 30 days of imposition of intermediate sanctions as 
outlined in this (e)(1), submit the documentation required under 
paragraph (d) of this section for review and approval by CMS.
    (2) If the new owner fails to begin the processes required under 
paragraph (d)(1)(i) or (ii) of this section within 30 days of 
imposition of intermediate sanctions as outlined in (d)(1) of this 
section, the existing contract will be subject to termination in 
accordance with Sec.  423.509(a)(4)(ix).
* * * * *
0
80. Section 423.562 is amended by revising paragraph (a)(1)(v) to read 
as follows:


Sec.  423.562  General provisions.

    (a) * * *
    (1) * * *
    (v) Appeal procedures that meet the requirements of this subpart 
for issues that involve at-risk determinations. Determinations made in 
accordance with the processes at Sec.  423.153(f) are collectively 
referred to as an at-risk determination, defined at Sec.  423.560, made 
under a drug management program.
* * * * *
0
81. Section 423.760 is amended by removing paragraph (b)(3)(i)(E) and 
revising paragraph (b)(3)(ii).
    The revision reads as follows:

[[Page 79739]]

Sec.  423.760  Definitions for calculating penalty amounts.

* * * * *
    (b) * * *
    (3) * * *
    (ii) Calculation of penalty amounts. (A) CMS will set minimum 
penalty amounts in accordance with paragraphs (b)(1) and (2) of this 
section.
    (B) CMS will announce the standard minimum penalty amounts and 
aggravating factor amounts for per determination and per enrollee 
penalties on an annual basis.
    (C) CMS has the discretion to issue penalties up to the maximum 
amount under paragraphs (b)(1) and (2) of this section when CMS 
determines that an organization's non-compliance warrants a penalty 
that is higher than would be applied under the minimum penalty amounts 
set by CMS.
* * * * *
0
82. Section 423.773 is amended by:
0
a. Revising paragraph (b)(1);
0
b. Removing the phrase ``For subsequent years,'' and adding in its 
place the phrase ``For years 2007 through 2023,'' in paragraph 
(b)(2)(ii);
0
c. Adding paragraph (b)(2)(iii); and
0
d. Revising paragraph (d) introductory text.
    The revisions and addition read as follows:


Sec.  423.773  Requirements for eligibility.

* * * * *
    (b) * * *
    (1) Has income below 135 percent of the FPL applicable to the 
individual's family size or, with respect to a plan year beginning on 
or after January 1, 2024, has income below 150 percent of the FPL 
applicable to the individual's family size; and
    (2) * * *
    (iii) For years beginning on or after January 1, 2024, the amount 
of resources specified at paragraph (d)(2) of this section.
* * * * *
    (d) Other low-income subsidy individuals. Other low-income subsidy 
individuals are subsidy eligible individuals who, for plan years 
beginning before January 1, 2024--
* * * * *
0
83. Section 423.780 is amended by revising paragraph (d) introductory 
text to read as follows:


Sec.  423.780  Premium subsidy.

* * * * *
    (d) Other low-income subsidy eligible individuals--sliding scale 
premium. Other low-income subsidy eligible individuals are entitled to 
a premium subsidy for plan years beginning before January 1, 2024, 
based on a linear sliding scale ranging from 100 percent of the premium 
subsidy amount described in paragraph (b) of this section as follows:
* * * * *
0
84. Section 423.2261 is amended by revising paragraph (a)(2) and 
removing paragraph (a)(3).
    The revision reads as follows:


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

* * * * *
    (a) * * *
    (2) Materials must be submitted to the HPMS Marketing Module by the 
Part D sponsor or, where materials have been developed by a Third Party 
Marketing Organization for multiple Part D sponsors or plans, by a 
Third Party Marketing Organization with prior approval of each Part D 
sponsor on whose behalf the materials were created.
* * * * *
0
85. Section 423.2262 is amended by revising paragraph (a)(1)(ii) and 
adding paragraph (a)(1)(xviii) to read as follows:


Sec.  423.2262  General communications materials and activity 
requirements.

* * * * *
    (ii) Use of superlatives, unless sources of documentation or data 
supportive of the superlative is also referenced in the material. Such 
supportive documentation or data must reflect data, reports, studies, 
or other documentation that has been published in either the current 
contract year or prior contract year.
* * * * *
    (xviii) Use of the Medicare name, CMS logo, and products or 
information issued by the Federal Government, including the Medicare 
card in a misleading way.
* * * * *
0
86. Section 423.2263 is amended by adding paragraphs (b)(8) through 
(10) to read as follows:


Sec.  423.2263  General marketing requirements.

* * * * *
    (b) * * *
    (8) Advertise benefits that are not available to beneficiaries in 
the service area where the marketing appears, unless unavoidable in a 
local market.
    (9) Market any products or plans, benefits, or costs, unless the 
Part D sponsor or marketing name(s) as listed in HPMS of the entities 
offering the referenced products or plans, benefits, or costs are 
identified in the marketing material.
    (i) Part D sponsor or marketing names must be in 12-point font in 
print and may not be in the form of a disclaimer or in fine print.
    (ii) For television, online, or social media the Part D sponsor or 
marketing name(s) must be either read at the same pace as the phone 
number or must be displayed throughout the entire advertisement in a 
font size equivalent to the advertised phone number or benefits.
    (iii) For radio or other voice-based advertisements, Part D sponsor 
or marketing names must be read at the same pace as phone numbers.
    (10) Part D sponsors may not include information about savings 
available to potential enrollees that are based on a comparison of 
typical expenses borne by uninsured individuals, unpaid costs of dually 
eligible beneficiaries, or other unrealized costs of a Medicare 
beneficiary.
* * * * *
0
87. Section 423.2264 is amended by:
0
a. Adding paragraph (a)(2)(i)(A) and reserved paragraph (a)(2)(i)(B);
0
b. Revising paragraphs (b)(2);
0
c. Removing paragraphs (c)(1)(ii)(C) and (E);
0
d. Redesignating paragraph (c)(1)(ii)(D) and new paragraph 
(c)(1)(ii)(C); and
0
e. Revising paragraphs (c)(2)(i), (c)(3)(i), and (c)(3)(iii)(A) and 
(B).
    The addition additions and revisions read as follows:


Sec.  423.2264  Beneficiary contact.

* * * * *
    (a) * * *
    (2) * * *
    (i) * * *
    (A) Contact is considered to be unsolicited door-to-door contact 
unless an appointment, at the beneficiary's home at the applicable time 
and date, was previously scheduled.
    (B) [Reserved]
* * * * *
    (b) * * *
    (2) If the Part D sponsor reaches out to beneficiaries regarding 
plan business, as outlined in this section, the Part D sponsor must 
provide notice to all beneficiaries whom the plan contacts as least 
once annually, in writing, of the individual's ability to opt out of 
future calls regarding plan business.
    (c) * * *
    (2) * * *
    (i) Marketing events are prohibited from taking place within 12 
hours of an educational event, in the same location. The same location 
is defined as the entire building or adjacent buildings.
* * * * *
    (3) * * *
    (i) At least 48 hours prior to the personal marketing appointment

[[Page 79740]]

beginning, the Part D plan (or agent or broker, as applicable) must 
agree upon and record the Scope of Appointment with the 
beneficiary(ies).
* * * * *
    (iii) * * *
    (A) Market any health care related product during a marketing 
appointment beyond the scope agreed upon by the beneficiary, and 
documented by the plan in a Scope of Appointment, business reply card, 
or request to receive additional information, which is valid for 6 
months following the date of beneficiary's signature date or the date 
of the beneficiary's initial request for information.
    (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; such Scope of Appointment is valid for six (6) months 
following the beneficiary's signature date.
* * * * *
0
88. Section 423.2265 is amended by removing and reserving paragraph 
(b)(12) and revising paragraph (c)(1)(vi).
    The revision reads as follows:


Sec.  423.2265  Websites.

* * * * *
    (c) * * *
    (1) * * *
    (vi) Utilization Management Criteria for physicians and enrollees.
* * * * *
0
89. Section 423.2267 is amended by--
0
a. Redesignating paragraph (a)(3) as paragraph (a)(5);
0
b. Adding new paragraph (a)(3) and pargraph (a)(4);
0
c. Revising paragraph (e)(4) introductory text;
0
d. Adding paragraph (e)(4)(viii);
0
e. Revising paragraphs (e)(13) introductory text, (e)(32)(vi), and 
(e)(41); and
0
f. Adding paragraphs (e)(42) through (44).
    The revisions and additions read as follows:


Sec.  423.2267  Required materials and content.

* * * * *
    (a) * * *
    (3) Be provided to enrollees on a standing basis in any non-English 
language identified in paragraphs (a)(2) and (4) of this section and/or 
accessible format using auxiliary aids and services upon receiving a 
request for the materials in another language or accessible format 
using auxiliary aids and services or when otherwise learning of the 
enrollee's preferred language and/or need for an accessible format 
using auxiliary aids and services. This requirement also applies to the 
individualized plans of care described in Sec.  422.101(f)(1)(ii) of 
this chapter for special needs plan enrollees.
    (4) For any fully integrated dual eligible special needs plan or 
highly integrated dual eligible special needs plan as defined at Sec.  
422.2 of this chapter, or applicable integrated plan as defined at 
Sec.  422.561 of this chapter, be translated into the language(s) 
required by the Medicaid translation standard as specified through 
their capitated Medicaid managed care contract in addition to the 
language(s) required by the Medicare translation standard in paragraph 
(a)(2) of this section.
* * * * *
    (e) * * *
    (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. For telephonic enrollments the 
contents of the PECL must be reviewed with the prospective enrollee 
prior to the completion of the enrollment. It references information on 
the following:
* * * * *
    (viii) Effect on current coverage.
* * * * *
    (13) Non-renewal notice. This is a standardized communications 
material through which plans must provide the information required 
under Sec.  423.507.
* * * * *
    (32) * * *
    (vi) Is excluded from the translation requirement under paragraphs 
(a)(2) through (4) of this section; and
* * * * *
    (41) Third-party marketing organization disclaimer. This is 
standardized content. If a TPMO does not sell for all Part D sponsors 
in the service area the disclaimer consists of the statement: ``We do 
not offer every plan available in your area. Any information we provide 
is limited to those plans we do offer in your area which are plans 
offered by [insert list of Part D sponsors here]. Please contact 
Medicare.gov, 1-800-MEDICARE, or your local State Health Insurance 
Program to get information on all of your options.'' If the TPMO sells 
for all Part D sponsors in the service area the disclaimer consists of 
the statement: ``We offer the following plans in your area [insert list 
of Part D sponsors]. You can always contact Medicare.gov, 1-800-
MEDICARE, or your local State Health Insurance Program for help with 
plan choices.'' The MA organization must ensure that the disclaimer is 
as follows:
    (i) Used by any TPMO, as defined under Sec.  422.2260, that sells 
plans on behalf of more than one MA organization.
    (ii) Verbally conveyed within the first minute of a sales call.
    (iii) Electronically conveyed when communicating with a beneficiary 
through email, online chat, or other electronic means of communication.
    (iv) Prominently displayed on TPMO websites.
    (v) Included in any marketing materials, including print materials 
and television advertisements, developed, used or distributed by the 
TPMO.
    (42) Required Content when offering defined standard coverage. This 
is model content which--
    (i) Applies to all plans offering defined standard coverage (as 
defined at Sec.  423.100);
    (ii) Must be used in all relevant communications (as defined at 
Sec.  423.2260) that pertain to the formulary (as defined at Sec.  
423.4) or preferential status of covered Part D drugs; and
    (iii) When discussing the Part D sponsor's formulary, conveys that 
all covered drugs have a single-tier benefit structure.
    (43) Comprehensive medication review--written summary. This is the 
standardized communications material Part D sponsors must provide to 
all MTM program enrollees who receive a comprehensive medication 
review, as required under Sec.  423.153(d)(1)(vii)(B).
    (44) Safe disposal information. This is model communications 
material Part D sponsors must provide to all enrollees targeted for its 
MTM program, as required under Sec.  423.153(d)(1)(vii)(E).
0
90. Section 423.2272 is amended by adding paragraph (e) to read as 
follows:


Sec.  423.2272  Licensing of marketing representatives and confirmation 
of marketing resources.

* * * * *
    (e) Establish and implement an oversight plan that monitors agent 
and broker activities, identifies non-compliance with CMS requirements, 
and reports non-compliance to CMS.
0
91. Section 423.2274 is amended by adding paragraph (c)(12), revising 
paragraph (g)(2)(ii), and adding paragraph (g)(4) to read as follows:


Sec.  423.2274  Required materials and content.

* * * * *
    (c) * * *
    (12) Ensure that, prior to an enrollment CMS' required questions 
and

[[Page 79741]]

topics regarding beneficiary needs in a health plan choice are fully 
discussed. Topics include information regarding pharmacies (that is, 
whether or not the beneficiary's current pharmacy is in the plan's 
network), prescription drug coverage and costs (including whether or 
not the beneficiary's current prescriptions are covered), premiums, and 
other services (such as over-the-counter medications and other 
incentives).
* * * * *
    (g) * * *
    (2) * * *
    (ii) Record all marketing, sales, and enrollment calls, including 
calls occurring via web-based technology, in their entirety.
* * * * *
    (4) Personal beneficiary data collected by a TPMO may not be 
distributed to other TPMOs.
0
92. Subpart Y is added to read as follows:
Subpart Y--Transitional Coverage and Retroactive Medicare Part D 
Coverage for Certain Low-Income Beneficiaries Through the Limited 
Income Newly Eligible Transition (LI NET) Program
Sec.
423.2500 Basis and scope.
423.2504 LI NET eligibility and enrollment.
423.2508 LI NET benefits and beneficiary protections.
423.2512 LI NET sponsor requirements.
423.2516 Selection of LI NET sponsor and contracting provisions.
423.2518 Intermediate sanctions for the LI NET sponsor.
423.2520 Non-renewal or termination of appointment.
423.2524 Bidding and payments to LI NET sponsor.
423.2536 Waiver of Part D program requirements.

Subpart Y--Transitional Coverage and Retroactive Medicare Part D 
Coverage for Certain Low-Income Beneficiaries Through the Limited 
Income Newly Eligible Transition (LI NET) Program


Sec.  423.2500  Basis and scope.

    (a) Basis. This subpart is based on section 1860D-14 of the Social 
Security Act.
    (b) Scope. This subpart sets forth the requirements for the Limited 
Income Newly Eligible Transition (LI NET) program that begins no later 
than January 1, 2024. Under this program, eligible individuals are 
provided transitional coverage for part D drugs.


Sec.  423.2504  LI NET eligibility and enrollment.

    (a) Eligibility. An individual is eligible for LI NET coverage if 
they satisfy the criteria at paragraph (a)(1) or (2) of this section.
    (1) LIS-eligible. The individual is a low-income subsidy eligible 
individual as defined at Sec.  423.773 and--
    (i) Has not yet enrolled in a prescription drug plan or an MA-PD 
plan; or
    (ii) Has enrolled in a prescription drug plan or MA-PD plan but 
their coverage has not yet taken effect.
    (2) Immediate need individuals. An individual who states their 
eligibility for LIS and immediate need for their prescription, but 
whose eligibility as defined at Sec.  423.773 cannot be confirmed at 
the point-of-sale, will be granted immediate need LI NET coverage.
    (i) Immediate need individuals may provide documentation to the LI 
NET sponsor to establish LIS eligibility. Documentation may include, 
but is not limited to:
    (A) A copy of the beneficiary's Medicaid card that includes their 
name and the eligibility date;
    (B) A copy of a letter from the State or SSA showing LIS status;
    (C) The date that a verification call was made to the State 
Medicaid Agency, the name and telephone number of the State staff 
person who verified the Medicaid period, and the Medicaid eligibility 
dates confirmed on the call;
    (D) A copy of a State document that confirms active Medicaid 
status;
    (E) A screen-print from the State's Medicaid systems showing 
Medicaid status; or
    (F) Evidence at point-of-sale of recent Medicaid billing and 
payment in the pharmacy's patient profile.
    (ii) If CMS cannot confirm the individual's eligibility during the 
period of LI NET coverage, the individual will not be auto-enrolled 
into a standalone Part D plan in accordance with Sec.  423.34(d) 
following their LI NET coverage.
    (b) Enrollment. Individuals are enrolled into the LI NET program as 
follows:
    (1) Automatic enrollment. Beneficiaries who are LIS-eligible and 
whose auto-enrollment into a Part D plan (as outlined in Sec.  
423.34(d)(1)) has not taken effect will be automatically enrolled by 
CMS into the LI NET program unless the beneficiary has affirmatively 
declined enrollment in Part D per Sec.  423.34(e);
    (2) Point-of-sale enrollment. An individual with an immediate need 
whose claim is submitted at the point-of-sale and billed to LI NET will 
be enrolled into the LI NET program by the LI NET sponsor; or
    (3) Direct reimbursement request. An individual who is LIS-eligible 
and who submits receipts for reimbursement for claims paid out of 
pocket will be retroactively enrolled into the LI NET program by the LI 
NET sponsor. The LI NET sponsor has 14 calendar days to reply with a 
coverage decision; or
    (4) LI NET application form. An individual who is not enrolled 
through the methods in paragraphs (b)(1) though (3) of this section may 
submit an application form to the LI NET sponsor with supporting 
documentation demonstrating their LIS status. The LI NET sponsor will 
periodically check for eligibility and enroll applicants once 
eligibility is confirmed.
    (c) Duration of LI NET enrollment. (1) Enrollment begins on the 
first day of the month an individual is identified as eligible under 
this section and ends after 2 months, with a longer LI NET enrollment 
for those with retroactive coverage per paragraph (c)(2) of this 
section.
    (2) Retroactive LI NET coverage begins on the date an individual is 
identified as eligible for a low-income subsidy as a full-benefit dual 
eligible or an SSI benefit recipient, or 36 months prior to the date 
such individual enrolls in (or opts out of) Part D coverage, whichever 
is later. LI NET coverage ends with enrollment into a Part D plan or 
opting out of Part D coverage.
    (d) Ending LI NET enrollment. An individual's enrollment in the LI 
NET program ends when:
    (1) The individual is auto-enrolled into a standalone Part D plan 
in accordance with the guidelines at Sec.  423.34(d) and that coverage 
has taken effect.
    (2) The individual elects another Part D plan and that coverage has 
taken effect.
    (3) The individual voluntarily disenrolls from the LI NET program.
    (4) The individual is involuntarily disenrolled under Sec.  
423.44(b).
    (5) LIS-eligibility for an individual in LI NET due to an immediate 
need cannot be confirmed within the period of LI NET coverage.


Sec.  423.2508  LI NET benefits and beneficiary protections.

    (a) Formulary. The LI NET program provides access to all Part D 
drugs under an open formulary.
    (b) Network. The LI NET sponsor must allow their network and out-
of-network pharmacies that are in good standing, as determined by CMS, 
to process claims under the program. Licensed pharmacies that have not 
been revoked from Medicare under Sec.  424.535, that do not appear on 
the Office of Inspector General's list of entities excluded from 
Federally funded health care programs pursuant to section 1128

[[Page 79742]]

of the Act and from Medicare under section 1156 of the Act (unless 
waived by the OIG), and do not appear on the preclusion list as defined 
at Sec.  423.100 are considered to be in good standing for the LI NET 
program.
    (c) Safety. The following provisions necessary to improve patient 
safety and ensure appropriate dispensing of medication apply to the LI 
NET program and LI NET sponsor, as applicable:
    (1) Section 423.153(b) and (c) for dispensing and point-of-sale 
safety edits;
    (2) Section 423.154 for appropriate dispensing of prescription 
drugs in long-term care facilities;
    (3) Sections 423.159 and 423.160 for electronic prescribing, 
excepting the requirements pertaining to formulary standards in Sec.  
423.160(b)(5);
    (4) Section 423.162 for QIO activities; and
    (5) Section 423.165 for compliance deemed on the basis of 
accreditation.
    (d) Cost sharing. (1) LI NET beneficiaries under Sec.  
423.2504(a)(1) will pay the applicable cost sharing for their low-
income category as established for each year in the Rate Announcement 
publication specified in Sec.  422.312 of this chapter.
    (2) LI NET beneficiaries under Sec.  423.2504(a)(2) will pay the 
cost sharing associated with the category of non-institutionalized 
full-benefit dual eligible individuals with incomes above 100% of the 
Federal poverty level and full-subsidy-non-FBDE individuals. If the 
beneficiary is later confirmed to belong to a different LIS category, 
the LI NET sponsor must reimburse the beneficiary for the difference 
between the cost sharing they paid versus what they would have paid in 
their LIS category.
    (e) Appeals. LI NET enrollees have rights with respect to Part D 
grievances, coverage determinations, and appeals processes set out in 
subpart M of this part.


Sec.  423.2512  LI NET sponsor requirements.

    The LI NET program is administered by one or more Part D sponsor(s) 
that meet all of the requirements in paragraphs (a) through (c) of this 
section.
    (a) Pharmacies and access to Part D drugs. (1) The LI NET sponsor 
must be a PDP sponsor that has an established contracted pharmacy 
network in all geographic areas of the United States in which low-
income subsidies are available.
    (2) The LI NET sponsor must meet the requirements for providing 
access to Part D drugs under Sec.  423.120(a), (c), and (d).
    (b) Experience. The LI NET sponsor must have a minimum of two 
consecutive years contracting with CMS as a Part D sponsor.
    (c) Other LI NET sponsor requirements. The LI NET sponsor must:
    (1) Have the technical capability and the infrastructure to provide 
immediate, current, and retroactive coverage for LI NET enrollees;
    (2) Have the technical capability to develop the infrastructure 
necessary for verifying Medicaid dual eligibility status for presumed 
eligible LI NET enrollees.
    (3) Identify, develop, and carry out outreach plans in consultation 
with CMS targeting key stakeholders to inform them about the LI NET 
program.
    (4) Establish and manage a toll-free customer service telephone 
line and fax line that can be accessed by pharmacy providers and 
beneficiaries, or others acting on their behalf, for purposes that 
include but are not limited to: handling inquiries about services under 
the LI NET program, providing the status of eligibility or claims, and 
having the ability to accept best available evidence.
    (5) Timely respond to beneficiary requests for reimbursement of 
claims by issuing reimbursement for eligible claims submitted by 
beneficiaries no later than 30 days after receipt, or, if the drug is 
not covered, the LI NET sponsor has 14 days to send communication to 
the beneficiary with a reason for the denial.
    (6) Adjudicate claims from out-of-network pharmacies according to 
the LI NET sponsor's standard reimbursement for their network 
pharmacies.


Sec.  423.2516  Selection of LI NET sponsor and contracting provisions.

    (a) Appointment by CMS. CMS appoints a Part D sponsor that meets 
the requirements at Sec.  423.2512 to serve as the LI NET sponsor.
    (b) Selection criteria. In appointing a LI NET sponsor, CMS 
evaluates the following:
    (1) Experience covering low-income beneficiaries, including but not 
limited to enrolling and providing coverage to low-income subsidy 
individuals as defined in Sec.  423.34;
    (2) Pharmacy access as outlined in Sec.  423.120;
    (3) Past performance, including Star Ratings (as detailed in Sec.  
423.186), previous intermediate sanctions (as detailed in Sec.  
423.750), and consistent with past performance in Sec.  423.503(b); and
    (4) Ability to meet the requirements listed in Sec.  423.505 that 
are not waived under Sec.  423.2536.
    (c) Term of appointment. The term of the appointment will be 
ongoing provided mutual agreement between CMS and the selected party, 
subject to an annual contracting and bid process (per Sec.  
423.2524(b)) to determine payment rates for the upcoming year.


Sec.  423.2518  Intermediate sanctions for the LI NET sponsor.

    In the event it is determined that the LI NET sponsor violated its 
contract, CMS may impose intermediate sanctions as outlined in subpart 
O of this part.


Sec.  423.2520  Non-renewal or termination of appointment.

    (a) Notice of non-renewal. If the LI NET sponsor decides for any 
reason to non-renew its existing contract, it must notify CMS by 
January 1 of the year before the next contract year. Except as provided 
in paragraph (c) of this section, if CMS decides for any reason to non-
renew the existing contract with the incumbent LI NET sponsor, CMS 
notifies the LI NET sponsor by January 1 of the year before the next 
contract year.
    (b) Selection of successor and transition period. After a notice of 
non-renewal or termination, CMS selects a successor for the LI NET 
contract from among potentially eligible entities (as detailed in Sec.  
423.2516). The outgoing LI NET sponsor must coordinate with the 
successor for a period of no less than 3 months to ensure seamless 
transition of the LI NET program, including timely transfer of any data 
or files.
    (c) Immediate termination for cause. (1) Notwithstanding paragraph 
(a) of this section, CMS may immediately terminate the existing LI NET 
contract for any of the reasons specified at Sec.  423.509(a)(4)(i) and 
(xii) or (b)(2)(i)(A) and (B).
    (2) CMS sends notice of an immediate termination as specified at 
Sec.  423.509(b)(2)(ii).
    (d) Appeal rights. Subpart N of this part applies to a termination 
under paragraph (c) of this section.


Sec.  423.2524  Bidding and payments to LI NET sponsor.

    (a) Source of payments. CMS payments under this section are made 
from the Medicare Prescription Drug Account.
    (b) Submission of bids and related information.
    (1) The submission of LI NET bids and related information must 
follow the requirements and limitations in Sec.  423.265(b), (c), 
(d)(1), (d)(2)(i), (ii), (iv), and (v), (d)(4) and (6), and (e).
    (2) The review, negotiation, and approval of the LI NET bid would 
follow the provisions in Sec.  423.272(a) and (b)(1) and (4).

[[Page 79743]]

    (3) Basic rule for bid. The bid must reflect the LI NET sponsor's 
estimate of its revenue needs for Payment Rates A and B per paragraph 
(c) of this section.
    (c) Monthly payments. CMS provides advance monthly LI NET payments 
equal to the sum of Payment Rates A and B as established in the LI NET 
sponsor's approved bid, as outlined in paragraph (b) of this section. 
LI NET payments are made on a prospective per-member, per-month basis.
    (1) Payment Rate A is an annual rate of payment for projected 
administrative costs. An annual percentage-based cap on Payment Rate A 
limiting the year over year increase to Payment Rate A is set as part 
of the bid review and negotiation under Sec.  423.272(a).
    (i) For the 2024 plan year, the LI NET sponsor includes in their 
bid the assumption that Payment Rate A cannot exceed a 2% increase from 
the prior year's Payment A, which is a figure CMS will provide to the 
LI NET sponsor.
    (ii) For the 2025 plan going forward, the LI NET sponsor will 
specify their assumption for any increase needed to the prior year's 
Payment Rate A, submitting justification to CMS in their bid if the cap 
exceeds 2%.
    (2) Payment Rate B reflects the projected net costs of the Part D 
drugs dispensed to individuals who receive the LI NET benefit.
    (d) Payment reconciliation and risk corridors--(1) Reconciliation. 
CMS conducts LI NET payment reconciliation each year for Payment Rates 
A and B after the annual PDE data submission deadline has passed and 
makes the resulting payment adjustment consistent with Sec.  
423.343(a).
    (2) Risk corridors. As part of LI NET payment reconciliation, CMS 
will apply risk corridors to Payment Rate B as follows:
    (i) There will be no risk sharing in the symmetrical 1% risk 
corridor around the target amount as defined in Sec.  423.308.
    (ii) There will be symmetrical risk sharing of 0.1% beyond the 1% 
risk corridor.
    (iii) To carry out this section, Sec.  423.336(c) applies to LI 
NET.
    (e) Reopening. The LI NET contract will be subject to payment 
reopenings per Sec.  423.346 as applicable.
    (f) Payment appeals. The LI NET sponsor can appeal under Sec.  
423.350.
    (g) Overpayments. The overpayment provisions at Sec. Sec.  423.352 
and 423.360 apply to LI NET.


Sec.  423.2536  Waiver of Part D program requirements.

    CMS waives the following Part D program requirements for the LI NET 
program:
    (a) General information. Paragraphs (1) and (3)(B) of section 
1860D-4(a) of the Act (relating to dissemination of general 
information; availability of information on changes in formulary 
through the internet).
    (b) Formularies. Subparagraphs (A) and (B) of section 1860D-4(b)(3) 
of the Act (relating to requirements on development and application of 
formularies; formulary development) and formulary requirements in 
Sec. Sec.  423.120(b) and 423.128(e)(5) and (6).
    (c) Cost control and quality improvement requirements. Provisions 
under subpart D of this part, including requirements about medication 
therapy management, are waived except for the provisions in Sec.  
423.2508(d)(1) through (5).
    (1) Section 423.153(b) and (c) for dispensing and point-of-sale 
safety edits;
    (2) Section 423.154 for appropriate dispensing of prescription 
drugs in long-term care facilities;
    (3) Sections 423.159 and 423.160 for electronic prescribing, 
excepting the requirements pertaining to formulary standards in Sec.  
423.160(b)(5);
    (4) Section 423.162 for QIO activities; and
    (5) Section 423.165 for compliance deemed on the basis of 
accreditation.
    (d) Out-of-network access. Section 423.124 Special rules for out-
of-network access to Part D drugs at out-of-network pharmacies, except 
for Sec.  423.124(a)(2), which applies to LI NET.
    (e) Medicare contract determinations and appeals. Subpart N, except 
for the provisions that apply to LI NET in Sec.  423.2520(d).
    (f) Risk-sharing arrangements. Section 423.336(a), (b), and (d).
    (g) Certification of accuracy of data for price comparison. Section 
423.505(k)(6).
    (h) Part D communication requirements. Portions of subpart V of 
this part related to Part D communication requirements that are 
inapplicable to LI NET, including:
    (1) Section 423.2265(b)(4), (5), (11), and (13);
    (2) Section 423.2265(c);
    (3) Section 423.2266(a);
    (4) Section 423.2267(e)(3) through (5), (9) through (12), (14) 
through (17), (25), (29), and (33); and
    (5) Section 423.2274.
    (i) Medicare Coverage Gap Discount Program. Subpart W of this part.
    (j) Requirements for a minimum medical loss ratio. Subpart X of 
this part.
    (k) Recovery audit contractor Part C appeals process. Subpart Z of 
this part.

Subpart Z--Recovery Audit Contractor Part D Appeals Process

0
93. The heading for subpart Z is revised to read as set forth above.

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

0
94. 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
95. Section 460.6 is amended by revising the definition of ``contract 
year'' to read as follows:


Sec.  460.6  Definitions.

* * * * *
    Contract year means the term of a PACE program agreement, which is 
a calendar year, except that a PACE organization's initial contract 
year may be from 19 to 30 months, as determined by CMS, but in any 
event will end on December 31.
* * * * *
0
96. Section 460.12 is amended by revising paragraph (a) and adding 
paragraph (b)(3) to read as follows:


Sec.  460.12  Application requirements.

    (a) Submission of application. (1) An individual authorized to act 
for an entity that seeks to become a PACE organization or a PACE 
organization that seeks to expand its service area and/or add a PACE 
center site must submit to CMS a complete application in the form and 
manner, including timeframes for submission, specified by CMS, that 
describes how the entity or PACE organization meets all requirements in 
this part.
    (2) An individual authorized to act for an entity that seeks to 
become a PACE organization must submit an application to qualify as a 
Part D sponsor in the form and manner required by CMS pursuant to 42 
CFR part 423, subpart K.
    (b) * * *
    (3) Any PACE application that does not include a signed and dated 
State assurances document that includes accurate service area 
information and the physical address of the PACE center, as applicable, 
is considered incomplete and invalid and will not be evaluated by CMS.
* * * * *
0
97. Section 460.18 is amended by adding paragraphs (c) and (d) to read 
as follows:

[[Page 79744]]

Sec.  460.18  CMS evaluation of applications.

* * * * *
    (c)(1) If, during the 12 months preceding the deadline established 
by CMS for the submission of an application or submission of a response 
to a CMS request for additional information, a PACE organization fails 
to comply with the requirements of the PACE program under any current 
or prior PACE program agreement or fails to complete a corrective 
action plan during the applicable 12-month period, CMS may deny an 
application based on the applicant's failure to comply with the 
requirements of the PACE program under any current or prior PACE 
program agreement even if the applicant currently meets all of the 
requirements of this part.
    (i) An applicant may be considered to have failed to comply with 
the requirements of the PACE program under a PACE program agreement for 
purposes of an application denial under paragraph (c)(1) of this 
section if any of the conditions in paragraphs (c)(1)(i)(A) through (D) 
of this section apply with respect to the applicant during the 
applicable 12-month review period. The applicant:
    (A) Was subject to the imposition of an enrollment or payment 
sanction under Sec.  460.42(a) or (b) for one or more of the violations 
specified in Sec.  460.40.
    (B) Failed to maintain a fiscally sound operation consistent with 
the requirements of Sec.  460.80(a) after the end of the trial period.
    (C) Filed for or is currently in State bankruptcy proceedings.
    (D) Met or exceeded 13 points for compliance actions for any one 
PACE program agreement.
    (1) CMS determines the number of points accumulated during the 
performance period for compliance actions based on the following point 
values:
    (i) Each corrective action plan issued under Sec.  460.19(c)(3) 
during the performance period counts for 6 points.
    (ii) Each warning letter issued under Sec.  460.19(c)(2) during the 
performance period counts for 3 points.
    (iii) Each notice of noncompliance issued under Sec.  460.19(c)(1) 
during the performance period counts for 1 point.
    (2) CMS adds all the point values for each PACE organization's 
program agreement to determine if the 13-point threshold described in 
paragraph (c)(1)(i)(D) of this section has been reached.
    (ii) CMS may deny an application submitted by an organization that 
does not hold a PACE program agreement at the time of the submission if 
the applicant's parent organization or another subsidiary of the parent 
organization meets the criteria for denial stated in paragraph 
(c)(1)(i) of this section. This paragraph does not apply to a parent 
organization that completed the acquisition of a subsidiary that meets 
the criteria for denial within the 24 months preceding the application 
submission deadline.
    (2) [Reserved]
    (d) If CMS has terminated a PACE program agreement under Sec.  
460.50, or did not renew a PACE program agreement, and that termination 
or non-renewal took effect within the 38 months preceding the 
submission of an initial or expansion PACE application from the same 
organization, CMS may deny the application based on the applicant's 
substantial failure to comply with the requirements of the PACE 
program, even if the applicant currently meets all of the requirements 
of this part.
* * * * *
0
98. Section 460.19 is added to read as follows:


Sec.  460.19  Issuance of compliance actions for failure to comply with 
the terms of the PACE program agreement.

    (a) CMS may take compliance actions as described in paragraph 
(c)(1) of this section if CMS determines that the PACE organization has 
not complied with the terms of a current or prior PACE program 
agreement with CMS and a State administering agency.
    (1) CMS may determine that a PACE organization is out of compliance 
with requirements when the organization fails to meet performance 
standards articulated in sections 1894 and 1934 of the Social Security 
Act and regulations in this chapter.
    (2) If CMS has not already articulated a measure for determining 
noncompliance, CMS may determine that an PACE organization is out of 
compliance when its performance in fulfilling requirements represents 
an outlier relative to the performance of other PACE organizations.
    (b) CMS bases its decision on whether to issue a compliance action 
and what level of compliance action to take on an assessment of the 
circumstances surrounding the noncompliance, including all of the 
following:
    (1) The nature of the conduct.
    (2) The degree of culpability of the PACE organization.
    (3) The actual or potential adverse effect on beneficiaries which 
resulted or could have resulted from the conduct of the PACE 
organization.
    (4) The history of prior offenses by the PACE organization or its 
related entities.
    (5) Whether the noncompliance was self-reported.
    (6) Other factors which relate to the impact of the underlying 
noncompliance or to the PACE organization's inadequate oversight of the 
operations that contributed to the noncompliance.
    (c) CMS may take one of three types of compliance actions based on 
the nature of the noncompliance.
    (1) Notice of noncompliance. A notice of noncompliance may be 
issued for any failure to comply with the requirements of the PACE 
organization's current or prior PACE program agreement with CMS and a 
State administering agency, as described in paragraph (a) of this 
section.
    (2) Warning letter. A warning letter may be issued for serious and/
or continued noncompliance with the requirements of the PACE 
organization's current or prior PACE program agreement with CMS and a 
State administering agency, as described in paragraph (a) of this 
section and as assessed in accordance with paragraph (b) of this 
section.
    (3) Corrective action plan. (i) Corrective action plans are issued 
for particularly serious or continued noncompliance with the 
requirements of the PACE organization's current or prior PACE program 
agreement with CMS and a State administering agency, as described in 
paragraph (a) of this section and as assessed in accordance with 
paragraph (b) of this section.
    (ii) CMS issues a corrective action plan if CMS determines that the 
PACE organization has repeated or not corrected noncompliance 
identified in prior compliance actions, has substantially impacted 
beneficiaries or the program with its noncompliance, or must implement 
a detailed plan to correct the underlying causes of the noncompliance.
0
99. Section 460.20 is amended by redesignating paragraphs (c) through 
(e) as paragraphs (d) through (f) and adding new paragraph (c).
    The addition reads as follows:


Sec.  460.20  Notice of CMS determination.

* * * * *
    (c) Incomplete application due to the lack of required State 
assurances documentation. An application that, upon submission, is 
determined to be incomplete under Sec.  460.12(b)(3) will be withdrawn 
by CMS and the applicant will be notified accordingly. The applicant is 
not entitled to a fair hearing when CMS withdraws an incomplete 
application on this basis.
* * * * *

[[Page 79745]]

0
100. Section 460.40 is amended by revising paragraph (b) to read as 
follow:


Sec.  460.40  Violations for which CMS may impose sanctions.

* * * * *
    (b) If CMS or the State administering agency makes a determination 
under Sec.  460.50 that could lead to termination of a PACE program 
agreement, CMS may impose any of the sanctions specified at Sec. Sec.  
460.42 and 460.46. If CMS or the State administering agency determines 
that the circumstances in Sec.  460.50(b)(1) exist, neither CMS nor the 
State administrating agency has to determine that the circumstances in 
460.50(b)(2) exist prior to imposing a CMP or enrollment and/or payment 
suspension.
0
101. Section 460.64 is amended by revising paragraph (a)(5) and adding 
paragraph (a)(6) to read as follows:


Sec.  460.64  Personnel qualifications for staff with direct 
participant contact.

    (a) * * *
    (5) Be medically cleared for communicable diseases before engaging 
in direct participant contact and on an annual basis.
    (i) Staff must be cleared for communicable diseases based on a 
physical examination performed by a licensed physician, nurse 
practitioner, or physician assistant acting within the scope of their 
authority to practice, unless:
    (A) The PACE organization conducts an individual risk assessment 
that meets the conditions specified in paragraph (a)(5)(iii) of this 
section, and
    (B) The results of the risk assessment indicate the individual does 
not require a physical examination for medical clearance.
    (ii) As part of the initial physical examination, staff must be 
determined to be free of active Tuberculosis disease.
    (iii) If the PACE organization conducts a risk assessment on an 
individual under paragraphs (a)(5)(i)(A) and (B) of this section:
    (A) Policies and procedures for conducting a risk assessment on 
each individual with direct participant contact must be based on 
accepted professional standards of care.
    (B) The PACE organization's risk assessment must identify when a 
physical examination is required based on the results of the 
assessment.
    (C) The results of the risk assessment must be reviewed by a 
registered nurse, physician, nurse practitioner, or physician 
assistant.
    (D) At a minimum, the risk assessment must:
    (1) Assess whether staff have been exposed to or have any symptoms 
of the following diseases: COVID-19, Diphtheria, Influenza, Measles, 
Meningitis, Meningococcal Disease, Mumps, Pertussis, Pneumococcal 
Disease, Rubella, Streptococcal Infection, Varicella Zoster Virus, and 
any other infectious diseases noted as a potential threat to public 
health by the CDC.
    (2) Determine if staff are free of active Tuberculosis during the 
initial risk assessment.
    (6) Have all immunizations up-to-date before engaging in direct 
participant contact, including, at a minimum, the vaccination 
requirements in Sec.  460.74.
* * * * *
0
102. Section 460.70 is amended by revising paragraph (a) to read as 
follows:


Sec.  460.70  Contracted services.

    (a) General rule. The PACE organization must 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, including, at a minimum, the medical 
specialties identified in paragraph (a)(1) of this section. The PACE 
organization does not need to have a written contract with entities 
that provide emergency services as described in Sec.  460.100.
    (1) At a minimum, except as noted in paragraph (a)(4) of this 
section, PACE organizations must have contracts in place for the 
following medical specialties:
    (i) Anesthesiology.
    (ii) Audiology.
    (iii) Cardiology.
    (iv) Dentistry.
    (v) Dermatology.
    (vi) Gastroenterology.
    (vii) Gynecology.
    (viii) Internal Medicine.
    (ix) Nephrology.
    (x) Oncology.
    (xi) Ophthalmology.
    (xii) Oral surgery.
    (xiii) Orthopedic surgery.
    (xiv) Otorhinolaryngology.
    (xv) Plastic surgery.
    (xvi) Pharmacy consulting services.
    (xvii) Podiatry.
    (xviii) Psychiatry.
    (xix) Pulmonology.
    (xx) Radiology.
    (xxi) Rheumatology.
    (xxii) General Surgery.
    (xxiii) Thoracic and vascular surgery.
    (xxiii) Urology.
    (2) Contracts with medical specialists must be executed prior to 
enrollment of participants and must be maintained on an ongoing basis 
to ensure participants receive appropriate and timely access to all 
medically necessary care and services.
    (3) A PACE organization is responsible for making all reasonable 
and timely attempts to contract with medical specialists. If at any 
time a PACE organization is unable to directly contract or maintain a 
contract with a specific specialty, the PACE organization must:
    (i) Ensure care and services that would otherwise be provided to 
participants by a contracted specialist are provided and that the 
participant's needs are met through a different mechanism to include 
hospitalization, and
    (ii) Promptly report the contracting issue to CMS and the SAA, 
including the attempts made to contract, the reason why the contract 
was not effectuated, and the PACE organization's plan to provide access 
to the necessary services.
    (4) A PACE organization is not required to have a contract with a 
particular medical specialty if the PACE organization directly employs 
one or more individuals prior to contracting who are legally 
authorized, and if applicable, board certified in the participant 
medical specialty.
* * * * *
0
103. Section 460.71 is amended by--
0
a. Revising paragraph (b)(4);
0
b. Redesignating paragraph (b)(5) and (6) as paragraphs (b)(6) and (7), 
respectively; and
0
c. Adding new paragraph (b)(5).
    The revision and addition read as follow:


Sec.  460.71  Oversight of direct participant care.

* * * * *
    (b) * * *
    (4) Be medically cleared for communicable diseases before engaging 
in direct participant contact and on an annual basis as required under 
Sec.  460.64(a)(5).
    (5) Have all immunizations up-to-date before engaging in direct 
participant contact, including, at a minimum, the vaccine requirements 
identified in Sec.  460.74.
* * * * *
0
104. Section 460.98 is amended by:
0
a. Removing paragraph (b)(4);
0
b. Redesignating paragraph (b)(5) as paragraph (b)(4).
0
c. Redesignating paragraphs (c) through (e) as paragraphs (d) through 
(f), respectively;
0
d. Adding new paragraph (c);
    The addition reads as follows:


Sec.  460.98  Service delivery.

* * * * *
    (c) Timeframes for arranging and providing services--(1) 
Medications.

[[Page 79746]]

The PACE organization must arrange and schedule the dispensing of 
medications as expeditiously as the participant's condition requires, 
but no later than 24 hours after a primary care provider orders the 
medication.
    (2) All other services. The PACE organization must arrange or 
schedule the delivery of interdisciplinary team approved services, 
other than medications, as identified in paragraph (c)(2)(i) of this 
section, as expeditiously as the participant's health condition 
requires, but no later than 7 calendar days after the date the 
interdisciplinary team or member of the interdisciplinary team first 
approves the service, except as identified in paragraph (c)(3) of this 
section.
    (i) Interdisciplinary team approved services include:
    (A) Services approved by the full interdisciplinary team.
    (B) Services approved by a member of the interdisciplinary team.
    (C) Services ordered by a member of the interdisciplinary team.
    (D) Care planned services.
    (ii) [Reserved]
    (3) Routine or preventative services. Routine or preventive 
services are excluded from the requirement in paragraph (c)(2) of this 
section when all of the following requirements are met:
    (i) The PACE organization documents that they were unable to 
schedule the appointment due to circumstances beyond the control of the 
PACE organization.
    (ii) The participant does not have a change in status that requires 
the service to be provided more quickly.
    (iii) The PACE organization provides the service as expeditiously 
as the participant's condition requires.
    (4) Providing approved services. Services must be provided as 
expeditiously as the participant's health condition requires, taking 
into account the participant's medical, physical, social, and emotional 
needs.
* * * * *
0
105. Section 460.102 is amended by revising paragraph (d)(1) to read as 
follows:


Sec.  460.102  Interdisciplinary team.

* * * * *
    (d) * * *
    (1) The interdisciplinary team is responsible for the following for 
each participant:
    (i) Assessments and plan of care. The initial assessment, periodic 
reassessments, and plan of care.
    (ii) Coordination of care. Coordination and implementation of 24-
hour care delivery that meets participant needs across all care 
settings, including but not limited to:
    (A) Ordering, approving, or authorizing all necessary care.
    (B) Communicating all necessary care and relevant instructions for 
care.
    (C) Ensuring care is implemented as it was ordered, approved, or 
authorized by the IDT.
    (D) Monitoring and evaluating the participant's condition to ensure 
that the care provided is effective and meets the participant's needs.
    (E) Promptly modifying care when the IDT determines the 
participant's needs are not met in order to provide safe, appropriate, 
and effective care to the participant.
    (iii) Documenting recommended services. 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).
    (iv) Consideration of recommended services. The interdisciplinary 
team must review, assess, and act on recommendations from emergency or 
urgent care providers, employees, and contractors, including medical 
specialists. Specifically, the interdisciplinary team must ensure the 
following requirements are met:
    (A) The appropriate member(s) of the interdisciplinary team must 
review all recommendations from hospitals, emergency departments, and 
urgent care providers and determine if the recommended services are 
necessary to meet the participant's medical, physical, social, or 
emotional needs within 24 hours from the time of the participant's 
discharge.
    (B) The appropriate member(s) of the interdisciplinary team must 
review all recommendations from other employees and contractors and 
determine if the recommended services are necessary to meet the 
participant's medical, physical, social, or emotional needs as 
expeditiously as the participant's health condition requires, but no 
later than 5 calendar days from the date the recommendation was made.
    (C) If recommendations are authorized or approved by the 
interdisciplinary team or a member of the interdisciplinary team, the 
services must be promptly arranged and furnished under Sec.  460.98(c).
* * * * *
0
106. Section 460.104 is amended by revising paragraph (e) to read as 
follows:


Sec.  460.104  Participant assessments.

* * * * *
    (e) Changes to plan of care. When the interdisciplinary team 
conducts semiannual or unscheduled reassessments, the interdisciplinary 
team must reevaluate and, if necessary, revise the plan of care in 
accordance with Sec.  460.106(c) following the completion of all 
required assessments.
* * * * *
0
107. Section 460.106 is revised to read as follows:


Sec.  460.106  Plan of care.

    (a) Basic requirement. The interdisciplinary team members specified 
in Sec.  460.102(b) must develop, evaluate, and if necessary revise a 
comprehensive person-centered plan of care for each participant. Each 
plan of care must take into consideration the most current assessment 
findings and must identify the services to be furnished to attain or 
maintain the participant's highest practicable level of well-being.
    (b) Timeframes for developing, evaluating, and revising plan of 
care--(1) Initial plan of care. The interdisciplinary team must 
complete the initial plan of care within 30 calendar days of the 
participant's date of enrollment.
    (2) Semi-annual plan of care evaluation. At least once every 180 
calendar days the interdisciplinary team must complete a reevaluation 
of, and if necessary, revisions to each participant's plan of care.
    (3) Change in participant's status. (i) Except as specified in 
paragraph (b)(3)(ii) of this section, the interdisciplinary team must 
complete a re-evaluation of, and if necessary, revisions to a 
participant's plan of care within 14 calendar days after the PACE 
organization determines, or should have determined, that there has been 
a change in the participant's health or psychosocial status, or more 
expeditiously if the participant's condition requires. For purposes of 
this section, a ``change in participant's status'' means a major 
decline or improvement in a participant's status that will not normally 
resolve itself without further intervention by staff or by implementing 
standard disease-related clinical interventions, that has an impact on 
more than one area of the participant's health status, and requires 
interdisciplinary team review or revision of the care plan, or both.
    (ii) If a participant is hospitalized within 14 calendar days of 
the change in participant status, the interdisciplinary team must 
complete a reevaluation of, and if necessary, revisions to the plan of 
care as expeditiously as the participant's condition requires but no 
later than 14 calendar days after the date of discharge from the 
hospital.

[[Page 79747]]

    (c) Content of plan of care. At a minimum, each plan of care must 
meet the following requirements:
    (1) Identify all of the participant's current medical, physical, 
emotional, and social needs, including all needs associated with 
chronic diseases, behavioral disorders, and psychiatric disorders that 
require treatment or routine monitoring. At a minimum, the care plan 
must address the following factors:
    (i) Vision;
    (ii) Hearing;
    (iii) Dentition;
    (iv) Skin integrity;
    (v) Mobility;
    (vi) Physical functioning, including activities of daily living;
    (vii) Pain management;
    (viii) Nutrition, including access to meals that meet the 
participant's daily nutritional and special dietary needs;
    (ix) The participant's ability to live safely in the community, 
including the safety of their home environment;
    (x) Home care;
    (xi) Center attendance;
    (xii) Transportation; and
    (xiii) Communication, including any identified language barriers.
    (2) Identify each intervention (the care and services) needed to 
meet each medical, physical, emotional, and social needs, except: the 
plan of care does not have to identify the medications needed to meet 
the participant's needs if a comprehensive list of medications is 
already documented elsewhere in the medical record;
    (3) Utilize the most appropriate interventions for each care need 
that advances the participant toward a measurable goal and outcome.
    (4) Identify how each intervention will be implemented, including a 
timeframe for implementation.
    (5) Identify a measurable goal for each intervention.
    (6) Identify how the goal for each intervention will be evaluated 
to determine whether the intervention should be continued, 
discontinued, or modified.
    (7) The participant's preferences and goals of care.
    (d) Implementation of the plan of care. (1) The team must 
continuously implement, coordinate, and monitor the plan of care 
regardless of whether the services are furnished by PACE employees or 
contractors, across all care settings.
    (2) The team must continuously evaluate and monitor the 
participant's medical, physical, emotional, and social needs as well as 
the effectiveness of the plan of care, through the provision of 
services, informal observation, input from participants or caregivers, 
and communications among members of the interdisciplinary team and 
other employees or contractors.
    (e) Participant and caregiver involvement in plan of care. (1) The 
interdisciplinary team must develop, evaluate and revise each plan of 
care in collaboration with the participant, the participant's 
caregiver, or both.
    (2) The interdisciplinary team must review and discuss each plan of 
care with the participant and/or the participant's caregiver before the 
plan of care is completed to ensure that there is agreement with the 
plan of care and that the participant's concerns are addressed.
    (f) Documentation. The team must establish and implement a process 
to document and maintain records related to all requirements for plans 
of care, in the participant's medical record, and ensure that the most 
recent care plan is available to all employees and contractors within 
the organization as needed.
0
108. Section 460.112 is amended by--
0
a. Removing paragraph (d);
0
b. Redesignating paragraphs (a) through (c) as paragraphs (b) through 
(d);
0
c. Adding new paragraph (a);
0
d. Adding paragraph (b)(8);
0
e. Revising newly redesignated paragraph (c) introductory text and 
paragraph (e)(1);
0
f. Adding paragraph (c)(5);
0
g. Revising paragraph (e)(1);
0
g. Redesignating paragraphs (e)(2) through (6) as (e)(3) through (7);
0
h. Adding new paragraph (e)(2);
0
i. Revising the paragraph (g) subject heading;
0
j. Revising paragraph (g)(2); and
0
k. Adding paragraph (g)(3).
    The revisions and additions read as follows:


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

    (a) Right to treatment. Each participant has the right to 
appropriate and timely treatment for their health conditions, including 
the right to:
    (1) Receive all care and services needed to improve or maintain the 
participant's health condition and attain the highest practicable 
physical, emotional, and social well-being; and
    (2) Access emergency health care services when and where the need 
arises without prior authorization by the PACE interdisciplinary team.
    (b) * * *
    (8) To have all information regarding PACE services and treatment 
options explained in a culturally competent manner.
    (c) Information disclosure. Each PACE participant has the right to 
receive accurate, easily understood information and to receive 
assistance in making informed health decisions. A participant has the 
right to have all information in this section shared with their 
designated representative. Specifically, each participant has the 
following rights:
* * * * *
    (5) To be fully informed of the following, in writing, before the 
PACE organization implements palliative care, comfort care, or end-of-
life care services:
    (i) A description of the PACE organization's palliative care, 
comfort care, and end-of-life care services (as applicable) and how 
they differ from the care the participant is currently receiving.
    (ii) Whether palliative care, comfort care, or end-of-life care 
services (as applicable) will be provided in addition to or in lieu of 
the care the participant is currently receiving.
    (iii) Identify all services that will be impacted and provide a 
detailed explanation of how the services will be impacted if the 
participant and/or designated representative elects to initiate 
palliative care, comfort care, or end-of-life care, including but not 
limited to the following types of services.
    (A) Physician services, including specialist services.
    (B) Hospital services.
    (C) Long-term care services.
    (D) Nursing services.
    (E) Social services.
    (F) Dietary services.
    (G) Transportation.
    (H) Home care.
    (I) Therapy, including physical, occupation, and speech therapy.
    (J) Behavioral health.
    (K) Diagnostic testing, including imaging and laboratory services.
    (L) Medications.
    (M) Preventative healthcare services.
    (N) PACE center attendance.
    (iv) The right to revoke or withdraw their consent to receive 
palliative, comfort, or end-of-life care at any time and for any 
reason, either verbally or in writing.
* * * * *
    (e) * * *
    (1) To make health care decisions, including the right to:
    (i) Have all treatment options fully explained;
    (ii) Refuse any and all care and services; and
    (iii) Be informed of the consequences their decisions may have on 
their health and/or psychosocial status.
    (2) To fully understand the PACE organization's palliative care, 
comfort

[[Page 79748]]

care, and end-of-life care services. Specifically, the PACE 
organization must do all of the following before palliative care, 
comfort care, or end-of-life care services can be initiated:
    (i) Fully explain the applicable treatment options;
    (ii) Provide the participant with written information about their 
treatment options, in accordance with paragraph (c)(5) of this section.
    (iii) Obtain written consent from the participant or designated 
representative prior to initiating palliative care, comfort care, or 
end-of-life care.
* * * * *
    (g) Complaints, requests, and appeals. * * *
    (2) To request services from the PACE organizations, its employees, 
or contractors through the process described in Sec.  460.121.
    (3) To appeal any treatment decision of the PACE organization, its 
employees, or contractors through the process described in Sec.  
460.122.
0
109. Section 460.120 is revised to read as follow:


Sec.  460.120  Grievance process.

    (a) Written procedures. A PACE organization must have a formal 
written process to promptly identify, document, investigate, and 
resolve all medical and nonmedical grievances in accordance with the 
requirements in this part.
    (b) Definition of grievance. For purposes of this part, a grievance 
is a complaint, either oral or written, expressing dissatisfaction with 
service delivery or the quality of care furnished, regardless of 
whether remedial action is requested. Grievances may be between 
participants and the PACE organization or any other entity or 
individual through which the PACE organization provides services to the 
participant.
    (c) Grievance process notification to participants. Upon 
enrollment, and at least annually thereafter, the PACE organization 
must give a participant written information on the grievance process in 
understandable language, including:
    (1) A participant or other individual specified in paragraph (d) of 
this section has the right to voice grievances without discrimination 
or reprisal, and without fear of discrimination or reprisal.
    (2) A Medicare participant or other individual specified in 
paragraph (d) of this section acting on behalf of a Medicare 
participant has the right to file a written complaint with the quality 
improvement organization (QIO) with regard to Medicare covered 
services.
    (3) The requirements under paragraphs (b) and (d) through (k) of 
this section.
    (d) Who can submit a grievance. Any of the following individuals 
can submit a grievance:
    (1) The participant;
    (2) The participant's family member;
    (3) The participant's designated representative;or
    (4) The participant's caregiver.
    (e) Methods for submitting a grievance.(1) Any individual as 
permitted under paragraph (d) of this section may file a grievance with 
the PACE organization either orally or in writing.
    (2) The PACE organization may not require a written grievance to be 
submitted on a specific form.
    (3) A grievance may be made to any employee or contractor of the 
PACE organization that provides care to a participant in the 
participant's residence, the PACE center, or while transporting 
participants.
    (f) Conducting an investigation. The PACE organization must conduct 
a thorough investigation of all distinct issues within the grievance 
when the cause of the issue is not already known.
    (g) Grievance resolution and notification timeframes. (1) The PACE 
organization must take action to resolve the grievance based on the 
results of its investigation as expeditiously as the case requires, but 
no later than 30 calendar days after the date the PACE organization 
receives the oral or written grievance.
    (2) The PACE organization must notify the individual who submitted 
the grievance of the grievance resolution as expeditiously as the case 
requires, but no later than 3 calendar days after the date the PACE 
organization resolves the grievance in accordance with paragraph (g)(1) 
of this section.
    (h) Expedited grievances. The PACE organization must resolve and 
notify the individual who submitted the grievance of the grievance 
resolution as expeditiously as the case requires, but no later than 24 
hours after the time the PACE organization receives the oral or written 
grievance if the nature of the grievance could have an imminent and 
significant impact on the health or safety of the participant.
    (i) Grievance resolution notification. The PACE organization must 
inform the individual who submitted the grievance of the resolution as 
follows:
    (1) Either orally or in writing, based on the individual's 
preference for notification, except for grievances identified in 
paragraph (i)(3) of this section.
    (2) At a minimum, oral or written notification of grievance 
resolutions must include the following, if applicable:
    (i) A summary statement of the participant's grievance including 
all distinct issues.
    (ii) For each distinct issue that requires an investigation, the 
steps taken to investigate the issueand a summary of the pertinent 
findings or conclusions regarding the concerns for each issue.
    (iii) For a grievance that requires corrective action, the 
corrective action(s) taken or to be taken by the PACE organization as a 
result of the grievance, and when the participant may expect corrective 
action(s) to occur.
    (3) All grievances related to quality of care, regardless of how 
the grievance is filed, must be responded to in writing. The response 
must describe the right of a Medicare participant or other individual 
specified in paragraph (d) of this section acting on behalf of a 
Medicare participant to file a written complaint with the QIO with 
regard to Medicare covered services. For any complaint submitted to a 
QIO, the PACE organization must cooperate with the QIO in resolving the 
complaint.
    (4) The PACE organization may withhold notification of the 
grievance resolution if the individual who submitted the grievance 
specifically requests not to receive the notification, and the PACE 
organization has documented this request in writing. The PACE 
organization is still responsible for paragraphs (i)(1) through (3) of 
this section.
    (j) Continuing care during grievance process. The PACE organization 
must continue to furnish all required services to the participant 
during the grievance process.
    (k) Maintaining confidentiality of grievances. The PACE 
organization must develop and implement procedures to maintain the 
confidentiality of a grievance, including protecting the identity of 
all individuals involved in the grievance from other employees and 
contractors when appropriate.
    (l) Recordkeeping. The PACE organization must establish and 
implement a process to document, track, and maintain records related to 
all processing requirements for grievances received both orally and in 
writing. These records, except for information deemed confidential as a 
part of paragraph (k) of this section,, must be available to the 
interdisciplinary team to ensure that all members remain alert to 
pertinent participant information.
    (m) Analyzing grievance information. The PACE organization must 
aggregate and analyze the information collected under paragraph (l) of 
this section for purposes of its internal quality improvement program.

[[Page 79749]]

 Sec.  460.121  [Amended]

0
110. Section 460.121 is amended in paragraph (i)(2) by adding the 
phrase ``either orally or'' after the phrase ``their designated 
representative''.
0
111. Section 460.198 is added to subpart K to read as follows:


Sec.  460.198  Disclosure of compliance deficiencies.

    CMS may require a PACE organization to disclose to its PACE 
participants or potential PACE participants, the PACE organization's 
performance and contract compliance deficiencies in a manner specified 
by CMS.
0
112. Section 460.200 is amended by revising paragraph (d)(2) to read as 
follows:


Sec.  460.200  Maintenance of records and reporting of data.

* * * * *
    (d) * * *
    (2) Maintain all written communications received in any format (for 
example, emails, faxes, letters, etc.) from participants or other 
parties in their original form when the communications relate to a 
participant's care, health, or safety 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, care, health, or 
safety.
    (ii) Communications from an advocacy or governmental agency such as 
Adult Protective Services.
* * * * *


Sec.  460.202  [Amended]

0
113. Section 460.202 is amended in paragraph (b) by removing the last 
sentence.
0
114. Section 460.210 is amended by revising paragraph (b)(6) to read as 
follows:


Sec.  460.210  Medical records.

* * * * *
    (b) * * *
    (6) Original documentation, or an unaltered electronic copy, of any 
written communication as described in Sec.  460.200(d)(2) must be 
maintained in the participant's medical record unless the following 
requirements are met:
    (i) The medical record contains a thorough and accurate summary of 
the communication including all relevant aspects of the communication,
    (ii) Original documentation of the communication is maintained 
outside of the medical record and is accessible by employees and 
contractors of the PACE organization when necessary, and in accordance 
with Sec.  460.200(e), and
    (iii) Original documentation of the communication is available to 
CMS and the SAA upon request.
* * * * *

Title 45

PART 170--HEALTH INFORMATION TECHNOLOGY STANDARDS, IMPLEMENTATION 
SPECIFICATIONS, AND CERTIFICATION CRITERIA AND CERTIFICATION 
PROGRAMS FOR HEALTH INFORMATION TECHNOLOGY

0
115. The authority citation for part 170 continues to read as follows:

    Authority: 42 U.S.C. 300jj-11; 42 U.S.C 300jj-14; 5 U.S.C. 552.

0
116. Section 170.205 is amended by revising paragraphs (b)(1) and (2) 
and adding paragraph (c) to read as follows:


Sec.  170.205  Content exchange standards and implementation 
specifications for exchanging electronic health information.

* * * * *
    (b) * * *
    (1) Standard. National Council for Prescription Drug Programs 
(NCPDP): SCRIPT Standard Implementation Guide; Version 2017071 
(incorporated by reference in Sec.  170.299). The Secretary's adoption 
of this standard expires on January 1, 2025.
    (2) Standard. NCPDP SCRIPT Standard, Implementation Guide, Version 
2022011 (incorporated by reference in Sec.  170.299).
    (c) Real-Time Prescription Benefit --(1) Standard. NCPDP Real-Time 
Prescription Benefit Standard, Implementation Guide, Version 12 
(incorporated by reference in Sec.  170.299).
    (2) [Reserved]
* * * * *
0
117. Section 170.299 is amended by revising paragraphs (a) and (k) to 
read as follows:


Sec.  170.299  Incorporation by reference.

    (a) Certain material is incorporated by reference into this part 
with the approval of the Director of the Federal Register under 5 
U.S.C. 552(a) and 1 CFR part 51. To enforce any edition other than that 
specified in this section, the Department of Health and Human Services 
(HHS) must publish a document in the Federal Register and the material 
must be available to the public. All approved incorporation by 
reference (IBR) material is available for inspection at the HHS and at 
the National Archives and Records Administration (NARA). Contact HHS 
at: U.S. Department of Health and Human Services, Office of the 
National Coordinator for Health Information Technology, 330 C Street 
SW, Washington, DC 20201; call ahead to arrange for inspection at 202-
690-7151. For information on the availability of this material at NARA, 
visit www.archives.gov/federal-register/cfr/ibr-locations.html or email 
[email protected]. The material may be obtained from the sources 
in the following paragraphs of this section.
* * * * *
    (k) National Council for Prescription Drug Programs (NCPDP), 
Incorporated, 9240 E. Raintree Drive, Scottsdale, AZ 85260-7518; phone 
(480) 477-1000; fax: (480) 767-1042: website: www.ncpdp.org. (1) SCRIPT 
Standard, Implementation Guide, Version 2017071 (Approval Date for 
ANSI: July 28, 2017), IBR approved for Sec.  170.205(b).
    (2) NCPDP SCRIPT Standard, Implementation Guide, Version 2022011, 
January 2022, (Approval Date for ANSI: December 2, 2021), IBR approved 
for Sec.  170.205(b).
    (3) NCPDP Real-Time Prescription Benefit Standard, Implementation 
Guide, Version 12, October 2021 (Approval Date for ANSI: September 27, 
2021), IBR approved for Sec.  170.205(c).
* * * * *

    Dated: December 7, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2022-26956 Filed 12-14-22; 4:15 pm]
BILLING CODE 4120-01-P